Department of Finance and Administration
Legislative Impact Statement
Bill: HB1239
Bill Subtitle: TO AMEND LAWS CONCERNING THE CORPORATE FRANCHISE TAX; TO REPEAL
THE ARKANSAS CORPORATE FRANCHISE TAX ACT OF 1979; AND TO MAKE CONFORMING
CHANGES.
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Basic Change :
Sponsors: Reps. Underwood, Ray, Hollowell, and G. Hodges; Sen. Dotson
HB1239 repeals the Arkansas Corporate Franchise Tax Act of 1979 (the Act). Under current law, a
business formed in the state or transacting business in the state must file an annual report and pay an
annual franchise tax to the Secretary of State. The first $8,000,000 of franchise tax and penalty
collected is General Revenue and any amount exceeding $8,000,000 is transferred to the Educational
Adequacy Fund. HB1239 repeals the Act so that the franchise tax, including all payment and reporting
requirements, would cease.
Revenue Impact :
FY2024
$7.8M - General Revenue Reduction
$25.3M - Educational Adequacy Fund Reduction
$700,000 - State Central Services Fund Reduction
$300,000 - Constitutional Officers Fund Reduction
Taxpayer Impact :
A taxpayer would no longer be required to pay or report franchise tax.
Resources Required :
None.
Time Required :
Adequate time is provided for implementation.
Procedural Changes :
None.
Other Comments :
None.
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2/5/2023 12:02 PM 1
 Department of Finance and Administration
Legislative Impact Statement
Bill: HB1239
Bill Subtitle: TO AMEND LAWS CONCERNING THE CORPORATE FRANCHISE TAX; TO REPEAL
THE ARKANSAS CORPORATE FRANCHISE TAX ACT OF 1979; AND TO MAKE CONFORMING
CHANGES.
---------------------------------------------------------------------------------------------------------------------------------------
Legal Analysis :
HB1239 may benefit from the addition of an effective date that takes into account the timing of
franchise tax payments. HB1239 may also benefit from an amendment providing clarity regarding the
collection of franchise taxes currently owed, but not yet paid, at the time the act becomes effective and
the proper allocation of any funds collected after the effective date of the act.
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Statutes affected:
Old version HB1239 Original - 1-24-2023 02:21 PM: 4-27-1622, 4-20-105(a), 4-27-121(a), 26-54-101, 4-36-401(a), 4-36-401(b), 4-37-205(a), 26-54-105, 4-37-206, 4-38-212(f), 19-5-1227(b), 19-6-201(3)
Old version HB1239 V2 - 3-27-2023 10:55 AM: 4-27-1622, 4-20-105(a), 4-27-121(a), 26-54-101, 4-25-111, 4-36-401(a), 4-36-401(b), 4-37-205(a), 26-54-105, 03-27-2023, 4-37-206(a), 4-38-212(f), 19-5-1227(b), 19-6-201(3)
Old version HB1239 V3 - 3-27-2023 11:57 AM: 4-27-1622, 4-20-105(a), 4-27-121(a), 26-54-101, 4-25-111, 4-36-401(a), 4-36-401(b), 4-37-205(a), 26-54-105, 03-27-2023, 4-37-206(a), 4-38-212(f), 19-5-1227(b), 19-6-201(3)
HB 1239: 4-27-1622, 4-20-105(a), 4-27-121(a), 26-54-101, 4-36-401(a), 4-36-401(b), 4-37-205(a), 26-54-105, 4-37-206, 4-38-212(f), 19-5-1227(b), 19-6-201(3)