USA – ARKANSAS Law and Practice Contributed by: Aaron Bundy and Danya Bundy, Bundy
1.4 Pre-Immigration and Exit Planning For people moving in, the planning is timing. Estab - lishing Arkansas domicile before a major recognition event captures the 50% exclusion and the USD10 mil - lion exemption, and the falling rate schedule rewards deferral of income into later years. Part-year returns allocate income around the move date. Residency has teeth here, since a person is taxed as a resident based on domicile or on maintaining a place of abode in the state and spending more than six months of the year in it, so the record should be built deliberately from the first day. For those leaving, Arkansas imposes no exit tax. Domicile continues until a new one is established with both presence and intent, and intent alone changes nothing. Clients with international connections should complete federal pre-immigration planning with spe - cialist counsel before US residency begins, because the most valuable techniques expire on arrival, and foreign clients should review the land ownership restrictions before acquiring agricultural property. 1.5 Taxation of Real Estate Owned by Non- Residents and Non-Citizens Property taxes do not distinguish between residents and non-residents, and non-residents pay Arkansas income tax on rents and gains from Arkansas real estate. Foreign sellers face federal FIRPTA withhold - ing of 15% of the amount realised on disposition. Ownership through limited liability companies is com - mon for management and liability reasons and does not change the state income tax result. The distinctive Arkansas issue is eligibility rather than taxation. Act 636 of 2023: i) disallows a prohibited foreign party (a category defined with reference to countries subject to federal arms regulations) from acquiring any interest in agricultural land in the state regardless of intended use; ii) bars certain foreign- party-controlled businesses from acquiring other real property; and iii) created an Office of Agricultural Intelligence to investigate, with enforcement by the Attorney General. Arkansas brought the first enforce - ment action in the nation under this generation of laws, ordering divestiture of seed company land held through a Chinese state-owned parent and imposing the statutory maximum penalty of USD280,000. Act
811 of 2025 went further, extending the prohibition to leases, barring prohibited foreign parties from hold - ing land within ten miles of critical infrastructure, and shortening divestiture windows from two years to one. The laws are under constitutional attack. In Jones Eagle v Ward , a federal court preliminarily enjoined enforcement against a single company on preemption grounds, and the state’s appeal to the Eighth Circuit remains undecided, so counsel should confirm the current state of the litigation before advising. Federal AFIDA reporting also applies to foreign holdings of agricultural land, with penalties that can reach 25% of the land’s value and federal enforcement attention rising. Foreign persons should have this analysis com - pleted before contracting, not at closing. 1.6 Stability of Tax Laws Arkansas tax law is stable, and the movement that does occur runs in the taxpayer’s favour. The Gen - eral Assembly has cut income tax rates four times since 2023, most recently in the May 2026 special session. Amendment 19 to the Arkansas Constitu - tion, adopted in 1934, requires a three-fourths vote of both chambers or a vote of the people to raise the rates of taxes then levied, which covers the income tax and makes reversal a practical impossibility. The sales tax postdates the amendment and can be raised by simple majority, which is why revenue debates in Little Rock tend to be sales tax debates. No transfer tax has applied to deaths in more than twenty years. Clients should plan around federal, rather than state, uncertainty. The 2025 federal tax legislation made the USD15 million exemption permanent rather than sub - ject to sunset. Permanent means only that no expira - tion date is on the books, so it is prudent to build flexibility into irrevocable structures, including broad powers of appointment, trust protector provisions, and, since 2023, statutory decanting, against the pos - sibility that Congress changes direction. 1.7 Transparency and Increased Global Reporting The US does not participate in the Common Reporting Standard, and EU DAC 6 has no direct application to domestic Arkansas planning. FATCA applies as fed - eral law for US persons with foreign accounts. The
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