The Arkansas inheritance tax is based on the federal estate tax law of the United States. The credit allowed for Arkansas state death taxes on the federal estate tax return is equal to the Arkansas inheritance tax or estate tax. Estate tax returns in Arkansas are due nine months after the date of the property owner’s death. Form AY321 is the state’s Estate Tax Form.
In cases when additional time is needed to file the tax, an extension must be filed. The extension forms for filing the estate tax in Arkansas are Federal Extension, Federal Form 4768, or Arkansas Extension, Arkansas Form AY321E, provided by the Arkansas Department of Finance & Administration.
Estate taxes that are paid late or paid on the extended due date are subject to assessment of additional interest at 10% per annum, retroactive to the payment’s due date. The Arkansas estate tax is equal to the Federal credit that is permitted for state death taxes determined by the Table C of the Federal Estate Tax Return, Federal Form 706.
If the estate of an Arkansas resident or a nonresident has tangible personal property or real property located within and without the border of the State of Arkansas, the Arkansas tax due is the proportionate part of the Federal credit permitted for state death taxes in the same proportion that the Arkansas property amount bears to the gross estate value.
In cases when the Federal Estate Tax return is not required in Arkansas, the Arkansas estate tax return need not be filed unless the request for the release of real estate is specifically required. On the payment of taxes and applicable interest, a receipt is issued by the Arkansas Department of Finance & Administration. The state legislature issues a closing letter when the copy of the federal closing letter has been received. The state of Arkansas does not have a Gift Tax or an Inheritance Tax.