Arkansas – New Sales Tax Provisions

SALT Report 2747 – The Arkansas Department of Finance and Administration released a notice that summarizes the sales and use tax provisions that will take effect in 2013.

Tax Rate

The state sales and use tax rate will increase by 0.5% effective July 1, 2013. The increased rates will be imposed as follows:

  • State sales and use tax rate increases to 6.5%
  • Manufacturing utilities reduced rate increases to 3.25%
  • Electricity manufacturing reduced rate increases to 4.75%

The reduced tax rate for food is not affected by the increase and will remain at 1.5%.

The following sales tax provisions are effective August 16, 2013.

Act 483: Allows an in-state Arkansas winery or an out-of-state winery to ship wine to a residence in Arkansas if the purchaser has physically visited the winery and made a purchase. State and local sales taxes must be collected by the winery on the shipments.

Act 712: Allows the Department to release tax records to a joint auditor for purposes of auditing the advertising and promotion taxes collected by a city. The records provided to a joint auditor must remain confidential and are not subject to disclosure by the joint auditor.

Act 1076: Creates civil and criminal penalties for activities related to the use of software and other devices or mechanisms used to modify or falsify electronic sales records or used to evade the payment of taxes.

Act 233: Provides an exemption for pollution control machinery and equipment that is required by a state or federal law if used to remove sulphur pollutants from petroleum based products.  The exemption applies to repair parts and labor used in the machinery and equipment.

Act 1164:  State, local, and long term motor vehicle leasing tax applies to vehicles leased for more than 30 days regardless of whether tax was paid at the time of registration.

Act 1392: Provides an exemption for farmers engaged in commercial farming operations.  The exemption applies to purchases of baling twine, net wrap, silage wrap, and other similar products that are used for baling, packaging, tying, wrapping, or sealing animal feed products.  Animal feed products include hay, straw, grass, fodder, and silage.

Act 1419:  Provides that non-profit blood donation organizations are exempt from state and local sales and use taxes.

The following sales and use tax provisions are effective January 1, 2014.

Act 623:  Retailers who sell prepaid wireless telecommunication services are required to collect a $0.65 E-911 fee from the consumer.  Retailers will collect the fee at the time of sale and remit the fee to the Department.

Act 1441: Utilities used for qualifying agricultural structures and qualifying aquaculture and horticulture equipment are exempt. Aquaculture includes the cultivation of domesticated fish.  Horticulture means the initial production of fruits, vegetables, tree nuts, trees, shrubs, vines, and florist stock unless these items are cultivated and sold at a retail or wholesale facility.  A qualifying agricultural structure means a poultry or livestock facility used for commercial production, for a cattle or dairy facility, and for a greenhouse.

Utilities eligible for the exemption include electricity; liquefied petroleum gas; and natural gas.  These utilities must be separately metered from utilities used for any other purpose.

The Department is in the process of creating and updating forms to accommodate these provisions. However, if you have questions you should contact the Sales and Use Tax Section at 501-682-7104.

For Further Information

Arkansas Department of Finance and Administration – What’s New for Sales Tax in 2013