Sales Tax Updates in Arkansas

Tax Professionals' Resource
December 30, 2012 — 1,509 views  
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State Gross Receipts Tax Changes

The big news in Arkansas sales tax for 2012 involves the rate increase approved last month. In the November elections, the voters approved an increase of the state’s gross receipts tax from 6 percent to 6.5 percent. The increase was accomplished through a constitutional amendment.

The .5 percent increase is earmarked to fund repair and construction of roads, highways, bridges and other surface thoroughfares. The tax increase is scheduled to be temporary in nature and last 10 years. If bonds are paid earlier, the tax increase is intended to end earlier.

New exemptions were created for certain semitrailer sales. Class 6 and Class 7 trucks are now exempt from sales tax. To qualify, they must be under the International Registration Plan.

Arkansas has also revised two forms for sales and use tax. The Combined Business Tax  Form and Combined Business Tax Change Form have been revised in October. The forms are in PDF format.

There are more changes for out of state sellers. Sellers with sales of more than $200,000 per month must now prepay their sales tax liability up to 80% of their monthly liability. Payments to the state are to be made twice per month and must be made electronically. The new rule began on January 1, 2012 and is now in effect.

Arkansas has had a sales tax on internet sales since 2011. Out of state sellers should be aware of collecting sales tax when selling in Arkansas, as well as the requirements of prepayment and electronic payment.

Utility Sales Tax Increase

The sales tax for natural gas and electricity generated by a gas fired generator has increased to 5.125 percent, effective January 1. When the conservation tax is added, total sales tax will be 5.25 percent.

Local Tax Rate Changes

• Miller County lessened its local sales tax by .25 percent. The new rate is 1.25 percent, down from 1.5 percent;
• Twin Groves has cancelled its local sales tax. It had been at 1 percent;
• Melbourne, in Izard County, increased its tax rate to 2 percent, up from 1 percent;
• The town of Palestine increased its rate to 2 percent, from 1 percent;
• The City of Damascus created a 1 percent sales tax. It had no local rate previously;
• Austin, Fort Smith, Van Buren and Yellville have increased their local rates to 2 percent, effective January 1, 2013;
• Magnolia has increased its local rate to 2.375 percent effective January 1, 2013.

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