When you’re making sales to customers in Arkansas, there are several factors you need to consider in determining if you must register to collect and remit sales tax to the state. For businesses located in Arkansas, that calculation is straightforward enough, but sellers not based in the state must determine if a combination of other factors creates a nexus for them. Additionally, you’ll need to know if what you’re selling is taxable in Arkansas, as well as what rate to collect sales tax at based on the applicable jurisdiction for each individual sale.
The state tax rate in Arkansas is 6.5%, and cities and counties can each impose their own local taxes as well. That makes the applicable rate in any given part of the state the total of the state, county and city rate. This total varies from one part of Arkansas to another, with the highest combined rate at 11.25% in Anthonyville, Earl, and Marion, AK. By contrast, the effective rates in Little Rock and Fayetteville, two of the largest cities in the state, are 9% and 9.75% respectively.
The total sales tax rate you charge your Arkansas customers will depend on either the physical retail location you operate or the final destination of shipped goods. For instance, if you run a clothing store in Fort Smith, you’ll charge each customer the 9.75% rate applicable at that location, regardless of where in the state they live. If you’re shipping goods, however, whether from in-state or out-of-state, you’ll charge your customers the rate in effect at the final delivery address.
Having a brick-and-mortar store automatically qualifies you to collect and remit Arkansas state sales tax on all taxable purchases. If you’re based out-of-state, however, determining your sales tax responsibility can be a bit more complex. Arkansas requires any seller with a significant presence in the state to register to collect sales tax on purchases to Arkansas customers. A significant presence is generally considered:
If you use fulfillment by Amazon, you may be aware that the presence of an Amazon Fulfillment Center in a state generally triggers a nexus condition for you since your goods are in all likelihood stored there. Arkansas does not have a fulfillment center at the moment, however, and so that particular situation does not apply.
Most tangible personal property is taxable in Arkansas, while many services are not. There are exceptions to both of these rules, however, with taxes applied to things like janitorial services and any service involved in the production of tangible personal property. Examples of goods that are taxed are groceries, prepared food, clothing, medicines, fuel, and machinery. Some exemptions include:
Shipping and handling charges are taxable assuming the item being shipped is taxable, but not otherwise, and regardless of how it’s listed on the invoice or receipt.
Arkansas has a state sales tax holiday on the first Saturday and Sunday in August. During this period, school supplies, school art supplies, clothing, and instructional materials are free of state and local taxes. All retailers and other sellers are required to participate in this event.
In order to begin collecting sales tax on purchases made by your Arkansas customers, you first need to register your business with the state. This can be done online, by mail, or in person at your local Arkansas Department of Finance office. There is a $50 fee to register, and no matter how you choose to submit your registration, the actual filing of your returns must be done online.
Because Arkansas is a member of the Streamlined Sales and Use Tax Agreement (SSUTA), you can register through that website for an Arkansas sales tax permit at the same time that you register to collect sales tax in all of the other states that are party to the agreement. If you’re only interested in registering in Arkansas at this time, however, you can go through the online Arkansas Taxpayer Access Point.
Depending on the volume of taxable sales you’ve previously made or expect to make in the state, and so your estimated annual sales tax liability, you will be assigned a filing frequency at the time of registration. This may be monthly, quarterly or annually, and regardless of the frequency, returns and payments will be due on the 20th of the month following the close of the period in question.
|January – March (Q1)||April 20|
|April – June (Q2)||July 20|
|July – September (Q3)||October 20|
|October – December (Q4)||January 20|
For those taxpayers filing annually, returns and payments are due on January 20th of the following year. If the 20th of any month falls on a weekend or holiday, returns and payments will be considered timely as long as they’re received by the next business day. Zero returns are required in Arkansas, and a penalty of 5% of the tax due will be assessed for late payments, as well as for payments not made through electronic funds transfer (EFT).
When you’re making sales to customers across Arkansas, and possibly other states as well, there are a lot of elements to keep track of. You need to know when to add sales tax onto the purchase price of an item, what rate to use, who to remit your payments to, and how frequently to file. All of the regulations surrounding these issues vary a good deal from one state to another, and so keeping track of all of your taxable sales and sales tax returns, especially if you’re selling in multiple states, can become a real burden.
Fortunately, TaxTools can help you streamline all of these processes and significantly ease your administrative burden. It is a software tool specifically designed to keep track of the myriad state and local regulations surrounding the collection of sales tax, and it can seamlessly integrate with your ecommerce platform as well. Through TaxTools, you can view and print reports of taxable sales with location information, file state and local returns, keep track of filing deadlines, and much more. It’s a huge asset, especially if you make sales into multiple states on a regular basis, and it can greatly improve the overall efficiency of your business processes.