Summary of 2019 Arkansas Sales and Use Tax Legislation

Every General Assembly makes numerous adjustments to the Arkansas sales and use tax system, and the 2019 session was no exception.  Changes were as follows:

Act 165 prohibits imposition of penalties on retailers for food versus soft drink and candy rate determinations if acting in good faith, unless DFA publishes a list of UPC codes and associated food versus candy and soft drink rate classifications.

Act 172 amends the medical equipment and supplies exemption to include durable medical equipment prescribed by podiatrists. Effective October 1, 2019.

Act 583 effectively exempts from tax in-kind withdrawal form stock donations to 501(c)(3) organizations, public schools, churches, or disaster victims, by specifying that such donations have a $0 value for purposes of the tax on withdrawals from stock. Effective October 1, 2019.

Act 634 exempts from sales tax concession stand sales at youth athletic events. Effective October 1, 2019.

Act 772 expands the manufacturing repair parts and services reduced rate refund (and future exemption once phased in) to also apply to machinery and equipment used to modify, replace, or repair dies and molds used directly in manufacturing. Effective October 1, 2019.

Act 819 is the tax reform bill that focuses on tax administration. Among its provisions are two involving sales tax, both effective October 1, 2019:

  • Additional disclosure and paperwork requirements for claiming the farm equipment exemption for all terrain vehichles (ATVs); and
  • Exempting advertising on public transportation buses.

Act 822 is the omnibus Tax Reform Task Force bill with both income tax provisions and also the following sales and use tax provisions:

  • Remote seller and marketplace facilitator sales tax collection using thresholds of $100,000 in sales or 200 transactions annually. There are certain protections for marketplace facilitators. The effective date is July 1, 2019.
  • Accommodations intermediary (online travel company) tax collection will be required for DFA-administered taxes, effective October 1, 2019.
  • Car washes will pay a water usage fee in lieu of a sales tax, effective October 1, 2019.

Act 840 provides an exemption for sales of washer-extractors to fire departments or county intergovernmental councils. Effective October 1, 2019.

HJR 1018 refers a constitutional amendment for voter approval in the 2020 election. The amendment will extend the half-cent (0.5%) sales tax for highway funding indefinitely instead of the current scheduled phase-out. This is part of the Governor's highway funding plan, together with Act 416.

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