Arkansas Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Finance and Administration
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Arkansas, and if so, how best to tackle the sales tax situation in the Natural State.
After reading this, you’ll know:
- Do you or don’t you need to collect Arkansas sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Arkansas sales tax!
Do you have sales tax nexus in Arkansas?
Good news! You only have to begin thinking about Arkansas sales tax if you have sales tax nexus in Arkansas.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Arkansas considers a seller to have sales tax nexus in the state if you have any of the following in the state:
- An office or place of business (owned or leased)
- A warehouse or agency in Arkansas (owned or leased)
- Real or personal property
You can click here to read exactly what the Arkansas Department of Revenue (Arkansas’s taxing authority) has to say about what constitutes sales tax nexus in Arkansas on page 1 under “Doing Business As.”
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in Arkansas. Your next step is to determine if what you’re selling is even taxable.
Services in Arkansas are generally not taxable. So if you’re a freelance private investigator or a mechanic, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes selling, creating or manufacturing a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Arkansas , with a few exceptions. These exceptions include certain items used in agriculture and constructions, among other things. You can find a list of Arkansas’s non-taxable items in this guide starting on page g.
So if you sell outdoor equipment, then charge sales tax to your Arkansas customers.
But if you’re a private investigator, don’t charge sales tax to your Arkansas customers.
If you have sales tax nexus in Arkansas and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in Arkansas
Sellers with sales tax nexus in Arkansas must apply for an Arkansas sales tax permit.
Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Arkansas.
How to Collect Sales Tax in Arkansas
So you’ve determined that you have sales tax nexus in Arkansas and what you’re selling is taxable. And you’re all set and registered for your Arkansas sales tax permit.
The next step is to determine how much sales tax to collect.
Arkansas is a destination-based sales tax state. So no matter if you live and run your business in Arkansas or live outside Arkansas but have nexus there, you would charge sales tax at the rate of your buyer’s ship-to location.
Example: You live and run your business in Ft. Smith, AR where the sales tax rate is 9.75%. But you ship a product to a customer in Batesville, AR. The sales tax rate in Batesville, AR is made up of the 6.5% Arkansas sales tax rate, the 1.75% Independence County rate, and the 2% Batesville city rate, for a total of 10.25%. Since Arkansas is a destination-based sales tax state, you would charge the 10.25% Batesville sales tax rate to your customer.
And if you live outside of Arkansas but have sales tax nexus in Arkansas, you would also charge sales tax at the local sales tax rate of the buyer’s ship-to address.
Should you collect sales tax on shipping charges in Arkansas?
Arkansas considers shipping charges that you charge the customer to be part of the taxable sale, and therefore if the item you are selling is taxable then the shipping charges are also taxable.
Read a full explanation of sales tax on shipping in Arkansas here.
|6||North Little Rock||62,304||Pulaski||8.50%|
Top 20 Most Populous Cities in Arkansas and their Sales Tax Rates
When are Arkansas Sales Tax Returns Due?
Arkansas sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your Arkansas sales tax permit.
To break it down:
2016 Arkansas Monthly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
*indicates a due date pushed back due to a weekend or holiday
2016 Arkansas Quarterly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Arkansas Annual Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
Click here for a chart of Arkansas sales tax filing due dates in 2016.
How to File Sales Tax in Arkansas
When it comes time to file sales tax in Arkansas you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
We’ll walk you through these steps.
How to Calculate How Much Sales Tax You Owe in Arkansas
Calculating how much sales tax you should remit to the state of Arkansas is easy with TaxJar’s Arkansas sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Arkansas sales tax return will be waiting for you in TaxJar. Try a 30-day free trial of TaxJar now!
How to File and Pay Sales Tax in Arkansas
You have two options for filing and paying your Arkansas sales tax:
- File online – File online at the Arkansas Taxpayer Access Point (ATAP). You can remit your payment through their online system.
- File by mail – You can use Form ET-1 and file and pay through the mail. To file this way you must contact the Arkansas Department of Finance and Administration at 501-682-7104 and a form ET-1 will be mailed to you. Here are instructions for filling out Arkansas sales tax form ET-1.
A note on paying Arkansas sales and use tax: Arkansas taxpayers whose tax liability is more than $20,000 during the taxable period are required to pay via electronic funds transfer (EFT).
Other Facts You Should Know about Arkansas Sales Tax Filing
There are a few more things you should know about sales tax in Arkansas:
- Late Filing Penalty - 5% of tax due per month or fraction (maximum 35%)
- Late Payment Penalty - 5% of tax due per month or fraction (maximum 35%).
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
Some states require that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. Arkansas doesn’t explicitly state that they require sellers to file a zero return. Click here for a list of states that require zero sales tax returns.
Many states understand that collecting sales tax is a difficult burden on merchants, and will provide a discount to help alleviate some of this burden. In Arkansas, you get to retain 2 percent of sales tax collected ($1,000 per month maximum) as a collection fee if you pay before the sales tax deadline. Click here for more about state sales tax discounts.
And that’s it. You’ve mastered Arkansas sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Arkansas Sales Tax Holidays
Arkansas has announced one sales tax holiday in 2016:
August 6-7, 2016: “Back to School Sales Tax Holiday”
Check here for more information about Arkansas’ sales tax holiday, including how to handle sales tax holidays as an online seller.
Arkansas Sales Tax Resources
For more about Arkansas sales tax, check out the Arkansas section of the TaxJar blog.