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Arkansas Tax and Incentives Update

DFA Hearing Calls Party Foul on Restaurant's Tax-Included Drink Pricing

Posted On: Tuesday, August 08, 2017

While Arkansas Department of Finance and Administration generally tolerates retailers not collecting sales tax as a separately stated amount, sellers need to understand the risk of being required to absorb the tax and pay it out-of-pocket instead of treating the sale as tax-included pricing and backing out the tax from the tax base of gross receipts. Hearing nos. 16-209, 16-210, 16-211 (May 8, 2017) illustrates this risk: A restaurant that also sold mixed drinks claimed a tax-included pricing approach, but this was rejected by the Department, likely effectively increasing the tax imposed by 50%. Read More

Will the FLIS Enterprises Case Be a Refund Opportunity for Sales Tax on Withdrawals from Stock?

Posted On: Thursday, June 01, 2017

A case is pending in the Arkansas Court of Appeals with significant implications for restaurants specifically and, potentially, for any manufacturers who make withdrawals from stock for finished goods. Taxpayers should evaluate their current positions and consider potential refund claims. Read More

Manufacturing Process Resumed: DFA Hearing Allows Manufacturing Exemption for Packaging Equipment

Posted On: Monday, February 06, 2017

An Arkansas manufacturer was allowed to claim the manufacturing machinery and equipment exemption on equipment used in preparing goods for shipment in a notable hearing decision issued at the end of 2016. Department of Finance and Administration Hearing nos. 16-444, 16-445 (Dec. 27, 2016). Read More

Arkansas Taxing Lawn-less "Lawn Care"

Posted On: Wednesday, October 26, 2016

Perhaps the scariest aspect of law to a small business is when words are defined to have a special meaning inconsistent with ordinary usage. An herbicide-spraying taxpayer learned this to its detriment in the Department of Finance and Administration's Office of Hearings and Appeals Administrative Decision no. 16-387 (Oct. 10, 2016), which upheld taxation of herbicide spraying as "lawn care" even in instances where no lawn apparently was involved. Read More

Big Thaw: DFA Reverses Opinion and Treats Freezer as Manufacturing

Posted On: Thursday, April 28, 2016

The Department of Finance and Administration (DFA) recently published a letter opinion, no. 20151008-S (Apr. 4, 2016), allowing a poultry blast freezer to obtain the reduced rate of sales tax on electricity used in manufacturing. This letter opinion was a reversal of a previously issued opinion, no. 20151008 (Feb. 9, 2016), which had wrongly denied the low rate on the basis that blast freezing was not actual manufacturing. (See our prior post criticizing the opinion.) This about-face demonstrates a benefit of tax transparency: The taxpayer community can identify erroneous legal interpretations and get them corrected. Read More

Ice Cold: DFA Tells Manufacturer That It Is Not Engaged in "Actual Manufacturing"

Posted On: Monday, February 29, 2016

The Arkansas Department of Finance and Administration has published a ruling that narrowly interpreted eligibility for the reduced rate of tax on sales of electricity for use by a manufacturer in the actual manufacturing process.  Opinion no. 20151008 (Feb. 9, 2016).   Read More

Chim Chim Cheroo! DFA Interprets "Cleaning Service" Narrowly

Posted On: Thursday, February 04, 2016

Burt from Mary Poppins would leap with joy: The Department of Finance and Administration, in Opinion No. 20160105, has advised that chimney cleaning services are not taxable.  The ruling is a reminder that while the state does tax "cleaning services," not every cleaning service is taxable. Read More

DFA Opinion Takes Narrow Reading of Arkansas Sales Tax Charitable Exemption

Posted On: Monday, January 04, 2016

One of the tax pitfalls for nonprofits is assuming that federal 501(c)(3) status means that the nonprofit is also eligible for other charitable tax exemptions. The DFA's first published opinion, No. 20140807 (Dec. 18, 2015), takes such a narrow reading of the Arkansas sales tax charitable exemption, denying the taxpayer the benefit of the exemption and exposing it to potential liability for failing to collect and pay sales tax. Read More


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Recent Posts


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