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Arkansas Tax and Incentives Update

Summary of 2017 Arkansas Sales and Use Tax Legislation

Posted On: Wednesday, April 12, 2017

There were relatively limited changes to Arkansas sales and use tax laws in the 2017 legislative session. The big news is Act 465, which phases out the InvestArk sales/use tax credit program while bringing in an exemption for manufacturing partial repairs and replacement parts. While a welcome simplification of the Arkansas tax system, the loss of InvestArk will affect many Arkansas manufacturers. Businesses should consider filing a final InvestArk application by June 30, 2017. Beyond Act 465, the Act 141 expansion of the tax base to include digital products is significant and may affect taxpayers engaged in e-commerce. 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

Light Manufacturers Beware: DFA Only Allowing Exemption for "Industrial" Manufacturing

Posted On: Sunday, November 20, 2016

In a troubling recent administrative decision, docket nos. 17-041 and 17-170 (Nov. 1, 2016), the Department of Finance and Administration appears to have added an extrastatutory "industrial" requirement to the application of the manufacturing machinery and equipment exemption. Businesses engaged in nontraditional manufacturing need to evaluate their risks in claiming the manufacturing exemption. Read More

Arkansas Supreme Court: Drinking Water Treatment Is Not Manufacturing

Posted On: Thursday, May 19, 2016

The Supreme Court of Arkansas rejected allowing the sales and use tax manufacturing exemption to water purification equipment in Walther v. Carrothers Construction Company of Arkansas, LLC, 2016 Ark. 209 (May 19, 2016).  This decision restricts the application of the exemption where the taxpayer is engaged in cleaning or purifying a product. 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


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