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Arkansas Tax and Incentives Update

Arkansas Tax Reform Task Force Takes on Sales, Use and Excise Taxes

Posted On: Wednesday, November 08, 2017

The Tax Reform Task Force heard from its tax consultant PFM Group on sales tax and excise tax policy during its meetings on November 7 and 8, 2017. The sales tax advice generally followed conventional wisdom on best practices: Broaden the base, avoid taxing business inputs, and scrutinize the justifications for sales tax exemptions on consumption items. The excise tax discussion was a systematic review of the various existing and potential excise taxes. In hearing PFM’s presentations and considering the taxes, legislators were eager to identify revenue sources that could pay for income tax cuts.
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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

SB362 to Phase Out InvestArk and the Tax on Manufacturing Repair Parts and Services

Posted On: Sunday, February 19, 2017

A proposal is underway for major simplification of Arkansas sales and use taxes on manufacturing: SB362 would phase out both the InvestArk investment incentive program and the sales tax on partial replacements and repairs of manufacturing machinery and equipment. Manufacturers should consider whether they can apply for one more InvestArk project by June 30, 2017, after which InvestArk will cease taking new applications and will begin to wind down. Read More

SB140 Economic Nexus Bill Fails in House Revenue & Taxation Committee

Posted On: Tuesday, February 14, 2017

Senator Jake Files's economic nexus bill, SB140, failed a do pass vote in the House Revenue & Taxation Committee today; the legislation's prospects are now unclear. SB140, which had passed the Senate, is an economic nexus bill modeled on South Dakota's. It would provide a $100,000 or 200-transaction threshold to trigger a sales/use tax collection obligation for an out-of-state seller. Senator Files submitted an amendment to the House committee today that would add a use tax reporting alternative to create a hybrid remote seller bill giving sellers exceeding the threshold a choice of Colorado-style information reporting or sales tax collection; this amendment was approved. 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 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

Repeal of InvestArk Credits Would Reduce Arkansas Manufacturing Competitiveness

Posted On: Friday, January 29, 2016

The repeal of the InvestArk sales tax credit program is under consideration as a revenue raiser to help pay for Arkansas highways.  This program, which provides a sales tax credit for major upgrades of manufacturing equipment and other investments, is critical to the state's competitiveness in retaining manufacturing jobs.  Potentially affected companies need to contact their representatives.  For a detailed explanation, please see our Arkansas Tax Update bulletin authored by Mike Parker.  Read More


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Recent Posts


Arkansas Tax Reform Task Force Takes on Sales, Use and Excise Taxes - November 8, 2017

Taxpayer Strikes Out Again vs. APSC Tax Division - November 2, 2017

Call the Movers: DFA ALJs Will Be Reassigned and Relocated for Increased Independence - October 13, 2017


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