Quick Highlights on Arkansas Sales Tax
| Detail | Value |
|---|---|
| State Sales Tax Rate Range | 6–8% |
| Base State Sales Tax Rate | 6% |
| Local Rate Range | 0–6% |
| Economic Nexus Sales Threshold | $100,000 |
| Transactional Threshold | 200 transactions (OR with sales threshold) |
| Reference Period | Current or Previous Calendar Year |
| Registration Deadline | Next transaction after threshold is crossed |
| Revenue Authority | Arkansas Department of Finance and Administration |
As a business, do I need to collect sales tax in Arkansas?
Businesses are required to collect sales tax in Arkansas if they have a sales tax nexus in the state. This includes having a physical presence or reaching a specific sales level, which establishes an economic nexus. This is why understanding Arkansas state sales tax obligations is crucial for compliance.
Do I have a physical nexus in Arkansas?
A physical nexus in the state of Arkansas is established if your business has a physical presence in the state, like an office, warehouse, or store. Even temporary physical presence, like participating in trade shows or craft fairs, can create a nexus.
In Arkansas, physical nexus is typically triggered by employees or contractors engaged in customer-facing roles such as sales, marketing, or support.
How do I know if I have an economic nexus in Arkansas?
An economic nexus in Arkansas is determined by your sales volume. If your enterprise meets the threshold, you must register for a Arkansas sales tax permit, collect tax on sales shipped to Arkansas, and remit that tax to Arkansas Department of Finance and Administration.
In Arkansas, economic nexus is established if your sales in the state exceed $100,000 OR the number of transactions exceeds 200, based on Current or Previous Calendar Year.
Marketplace sales (e.g., Amazon, eBay) are excluded when calculating whether you've exceeded the Arkansas economic nexus threshold.
Sales made for resale are excluded from the nexus threshold calculation for Arkansas.
Non-taxable sales are excluded from the nexus threshold calculation for Arkansas.
Once you cross the threshold, you must register by Next transaction after threshold is crossed.
Which goods are taxable in Arkansas?
In Arkansas, sales tax applies to the sale of all tangible personal property sold at retail. Certain services are also taxable, including:
- Landscaping services and commercial lawn care
- Sales of gas, water, and electricity
- Most solid waste disposal
- Telephone and prepaid telecommunications
- Repair services
What items are exempt from sales tax in Arkansas?
Arkansas exempts the following from sales tax:
- Prescription drugs
- Purchases made with food stamps
- Dental appliances sold by or to dentists or other professionals
- Timber harvesting equipment
- Farm equipment or machinery
- Natural gas used as fuel in the process of manufacturing glass
- Natural gas and electricity used in the manufacture of new motor vehicle tires
- Gas produced from biomass in a qualifying facility
Is SaaS taxable in Arkansas?
In Arkansas, SaaS is partially taxable. The following categories are taxable:
In Arkansas, the following software and SaaS categories are considered taxable:
- Software delivered on tangible media: Software distributed and obtained through physical means, such as CDs or DVDs.
- SaaS — On premises: Software as a Service installed and operated from the customer's in-house server and computing infrastructure rather than a third-party server.
Pure cloud-hosted SaaS (remotely accessed, no software transfer) may not be taxable. Consult a tax advisor for your specific product.
If you are uncertain about the taxability of your specific software product in Arkansas, consult with a tax specialist.
How can a business get a sales tax permit in Arkansas?
To obtain a sales tax permit in Arkansas, businesses need to register with the Arkansas Department of Finance and Administration. Registration can be completed online through the Arkansas Department of Finance and Administration website.
You will need to provide detailed information about your business, including business type, ownership details, and the nature of your business activities.
When should a business file sales tax in Arkansas?
Sales tax returns in Arkansas are generally due on the 20th day after month end for the previous period. Based on your annual tax liability, you may qualify for a less frequent filing schedule:
You can file your Arkansas sales tax return through the Arkansas Department of Finance and Administration online portal at https://atap.arkansas.gov/_/.
Does Arkansas offer a timely filing discount?
Yes, Arkansas offers a timely filing benefit for businesses that file and pay on time:
Arkansas offers a 2% discount on the tax due for timely filing and payment, capped at $1,000 per month. This discount applies to local sales tax accounts, with a maximum of $1,000 per city and county reported.
What are the penalties for late filing in Arkansas?
Arkansas imposes the following penalties for non-compliance:
- Failure to file: 5% of the tax owed per month or portion of a month overdue, up to a maximum of 35%
- Failure to pay: 1% per month on unpaid taxes, also capped at 35%
- Combined maximum: 35% of unpaid taxes
- Interest: 10% per year on the outstanding balance
For more details, refer to the Arkansas Department of Finance and Administration guidance on penalty and interest charges.
Is shipping taxable in Arkansas?
In Arkansas, shipping charges are taxable if the products being shipped are taxable, and exempt if the products are exempt. In cases where a shipment contains both taxable and exempt items, tax is typically applied only to the portion of the delivery charge allocated to the taxable items.
Does Arkansas have a Remote Seller program?
Arkansas requires remote sellers who exceed the economic nexus threshold to register, collect, and remit sales tax using standard state rates.