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Effective January 1, 2018, Arkansas sales and use tax is imposed on sales of specified digital products and digital codes. Arkansas sales and use tax applies to specified digital products sold to a purchaser who is an end user with the right of permanent use or less than permanent use granted by the seller regardless of whether the use is conditioned on continued payment by the purchaser. Per the legislation, "specified digital products" are defined as digital audio works, digital audio-visual works, and digital books, when transferred electronically. "Digital code" is defined as a code that provides a purchaser with a right to obtain one or more specified digital products and may be obtained by any means, including email or tangible means, regardless of its designation as a song code, video code, or book code. The provisions are in compliance with the Streamlined Sales Tax Agreement and tax is separately imposed on these items.  The definition of tangible personal property has been amended to exclude specified digital products or digital codes.  The sales tax exemption for textbooks and instructional materials for public schools has been amended to include specified digital products.  If none of the standard sourcing rules apply as the seller does not have information regarding the customer’s location, the sale will be sourced to the location from which the specified digital product or digital code was first available for transmission by the seller. (Act 141 (H.B. 1162), Laws 2017, effective January 1, 2018)


Arkansas has enacted legislation to exclude candy and soft drinks from the definition of “food and food ingredients.” As a result, candy and soft drinks are subject to the full Arkansas sales and use tax rate instead of the 1.5% reduced rate that applies to food and food ingredients, effective January 1, 2018. The enacted legislation also includes definitions for candy and soft drinks. "Candy" is defined as a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. "Candy" shall not include a preparation containing flour and shall require no refrigeration. "Soft drink" is defined as a nonalcoholic beverage that contains natural or artificial sweeteners. "Soft drink" does not include a beverage that contains milk or milk products, soy, rice, or similar milk substitutes, or that is greater than 50% of vegetable or fruit juice by volume.


In addition, the Arkansas soft drink tax rate is reduced, effective January 1, 2018. The rate will decrease from $2.00 to $1.26 per gallon of soft drink syrup or simple syrup sold in Arkansas. The rate will decrease from 21 cents to 20.6 cents per gallon of bottled soft drinks sold in Arkansas. If a package or container of powder or other base product, other than a syrup or simple syrup, is sold in the state and the powder is used by the retailer to produce a liquid soft drink for sale, the tax rate will decrease from 21 cents to 20.6 cents per gallon of soft drink which may be produced from each package or container by following the manufacturer's directions.The soft drink tax applies on the wholesale sale of powder or other base to the retailer for sale to the ultimate consumer after the liquid soft drink is produced by the retailer.  


Effective January 1, 2018, any simple syrup used in preparing tea is added to the Arkansas soft drink tax exemption. (Act 141 (H.B. 1162), Laws 2017, effective January 1, 2018)

(03/13/2017) has entered into a voluntary sales tax collection agreement with the state of Arkansas. Amazon will begin collecting Arkansas sales tax on its sales to Arkansas consumers and businesses beginning March 1, 2017. Arkansas currently has two proposed bills pertaining to remote sellers pending approval. S.B. 140 is an economic nexus bill that would require out-of-state sellers making more than $100,000 in sales or 200 or more transactions in Arkansas to register and collect the state sales tax. H.B. 1388 would enforce use tax notice and reporting requirements on out-of-state sellers. These bills are pending in the state legislature. We’ll update as action occurs. (Statement on Amazon's Decision to Collect Sales Tax in Arkansas Starting in March, Arkansas Governor Hutchinson, February 10, 2017)


A health center that provides services to a retirement housing complex is not subject to Arkansas sales tax on the services it provides. Arkansas sales tax applies to licensed home health care service agencies, personal care service providers, long term care facilities, nursing facilities, and intermediate care facilities for the mentally retarded. The services provided by the health center are not subject to Arkansas sales tax since the health center is not licensed as one of the agencies, health care providers, or facilities to which the tax applies. The residents of the housing complex are merely consuming health care services incidental to their residency and membership in the nonprofit managed retirement community. Additionally, since there are no charges billed to residents for any health care services, there is no amount upon which the tax could be computed even if the tax were applicable. (Revenue Legal Counsel Opinion No. 930210, Arkansas Department of Finance and Administration, September 2, 2016)


On August 25, 2016, House Judiciary Committee Chairman Robert Goodlatte released a discussion draft of the Online Sales Simplification Act of 2016. The legislation would implement a “hybrid origin” approach for remote sales. Under the legislation, states could impose sales tax on remote sales if the origin state participates in a clearinghouse.In this case, the tax is based on the origin state’s baseand taxability rules. The rate would be the origin state rate, unless the destination state participates. In that case, the rate used would be a single state-wide rate determined by each participating destination state. A remote seller would only remit sales tax to its origin state for all remote sales. Only the origin state would be able to audit a seller for remote sales. Non-participating states would not be able to receive distributions from the clearinghouse. Sellers would be required to provide reporting for remotes sales into participating states to the Clearinghouse so it can distribute the tax to the destination state. We will continue to monitor activity and update when the official bill is introduced.  (Discussion draft of Online Sales Simplification Act of 2016)



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