Arkansas Issues Opinion Regarding Sourcing Rules for Local Sales Tax

The Arkansas Department of Finance and Administration’s Office of Revenue Legal Counsel has issued an opinion providing guidance on sourcing rules for local sales tax in Arkansas. In Arkansas, sales tax is due at the point where the purchaser receives goods or services. Generally, if a purchaser receives a product or service at a business location of the seller, the sale is sourced to the business location. If the purchaser does not receive the product or service at the seller’s business location, the sale is sourced to the location where the purchaser receives it, including the location indicated by instructions for delivery to the purchaser known to the seller. Guidance was also issued on whether a utility company should charge city sales tax for service provided outside the city limits. A purchaser of utility services who lives outside of the city limits receives the service at the customer’s residence. As a result, that purchaser would pay state and county sales tax for utility service but not city sales tax. (Revenue Legal Counsel Opinion No. 20180529, Arkansas Department of Finance and Administration, Office of Revenue Legal Counsel, September 20, 2018).

Posted on October 11, 2018