Arkansas has issued guidance on the sales tax treatment of drop shipment transactions. In the example provided, Seller Corporation, which is required to collect sales or use tax for Arkansas, sells products to Buyer Corporation located in another state, which then resells the products to Other Corporation located in Arkansas and has Seller Corporation ship the products directly to Other Corporation. Arkansas views the sale between Seller and Buyer as an exempt sale-for-resale. The sale from Buyer to Other Corporation is a taxable transaction. However, if Buyer does not have nexus in Arkansas, then Arkansas cannot collect use tax from Buyer and will look to Other Corporation to pay the consumer use tax. Arkansas would not hold Seller liable for any sales tax incurred in the sale between Buyer and Other Corporation. The tax treatment of the sale between Seller and Buyer stays the same whether Seller delivers the products in its own equipment or uses a common carrier, by the FOB terms of the sale, by whether the Seller ships from an inventory pool in Arkansas or an inventory pool in another state, or by whether Seller has a direct pay certificate from Buyer instead of a resale certificate from Buyer’s home state. If Other Corporation installs the items in the performance of a construction contract with an exempt agency in Arkansas, Arkansas would still assess consumer use tax against Other Corporation, regardless of the status of Other Corporation’s customer since Arkansas deems contractors to be the consumers of services and tangible personal property that they purchase for use in their jobs.(Revenue Legal Counsel Opinion No. 20160104, Arkansas Department of Finance and Administration, February 9, 2016)