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Arkansas Sales Tax Fairness Law
In 2001, Arkansas enacted legislation (Act 922 of 2001 - Effective January 1, 2002) that clarifies existing tax law to indicate that entity isolation does not absolve retailers from their responsibility to collect sales taxes. The legislation says that a company processing orders remotely by fax, phone, or the internet must collect sales tax if 1) the company has a substantial ownership interest in, or is substantially owned by, a retail company with stores in the state, or 2) the company sells a similar line of products under a substantially similar name as a company operating stores in the state.
ARKANSAS SALES TAX LAW TEXT
Act 922 of 2001 - Effective January 1, 2002:
AN ACT to amend Arkansas Code 26-53-124 to provide that out of state vendors with significant connections to the state of Arkansas must collect use tax on sales made to Arkansas customers; and for other purposes.
Be it enacted by the general assembly of the state of Arkansas:
Section 1. Arkansas Code 26-53-124(a) pertaining to the collection of use tax by out of state vendors, is amended to read as follows:
(a)(1) Every vendor making a sale of tangible personal property directly or indirectly for the purpose of storage, use, distribution, or consumption in this state shall collect the tax from the purchaser and give a receipt therefor. This provision includes all out-of-state vendors who deliver merchandise into Arkansas in their own conveyance where such merchandise will be stored, used, distributed, or consumed within this state.
(2) The required amount of the tax collected by the vendor from the purchaser shall be displayed separately upon the check, sales slip, bill, receipt, or other evidence of sale.
(3) The processing of orders electronically, by fax, telephone, the internet or other electronic ordering process, or the processing of orders by non-electronic means, by mail order, fax, telephone, or otherwise, does not relieve a vendor of responsibility for collection of the tax from the purchaser if both the following conditions exist:
(a) The vendor holds a substantial ownership interest, directly or through a subsidiary, in a retailer maintaining sales locations in Arkansas, or is owned in whole or in substantial part by such a retailer, or by a parent or subsidiary thereof; and
(b) The vendor sells the same or substantially similar line of products as the Arkansas retailer under the same or substantially similar business name, or the facilities or employees of the Arkansas retailer are used to advertise or promote sales by the vendor to Arkansas purchasers.
(4) For the purposes of this section, "substantial ownership interest" in an entity means that degree of ownership of equity interests in an entity that is not less than that degree of ownership specified by Section 267 of the Internal Revenue Code of 1986, as in effect on January 1, 2001, with respect to a person other than a director or officer.
Section 2. Effective date. The provisions of this act shall be effective on and after January 1, 2002.
Approved: 3/19/2001
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