Arkansas Sales Tax is 6.5 percent, and local cities and counties may add additional taxes. You must collect local rates and apply them to your total sales unless you have an exemption certificate. In addition, you must make sure that customers are aware of the sales tax amount on their invoices. The Arkansas sales tax is a key part of the state’s economy. Businesses should be aware of this and should be prepared to collect the correct amount of sales tax. Keep detailed records of sales, including tax-exempt transactions, in case you are audited.
Before 2018, the Supreme Court ruled that states could require businesses to register and collect sales tax only if they had a physical presence in the state, such as a retail store, office, or warehouse. The decision has since been overturned, and states now have the power to tax businesses based on their economic and virtual connections to the state, known as economic nexus. Examples of economic nexus include having employees in the state, selling goods to government agencies and nonprofit organizations, or storing inventory in company vehicles.
Arkansas Sales Tax Permit
Companies that have a physical presence in Arkansas, such as a store, office, warehouse, distribution center, or storage space, are required to register and pay sales tax. Other factors that can trigger sales tax nexus include having affiliates in Arkansas, having representatives or agents working in the state, and advertising in the state.
In addition to registering for a seller’s permit, a business must have an active bank account to deposit collected sales taxes. They must also keep records of their taxable sales. These records can be reviewed during a sales tax audit, and failure to have adequate records can result in penalties.
If you are audited by the state’s Department of Finance and Administration (DFA), there are several deadlines to meet, such as filing and paying taxes. If you miss a deadline, you can be subject to penalties and other charges. It is a good idea to have representation from an attorney, CPA, or sales tax professional during this process.