SALES TAX TUESDAY: Arkansas

I can hardly believe that we are covering Arkansas this week, last week my ‘home state’, and this week my ‘home away from home’ state.  Yes I have a ‘river home’ on the beautiful White River about 15 miles south of Bull Shoals Damn in North Central Arkansas.  The White River is home to some of the best ‘trout fishing’ in the United States, I mean have you ever seen anything more beautiful than this picture of the dawn breaking over the mountains as we fished the river early one morning. Of course one of the best parts is ‘trout’ without sales tax, and you can’t get them any fresher, and you can’t eat them any better than to enjoy them on a shore lunch.

Nicknamed “the Natural State,” Arkansas appropriately houses 2.5 million acres of national forests 600,000+ acres of lakes and 9,700 streams and rivers. The state's geography ranges from the Ozark mountainous to dense forests of the Arkansas Timberlands, to the lowlands along the Mississippi River and the Arkansas Delta.

The state’s name, Arkansas, is a French interpretation of the Native American Sioux word acansa, which means “downstream place,” most fitting when you think of the beautiful rivers in the state. Not only the White, I mentioned moments ago, but the Buffalo River which is one of the few remaining unpolluted free-flowing rivers in the U.S.

But rivers are not the only thing that ‘flows’ in Arkansas, forty-seven (47) hot springs flow down from Hot Springs Mountain; their average temperature being 143 degrees Fahrenheit. Historical figures who’ve gotten into hot water (literally) in Hot Springs National Park include Franklin D. Roosevelt, Babe Ruth and Al Capone. 

Arkansas designated diamond as the official state gem in 196.  Diamonds were discovered in Arkansas in 1906 near the mouth of Prairie Creek southeast of Murfreesboro, and later diamonds were reported from two areas northeast of the Prairie Creek.

Although these discoveries created a modest local sensation, attempts to mine Arkansas diamonds commercially during the first half of the twentieth century were without sustained success. The failed commercial mining operations became a tourist attraction after World War II. The state of Arkansas bought the property which became Crater of Diamonds State Park in 1972. The lure of finding gem-quality stones has drawn a steady flow of visitors to this unique attraction: nearly 2.3 million guests visited the park from 1972 to present.

Arkansas is the 29th largest, at 53,176 square miles, and the 32nd most populous, with nearly 3-million residents, of the 50 United States. Famous folks who hail from Arkansas include President Bill Clinton, country singer Johnny Cash, musician Scott Joplin and General Douglas MacArthur, and retail giant Sam Walton who turned one little general store into the nation’s largest retailer Walmart, which is based in Bentonville, Arkansas.

About Sales Taxes and this series:

Thanks to Avalara, the 'tax people', this article is one in a 50 part series covering sales tax issues associated with each and every state tax jurisdiction in the United States. Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.

Note: For sales tax definitions and essentials check out the opening article to this series.

Sales Tax Facts

  • There are more than 300 local taxes in Arkansas since most cities and counties have local enacted a local sales and use tax passed by an election of the voters in their jurisdiction. These local sales taxes are collected by the state and not the cities or counties, they are then distributed back to the cities and counties every month by the state.
  • Arkansas recommends all taxpayers file sales tax returns online. The state discourages paper returns and no longer supports sales tax filings by mail. 
  • Arkansas is a destination sourcing state. This means that sales tax is based on the location of the buyer.
  • Arkansas is a member of Streamlined Sales Tax (SST)
  • Arkansas has one sales tax holiday for two days in August for clothing and school supplies.
  • Arkansas is one of the few states that charges a sales tax of 1.5% on food, this is a ‘reduced state sales tax’, not an amount in excess of the normal state tax.

Did you know?

  • That’s vintage Arkansas. Wineries (in and out of state) can only sell and ship wine to Arkansas residents who have visited and purchased wine directly at the winery. No shipments or sales may be made via phone, fax or Internet. Any winery that ships to an Arkansan must obtain a wine shipping permit and register, collect and remit Arkansas sales tax, wine and liquor excise taxes on all purchases – even if taxes was already collected in the state where the sales was made. Shipments may also only be made to “wet” territories (approximately half of the counties in Arkansas are dry), only during certain hours (10 am to midnight) and not on Christmas Day. 
  • Ooh, that stings. We’ve got an inkling this will needle a few artistic types. Arkansas charges a 6 percent tax on tattoos, body piercings and electrolysis treatments.  
  • Didn’t see this coming. In Arkansas, blind veterans are exempt from paying sales and use tax on automobiles.

Manual sales and use taxes are prone to error and can consumes hours of your time in collection, accounting and reporting for what is pass-through rather than revenue-generating activities. Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity.