How to get an Arkansas Sales Tax Exemption Certificate

An Arkansas Sales Tax Exemption Certificate (commonly known as a Resale Certificate) allows a business to buy goods that it will resell without paying sales tax on the purchase. When the goods are resold, the business will collect and remit sales tax to the state.

To get a Sales Tax Exemption Certificate, businesses must complete an application.

Learn more about what a Sales Tax Exemption Certificate is, how to get one, and more.

What is a Sales Tax Exemption Certificate?

When retailers purchase products to resell, they often don’t pay sales tax to the supplier on the purchase. The sales tax will still be paid, but instead of the retailer paying sales tax, the retailer charges sales tax to their customer on the final value of the merchandise. The collected sales tax is then sent by the retailer to the Arkansas Department of Finance and Administration.

For instance, imagine a furniture store in Little Rock, Arkansas. When the furniture store buys tables and chairs from manufacturers to sell in their store, by having an Arkansas resale certificate, the furniture store owner won’t pay sales tax on this transaction. This is because the items are intended for resale, so the tax is not levied at this stage.

When a customer walks into the furniture store and buys a table, the retailer will add Arkansas’s state sales tax to the price of the table. The sales tax is calculated based on the full price of the table. The customer pays this sales tax at the point of sale, which the furniture store collects.

Over a certain period of time, usually the end of the month, the furniture store will tally all the sales tax it has collected from its customers. The furniture store then sends this accumulated sales tax to the Arkansas Department of Finance and Administration. Therefore, while the furniture store is responsible for collecting and remitting the sales tax, the actual tax cost is borne by the end customer.

The purpose of the certificate is to provide evidence of why sales tax was not collected on a transaction. Similar names for a resale certificate include reseller number, seller’s permit, exemption certificate, wholesale license, or reseller’s license. In order for the supplier to allow the tax-exempt purchase, the seller needs proof the buyer intends to resell the product by providing a valid resale certificate.

The sales tax exemption is only intended to be used for inventory that will be resold and not intended for the tax-free purchase of items used in normal business operations such as paper, pens, etc.

Getting Started

Before a business starts selling products or providing taxable services, they must first get an Arkansas Sales Tax Permit from the Arkansas Department of Finance and Administration. The Sales Tax Permit is sometimes referred to as a seller’s permit, sales tax number, or sales tax license.

Related: How to register for an Arkansas Sales Tax Permit

Steps to fill out Arkansas Sales Tax Exemption Certificate

Filling out the Sales Tax Exemption Certificate (Form ST391) is pretty straightforward but it is critical for the seller to gather all the necessary information.

If audited, the Arkansas Department of Finance and Administration requires the seller to have a correctly filled out ST391 Sales Tax Exemption Certificate.  Without it correctly filled out, the seller could end up owing sales taxes that should have been collected from the buyer in addition to penalties and interest.  

Step 1 –  Begin by downloading the Arkansas Sales Tax Exemption Certificate Form ST391
Step 2 – Include the Arkansas Sales/Use Tax Permit Number or the state and Sales Tax Number if the buyer is from another state.
Step 3 – Identify the name of the seller
Step 4 – Describe the merchandise being purchased for resale
Step 5 – Provide the reason the merchandise is exempt (typically because it is being resold). 
Step 6 – Include the purchaser’s business activity or line of business
Step 7 – Include the purchaser’s business name, signature, address, position, and date

ST391 Sales Tax Exemption Certificate Fillable Form

Arkansas Sales Tax Exemption Certificate FAQs