How to Register for a Sales Tax Permit in Arkansas
Most businesses starting in Arkansas selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales and use tax number, or sales tax registration.
The sales tax permit is obtained through the Arkansas Department of Finance and Administration under the Gross Receipts Tax Law.
Check out the rest of this guide to determine who needs a sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.
Also See: Guide to Starting a Business in Arkansas
Who needs a sales tax permit in Arkansas?
A business must register as a retailer in Arkansas when:
- A business has sales tax nexus. Nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- Selling items at craft shows, fairs, seminars, conventions, etc. in Arkansas
- An Arkansas online business is selling taxable products to Arkansas residents
- An out-of-state business selling to Arkansas residents and one of the following:
- Making total sales of tangible personal property to Arkansas residents is $100,000 or more; or
- Shipping 200 or more transactions of tangible personal property are sold to Arkansas residents.
What products and services are taxable in Arkansas?
There are a few exceptions, but almost all physical products are taxable when sold at retail in Arkansas. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Certain agriculture and contracting equipment are tax-exempt.
Labor, in most cases, isn’t taxable in Arkansas. For instance, let’s say you broke the screen of your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have a sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded, and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products, with the exception of off-the-shelf software, aren’t taxable.
Most services aren’t taxable in Arkansas, however, there are a few exceptions.
- Short-term rentals
- Automobile rentals
- Pool cleaning
- Tanning salon
- Lawn care & landscaping services
- Towing services
- Dry cleaning and laundry
- Tattooing parlor
- Pest control services
- Security and alarm monitoring services
- Boat storage and docking
- Camping spaces
- Locksmith services
- Pet grooming and kennel services
- Gyms and health clubs/spas
More information about rules on the gross receipts tax is available from the Arkansas Department of Finance and Administration.
How to register for a sales tax permit in Arkansas
A sales tax permit can be obtained by registering through Arkansas Taxpayer Access Point (ATAP) or by mailing in the AR-1R Combined Business Tax Registration Form.
Information needed to register includes:
- Type of business entity: Sole Proprietorship, Partnership, Corporation, Limited Liability Company (LLC)
- Business name
- Federal Employer Identification Number (FEIN) from the IRS, or owner’s Social Security Number (SSN) if a sole proprietorship with no employees
- Names and addresses of owners/officers/members
- North American Industry Classification System (NAICS) code
- Description of what products or services are being sold
- Business address
- Phone number
- Date business activities began or will begin
- Projected monthly sales
- Projected monthly taxable sales
- Employee information
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Arkansas Department of Finance and Administration through the Arkansas Taxpayer Access Point.
How much is sales tax in Arkansas?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made or shipped from a company located in the state. If the seller is based out of the state, the sales tax rate is based on the buyer’s address.
In addition to the statewide tax, additional local sales taxes may be added from cities and municipalities. The Arkansas Department of Finance and Administration has a Sales Tax Lookup Tool to determine how much sales tax to charge.
When are Arkansas sales tax returns due?
The Department of Finance and Administration will determine a filing frequency based on the expected annual sales volume, which will be monthly, quarterly, or annually. Generally, a business collecting over $100 monthly in sales tax will file monthly.
The due date for filings is the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, which would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales.
How much does a sales tax permit cost in Arkansas?
The fee to register for a sales tax permit in the state of Arkansas is $50 and is non-refundable.
How long does it take to get an Arkansas sales tax permit?
Expect 8-10 business days to receive an Arkansas Sales Tax Permit.
Do you have to renew your Arkansas sales tax permit?
The sales tax permit is a one-time registration, and no renewals are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Department of Finance and Administration.
How do I get a wholesale license in Arkansas?
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the distributor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a completed Arkansas Sales Tax Exemption Certificate (also referred to as a wholesale license, reseller’s certificate, or resale certificate) to document the items being purchased are for resale.
Is a business license the same thing as a sales tax license?
In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Arkansas.
If you have questions about sales taxes, contact the Arkansas Department of Finance and Administration by calling 501-682-7104.