Overview
A taxpayer was not entitled to a sales tax credit against the sales price of a new motor vehicle because the title of the used motor vehicle was not in the taxpayer’s name, but in another entity’s name.
Regulation Reference
Ark. Regs. § GR-12.1(C)(1) provides that:
The person or entity claiming the credit must be the same person or entity that sold the used vehicle.
It is well settled that a company is a separate and distinct legal entity from an individual.
Decision Details
- Case Reference: Arkansas Administrative Hearing Decision
- Docket Number: 22-510
- Decision Date: 06/06/2022
Frequently Asked Questions
Who is eligible to claim the sales tax credit on a vehicle trade-in in Arkansas?
The individual or entity claiming the credit must be the same as the one that owned and sold the used vehicle. If the title of the used vehicle is not in your name, you are not eligible for the credit.
Can I receive a sales tax credit if the used vehicle was titled under a business name?
No, you cannot. If the vehicle was titled under a business or entity that is legally distinct from you as an individual, you are not entitled to the sales tax credit.
What regulation governs the sales tax credit eligibility in Arkansas?
The applicable rule is Ark. Regs. § GR-12.1(C)(1), which mandates that the person or entity claiming the credit must match the person or entity listed on the title of the traded-in vehicle.
Why was the taxpayer denied the sales tax credit in this case?
The taxpayer was denied because the title of the traded-in vehicle was not in their name. It was in the name of another legal entity, which disqualified them from receiving the credit under Arkansas law.
Is there legal precedent for denying sales tax credit based on title ownership?
Yes. It is a well-established principle that a company is a separate legal entity from an individual. As such, title ownership by a different entity invalidates an individual’s claim to a sales tax credit.