Arkansas Sales Tax Situs of the sale items shipped into Arkansas
The Arkansas Department of Finance and Administration Office of Hearings and Appeals upheld a use tax assessment against a taxpayer for transactions involving complimentary meals. The taxpayer contended that Arkansas sales tax applied to the transactions, placing the burden of collection and remittance of tax upon the sellers, not the taxpayer, in the absence of an exemption claim. The flaw in the taxpayer’s analysis was that it is wholly irrelevant for application of Arkansas sales tax versus Arkansas use tax whether a vendor is or is not registered with the Arkansas Secretary of State’s Office or may have a locations somewhere in Arkansas. Under Ark. Regs. §GR-5 and binding case law, the application of Arkansas sales tax turns on whether the situs of the sale is located within Arkansas. Here, the assessed use tax transactions occurred outside of Arkansas and then were shipped into Arkansas. No arguments or evidence was provided to show that the Department incorrectly concluded that the situs for the associated transactions were not located within Arkansas. Consequently, the transactions were not subject to sales tax but were subject to Arkansas compensating use tax in the absence of an applicable tax credit, deduction, or exemption.
Arkansas Sales Tax Situs of the sale items shipped into Arkansas
