Arkansas: Sales Tax Handbook
What constitutes sales tax nexus in Arkansas?
One of the more complicated aspects of Arkansas sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Arkansas, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Arkansas, the vendor must register for a Arkansas sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Arkansas.
Sales Tax Nexus in Arkansas
According to Arkansas's law, retailers who have tax nexus can be defined in several distinct ways. To have tax nexus, the business must be "engaging in business" within the state, meaning that they must meet a minimum of one of the following requirements:
Having an office or any other place of business, either owned or leased, within the state's boundaries,any real or personal property in Arkansas, or any agency or warehouse in the state.
For additional details on sales tax nexus law in Arkansas, see the nexus information page from the Department of Finance and Administration at http://www.dfa.arkansas.gov/offices/policyAndLegal/Documents/et2008_3.pdf
Taxation of Internet-Based Sales in Arkansas
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Depending on the situation, Arkansas may or may not charge sales tax on Internet-based transactions. In the state of Arkansas, there is a general presumption of tax nexus if the seller chooses to enter into an agreement with any Arkansas resident (in a situation where the resident, for some sort of consideration, refers customers by using a link on a website or in some other way)
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Arkansas, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Arkansas?
The folks at the sales tax compliance company Avalara are an approved Arkansas sales tax partner, and you can use their free Arkansas nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Arkansas sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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