Arkansas Sales Tax on Services, Installation, etc Arkansas: Sales Tax Handbook

Arkansas:

What purchases are taxable in Arkansas?

The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the Arkansas sales tax.

Section 1: Taxability of Goods and Services

What transactions are generally subject to sales tax in Arkansas?

In the state of Arkansas, sales tax is legally required to be collected from all tangible, physical products being sold to a consumer. Several examples of exceptions to this tax are certain items which are used in pursuits like agriculture and construction.

This means that someone in the state of Arkansas who sells textbooks would be required to charge sales tax, but an individual who sells agricultural equipment might not be required to charge sales tax.


Are services subject to sales tax in Arkansas?

The state of Arkansas does not usually collect any sales taxes on the vast majority of services performed. An example of taxed services would be one which manufactures or creates a product.

This means that a graphic designer would not be required to collect sales tax, while a someone working in the creation of clothing may be required to collect sales tax.

You can find a table describing the taxability of common types of services later on this page.

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Are shipping & handling subject to sales tax in Arkansas?

Arkansas has very simple rules when it comes to taxes on shipping. Essentially, if the item being shipped is considered to be taxable in Arkansas, then the shipping is seen as being taxable as well. If the item being shipped is not legally taxable, then the shipping charge should not be taxed. If the shipment involves multiple items, some taxable and some not, the seller is required to tax only the percentage of the shipping charge applying to the taxable items. It must also be noted that any charges which are billed to the purchaser by a carrier who is not the seller are excluded from this tax.

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Are drop shipments subject to sales tax in Arkansas?

"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In Arkansas, drop shipments are generally subject to state sales taxes.

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Section 2: Taxability of Various Items in Arkansas

This table shows the taxability of various goods and services in Arkansas. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.

Category Exemption Status
Amazon Purchases
Products on Amazon.com EXEMPT *
Clothing
General Clothing TAXABLE
Food and Meals
Catering TAXABLE *
Grocery Food TAXABLE *
Leases and Rentals
Motor Vehicles TAXABLE *
Tangible Media Property TAXABLE *
Manufacturing and Machinery
Machinery TAXABLE *
Raw Materials EXEMPT *
Utilities & Fuel TAXABLE *
Medical Goods and Services
Medical Devices EXEMPT *
Medical Services EXEMPT
Medicines TAXABLE
Newspapers and Magazines
Newspapers EXEMPT
Periodicals TAXABLE *
Occasional Sales
General Occasional Sales EXEMPT
Motor Vehicles TAXABLE
Optional Maintenance Contracts
General Optional Maintenance Contracts TAXABLE
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Pollution Control Equipment
General Pollution Control Equipment TAXABLE *
Services
Janitorial Services TAXABLE *
Transportation Services EXEMPT
Software and Digital Products
Canned Software - Delivered on Tangible Media TAXABLE
Canned Software - Downloaded EXEMPT *
Custom Software - Delivered on Tangible Media TAXABLE
Custom Software - Downloaded EXEMPT *
Customization of Canned Software EXEMPT *
Digital Products EXEMPT *
Trade-Ins
General Trade-Ins TAXABLE *
Vending Machine Sales
Food EXEMPT *
Merchandise EXEMPT *

* See notes in category taxability page for details



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** This Document Provided By SalesTaxHandbook **
Source: http://www.salestaxhandbook.com/arkansas/sales-tax-taxability