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STATE OF ARK NSAS Department of Finance and Administration June 5, 2001 BATESVILLE WATER. WORKS PO BOX 2375 BATESVILLE AR 72501-0000 What's New in Sales Tax 20 REVENUE DIVISION Sales and Use Tax Section P.O. Box 1272 Little Rock, AR 72203-1272 Phone: (501) 682-7104 Fax: (501) 682-7904 http://wwv.state.ar.us/dfa/ 0001877 32 001 0000 The 83rd General Assembly of 2001 has enacted several new laws that affect Sales and Use Tax. Listed below is a summary of the changes and effective dates: Act 622 - Effective March 8, 2001: Continues the Sales Tax exemption for the first S50,000 of the purchase price of machinery or equipment and related attachments sold to a person engaged primarily in the harvesting of timber. The exemption applies to off -road machinery and equipment and does not apply to purchases of repair or replacement parts. Act 628 - Effective August 13, 2001: Provides an exemption for sales by gift shops operated by charitable organizations at for -profit hospitals. .Act 922 - Effective January 1, 2002: Clarifies the Use Tax collection requirements for out-of-state vendors on orders if the following conditions are met: 1. The vendor holds a substantial ownership interest, directly or through a subsidiary, in a retailer maintaining sales locations in Arkansas, or is owned in whole or in substantial part by such retailer, or by a parent or subsidiary thereof; and 2. The vendor sells the same or substantially similar line of products as the Arkansas retailer under the same or substantially similar business name, or the facilities or employees of the Arkansas retailer are used to advertise or promote sales by the vendor to Arkansas purchasers. Act 949 - Effective July 1, 2001: Levies an additional 5% Rental Vehicle Tax for a total tax rate of 10010. Act 1035 - Effective July 1, 2001: Provides an exemption from motor fuel tax for leaded gasoline with an octane rating of 110 or higher used solely for off -highway testing or automobile racing. This type of leaded gasoline now will be subject to state and local sales and use tax. Act 104U - Effective August 13, 2001: Requires DFA on a quarterly basis to provide to cities and counties a list of businesses remitting local sales and use tax. Act 1064 - Effective August 13, 2001: Allows telecommunications providers to combine charges for taxable and nontaxable services as a single billed amount with tax being collected only on the taxable services portion. The seller's books and records must clearly identify the nontaxable charges. If the nontaxable charges cannot be identified, the total amount will be subject to tax. The burden of proving nontaxable charges will be on the seller of the communication services. Act 1368 - Effective April 5, 2001: Requires DFA to notify the Arkansas Tobacco Control Board (TCB) of those taxpayers holding permits to sell tobacco products who are delinquent in payment of state and local taxes. The TCB may not issue or renew a permit to sell tobacco products unless DFA has issued a tax clearance. The TCB is required to obtain the federal tax identification number, social security number, and if applicable, the state sales tax permit number, from all applicants for permit issuance or renewal. Act 1375 - Effective July 1, 2003: Provides an exemption for natural gas and electricity used in the manufacturing of wall and floor tile by manufacturers of tile if the manufacturer began construction of an .Arkansas facility prior to January 1, 2003. Act 1683 - Effective August 13, 2001: Provides an exemption for equipment, packaging materials, and chemicals used directly in the packaging and processing of hazardous andnon-hazardous waste materials into fuel products. The Arkansas Department of Environmental Quality must license the facility for hazardous waste treatment. Act 1841 - Effective August 13, 2001: Levies a 3% Beverage Excise Tax on the retail sale of beer for off premise consumption. The tax will be collected and reported in addition to state and local sales tax. The tax will expire June 30, 2003.