006.05.212-UT-12. SERVICES:
AR ADC 006.05.212-UT-12Arkansas Administrative Code
Ark. Admin. Code 006.05.212-UT-12
006.05.212-UT-12. SERVICES:
As of January 1, 2008, Arkansas compensating use tax applies to services in the same manner as tangible personal property. Services purchased out of state that would have been taxable if purchased in Arkansas are subject to use tax.
B. VENDORS. Arkansas compensating use tax is applicable to the sale of a taxable service if the sale is sourced to Arkansas pursuant to Ark. Code Ann. §§ 26-52-521, 26-52-522, and GR-76. Notwithstanding the laws of another state, the sourcing provisions determine a vendor's liability for Arkansas compensating use tax on the vendor's retail sale of a service taxable in Arkansas.
Example 1: XYZ takes office equipment to a Missouri vendor for repair. Following the repair, XYZ picks up the office equipment and returns to Arkansas. Repair service is not taxable in Missouri and the vendor did not collect Missouri sales tax. The vendor has nexus with Arkansas. Pursuant to Ark. Code Ann. § 26-52-521(b)(1) and GR-76(D)(1)(a), the repair service is sourced to Missouri. Accordingly, the vendor does not have an obligation to collect and remit Arkansas compensating use tax.
Example 2: XYZ takes office equipment to a Missouri vendor for repair. Following the repair, the office equipment is returned to XYZ in Arkansas by common carrier. Repair service is not taxable in Missouri and the vendor did not collect Missouri sales tax. The vendor has nexus with Arkansas. Pursuant to Ark. Code Ann. § 26-52-521(b)(2) and GR-76(D)(1)(b), the repair service is sourced to Arkansas. Accordingly, the vendor is obligated to collect and remit Arkansas compensating use tax based on the location indicated by the instructions for delivery.
Example 3: A Nebraska printer has an Arkansas customer with several retail locations. The customer orders brochures to be printed in bulk with delivery taking place at a later date and to multiple locations. The bulk order is paid for prior to delivery. At the time of purchase the Nebraska printer does not know where the brochures will be shipped. The Nebraska printer has nexus with Arkansas. Pursuant to Ark. Code Ann. § 26-52-521(b)(3) and GR-76(D)(1)(c), the sale is sourced to the location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller's business. The Nebraska printer is obligated to collect and remit Arkansas compensating use tax based on this location.
Example 4: XYZ has a physical location in North Little Rock. XYZ sends a ring to a jeweler in Texas to have the setting repaired. The jeweler does not charge Texas sales tax on the service. Following the repair, the jeweler sends the ring to XYZ's post office box in Little Rock. The jeweler has nexus with Arkansas. Pursuant to Ark. Code Ann. § 26-52-521(b)(2) and GR-76(D)(1)(b), the sale is sourced to the point of delivery, and the jeweler is obligated to collect and remit Arkansas compensating use tax applicable to the post office box in Little Rock.
C. CREDIT. Arkansas compensating use tax does not apply to any tangible personal property or taxable services used, consumed, distributed, or stored in Arkansas upon which a like tax equal to or greater than Arkansas compensating use tax has been paid in another state. A credit is allowed against the amount of Arkansas compensating use tax due for sales tax legally paid to the state or local jurisdiction where the services were performed. The credit shall be applied first against the amount of any use tax due the state, and any unused portion of the credit shall then be applied pro rata against the amount of any use tax due a local jurisdiction.
Credits
AUTHORITY: Ark. Code Ann. §§ 26-5-101; 26-53-106; 26-53-107; 26-53-131
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.05.212-UT-12, AR ADC 006.05.212-UT-12
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