Amazon to Begin Collecting Sales Tax in Arkansas

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On Friday, February 11, Arkansas Gov. Asa Hutchinson announced that will begin collecting and remitting sales tax on purchases in the state as of March 1. With Arkansas added to the list, this means that the online retailer now collects in 40 of the 45 states that collect sales tax.

“The announcement from Amazon to start the sales tax collection for Arkansas in March is laudable and good news for the state,” Hutchinson said in a statement. “This step by Amazon has been voluntary and reflects the new landscape in which retailers recognize the practicality and fairness of sales tax being treated equally between online sales and in-person store sales. This decision also shifts the responsibility of sales tax payment from the customer to the retailer at the time of checkout — providing further clarity and efficiency to the current and often misunderstood Arkansas law.”

Hutchinson added that lowering Arkansas’s income tax rate has been his priority since day one and “this strengthened revenue stream will allow us to continue to make progress in cutting the income tax rate.”

The governor’s statement comes at a time when the state is considering two bills regarding sales tax, as reported by the Pine Bluff Commercial. Senate Bill 140, introduced by Arkansas Sen. Jake Files (R-Fort Smith), would require an out-of-state seller that sells more than $100,000 worth of goods or has at least 200 transactions in Arkansas in a calendar year to begin collecting sales taxes, the article noted.

Files’ bill, which passed the Senate, is expected to be taken up by the House Revenue and Taxation Committee next week, the Commercial reported. The senator noted that while Amazon is a “part of the puzzle … it’s not all of it.”

House Bill 1388, introduced by Rep. Dan Douglas (R-Bentonville), is similar to the Colorado use tax law and would require a remote seller to notify Arkansas customers at the time of a purchase that they are required to file a tax return and pay sales taxes on purchases from the seller, the article explained. The bill imposes a $5 fine for each failure to provide notice.

Douglas’ bill has passed the House and is expected to be considered next week by the Senate Revenue and Taxation Committee, the Commercial reported.

Files told the Arkansas Democrat-Gazette that in 2014 it was projected that online sales-tax collection on in-state purchases would amount to about $32 million a year and that other estimates put that figure at more than $50 million a year. “I don’t think $50 million is out of the question,” Files said.