Sales Tax Obligations of Purchasers in Arkansas

April 13, 2006

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The following items should help you with the most frequently asked questions concerning purchasers and sales and use tax issues.

Tax exemption certificates. The Arkansas Department of Finance and Administration issues exemption certificates, otherwise known as Form ST-391. A seller who relies in good faith on a purchaser's claim or on documentation provided by the purchaser representing that the purchaser is entitled to an exemption from tax is relieved of the liability for sales tax, and any penalty and interest due on the sales of tangible personal property or taxable services.

Resale exemptions. Retail permits or resale permits, including those issued by other states, may be accepted by Arkansas sellers to establish entitlement to the "sale for resale" exemption. The sale for resale exemption is only applicable if the purchaser has a sales tax permit. The certification that a sale is for resale can be made on the bill, invoice, or sales slip retained by the seller, or a certification letter can be provided to the seller.

This certification should include:

the name and address of the purchaser
the retail permit number of the permit issued to the purchaser
a statement that the purchaser is engaged in the business of reselling what was purchased
a statement that the articles purchased are purchased for resale
the signature of the purchaser

Resale certificate exemption. Arkansas has developed a resale certificate that includes (1) the retail permit number of the purchaser; (2) a statement that the personal property purchased is for resale; (3) a statement that the purchaser will report the tax due if the property is withdrawn from stock or not resold; (4) a description of the property and of the purchaser's business; (5) purchaser's signature, business name and address, and the date; and (6) a notice to the vendor that the resale certificate must be accepted in good faith, or the vendor may be held liable for sales tax

Blanket resale certificates. Sellers who repeatedly sell the same type of property to the same purchaser may accept a blanket certificate that covers more than one transaction with that purchaser. A blanket certificate will relieve the burden of executing a separate certificate for each individual tax-exempt purchase as long as there is no significant change in the operations. There is no prescribed form for a blanket certificate, but it should include all the information that a resale certificate needs.

Purchases from out-of-state vendors. A credit for tax paid in another state is given for any tangible personal property upon which a like tax has been paid in another state. If the amount of tax paid in another state is less than the amount due in Arkansas, the purchaser must pay the difference to Arkansas.