006.05.06 Ark. Code R. 005-GR-50

Current through Register Vol. 49, No. 10, October, 2024

Rule 006.05.06-005-GR-50 - EXEMPTIONS FROM TAX - SECONDHAND AND USED TANGIBLE PERSONAL PROPERTY

A. Gross receipts or gross proceeds derived from the sale of secondhand and used tangible personal property will be exempt only if both the following conditions listed below are met:

1. Used property was traded-in to and accepted by the seller of tangible personal property as part of the purchase price of newly acquired tangible personal property. It is necessary that the gross receipts tax be collected and paid on the total consideration for the sale of the newly acquired tangible personal property in order to qualify for the exemption unless the sale of the newly acquired tangible personal property was otherwise exempt under other provisions of the Arkansas Gross Receipts Act; and

Arkansas gross receipts tax was collected and paid on the total amount of consideration for the sale of the newly acquired tangible personal property without any deduction or credit for the value of the used tangible personal property; or,

Example: Seller of boats sells a new boat to a customer. The customer trades in his old boat and pays sales tax to seller on the full purchase price of the new boat without any deduction for the trade-in. When seller sells the traded-in used boat, he is not required to collect sales tax.

b. The new personal property was originally exempt from tax under the provisions of the Arkansas Gross Receipts Act.

Example: Seller of farm equipment sells a new tractor to a farmer. The farmer trades in his old tractor that was purchased tax exempt under the gross receipts tax exemption for farm equipment and machinery. When the seller sells the used tractor, he is not required to collect sales tax.

B. The foregoing does not apply to transactions involving (i) used motor vehicles or trailers, (ii) used mobile homes, or (iii) used aircraft, but is applicable to boats, motors, appliances, etc. (See GR-13, GR-14, and GR-15.1.)

C. Property purchased by a seller and not taken as a trade-in does not qualify for the exemption.

006.05.06 Ark. Code R. 005-GR-50

Ark. Code Ann. § 26-52-401(22)