006.05.06 Ark. Code R. 005-GR-79

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

Rule 006.05.06-005-GR-79 - PERSONS LIABLE FOR TAX AND EXEMPTIONS

A. The tax must be collected, reported, and remitted by the seller of tangible personal property; the seller or collector of admissions to places of amusement, recreational, or athletic events; the seller of privileges of access to, or the use of amusement, entertainment, athletic, or recreational facilities; and by any other person furnishing any service subject to the tax.

B. CORPORATIONS. If the seller of tangible personal property or taxable services is a corporation and the corporation fails to collect, truthfully account for, and remit the proper amount of tax, interest, and penalty, then the officers or employees of the corporation charged with those duties shall also be personally, jointly, and severally liable for a penalty equal to the amount of the tax.

C. LIABILITY. The sales tax liability for all sales of tangible personal property or taxable services is upon the seller unless the purchaser claims an exemption. (See GR-79(E) and GR-79(F).)

D. RELIEF FROM CERTAIN LIABILITY.

1. Sellers. Except as provided in GR-79(D)(3), a seller or certified service provider using a database provided by the Department shall not be liable to the State of Arkansas or its local jurisdictions for charging and collecting the incorrect amount of sales or use tax if the seller or the certified service provider relied on erroneous data provided by the Department on sales or use tax rates, boundaries, or taxing jurisdiction assignments, or the taxability matrix, which may be viewed on the Department's website at: www.state.ar.us/salestax.

2. Purchasers. Except as provided in GR-79(D)(3), a purchaser may be relieved of liability for failing to pay the correct amount of sales or use tax.

a. Relief from liability for tax and interest. Except where prohibited by the Arkansas Constitution, a purchaser will be relieved from liability for tax and interest owed for having failed to pay the correct amount of sales or use tax as described in GR-79(D)(2) if this state erroneously classified terms in the library of definitions section of the taxability matrix as "taxable" or "exempt", "included in the sales price" or "excluded in the sales price", or "included in the definition" or "excluded in the definition".

b. Relief from liability for penalty. A purchaser will be relieved from liability for penalty owed for having failed to pay the correct amount of sale or use tax in the following circumstances:

(1) A purchaser's seller or certified service provider relied on erroneous data provided by this state on tax rates, boundaries, taxing jurisdiction assignments, or in the taxability matrix;

(2) A purchaser holding a direct pay permit relied on erroneous data provided by this state on tax rates, boundaries, taxing jurisdiction assignments, or in the taxability matrix; or

(3) A purchaser relied on erroneous data provided by this state in the taxability matrix.

(4) For purposes of this rule, the term "penalty" means an amount imposed for noncompliance that is not fraudulent, willful, or intentional which is in addition to the correct amount of sales or use tax and interest.

3. If the Department provides an address-based boundary database for assigning taxing jurisdictions and their associated sales or use tax rates, the Department may cease providing the relief from liability provided in GR-79(D)(1) and GR-79(D)(2) if the Department gave adequate notice. If it is demonstrated that requiring the use of the address-based database would create an undue hardship, the Department may extend the relief from liability to the seller for a designated period of time.

4. The seller, certified service provider, or purchaser must maintain proper records pertaining to the erroneous information provided at the time of the transaction and provide them to the Department when requested.

E. EXEMPTIONS.

1. The following provisions apply when a purchaser claims an exemption:

a. The seller must obtain identifying information of the purchaser and the reason the purchaser is claiming a tax exemption at the time of the purchase;

b. A purchaser is not required to provide a signature to claim an exemption from tax unless a paper certificate is used;

c. The seller must use the standard form for claiming an exemption electronically;

d. The seller is required to obtain the same information for proof of the claimed exemption regardless of the medium in which the transaction occurred; and

e. The Department may authorize a system wherein a purchaser that is exempt from the payment of tax is issued an identification number that must be presented to the seller at the time of sale.

2. A seller that follows the exemption requirements is relieved from any tax otherwise applicable if it is determined that the purchaser improperly claimed an exemption. If it is determined that the purchaser improperly claimed an exemption, the purchaser will be liable for the nonpayment of tax, as well as any penalty and interest due on the transaction. This relief from liability does not apply to a seller who does any of the following:

a. Fraudulently fails to collect the tax;

b. Solicits a purchaser to participate in the unlawful claim of an exemption; or

c. Accepts an exemption certificate from a purchaser claiming an entity-based exemption, as defined in Ark. Code Ann. § 26-21-103, if:

(1) The subject of the transaction sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the seller; and

(2) The multistate certificate of exemption (SSTGB Form F0003) clearly and affirmatively indicates that the claimed exemption is not available in Arkansas.

3. A seller has ninety (90) days from the date of sale to obtain a fully completed exemption certificate or information that is the equivalent of the information required by the exemption certificate. For example, if the seller cannot obtain a fully completed exemption certificate, then the seller has ninety (90) days to obtain the following information:

a. Name and address of the seller;

b. Name and address of the purchaser;

c. Any applicable permit or account numbers;

d. The nature of the purchaser's business;

e. Identifying information of the transaction (date, invoice, or purchase number); and

f. The exemption claimed.

4. If a seller has not obtained an exemption certificate or equivalent information and the Department makes a request for substantiation of the exemption, then the seller has one-hundred twenty (120) days from the date of the request to prove by other means that the transaction was not subject to sales or use tax or to obtain in good faith a fully completed exemption certificate from the purchaser.

5. The seller must maintain proper records of exempt transactions and provide them to the Department when requested.

6. Sellers may obtain indemnification agreements from their customers claiming an exemption.

F. EXEMPTION CERTIFICATES.

1. Sale-for-resale Exemption.

a. The sale-for-resale exemption may be claimed through the use of the exemption certificate (Form ST 391) or the multistate certificate of exemption (SSTGB Form F0003). Both forms may be obtained on the Department's website at: www.state.ar.us/salestax.

b. A purchaser may also claim the sale-for-resale exemption by providing information to the seller that otherwise establishes that the purchaser is reselling the articles or services purchased. (See GR-53.)

c. Any person repeatedly selling the same type of property to the same purchaser for resale may accept a blanket certificate covering more than one (1) transaction. A blanket certificate may not be used if a period of more than twelve (12) months elapses between transactions.

2. Other Exemptions.

a. Unless otherwise provided, an exemption that is not the sale-for-resale exemption should be claimed through the use of the general exemption certificate (Form ST 391) or the multistate certificate of exemption (SSTGB Form F0003). Both forms may be obtained on the Department's website at: www.state.ar.us/salestax.

b. As an alternative to an exemption certificate, a seller may accept a certification or other information from the purchaser that establishes the transaction is exempt under Arkansas law.

006.05.06 Ark. Code R. 005-GR-79

Ark. Code Ann. §§ 26-18-501; 26-21-106; 26-21-107; 26-52-508; 26-52-517