006.05.08 Ark. Code R. 004-GR-3

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

Rule 006.05.08-004-GR-3 - DEFINITIONS:

For purposes of these rules, unless otherwise required by their context, the following definitions apply:

A. BUNDLED TRANSACTION.

1. "Bundled transaction" means a retail sale of two (2) or more products, except real property and services to real property, in which (i) the products are otherwise distinct and identifiable; and (ii) the products are sold for one (1) non-itemized price.

2. Bundled transaction does not include the sale of any product in which the sales price varies or is negotiable based on the selection by the purchaser of the products included in the transaction. (See GR-7 and GR- 93.)

B. COMMISSIONER. "Commissioner" means and refers to the Commissioner of Revenue of the State of Arkansas, or any of his duly authorized agents. For purposes of these rules, the terms "Commissioner" and "Director" may be used interchangeably.

C. CONSUMER. "Consumer" is synonymous with "user", "customer", or "purchaser" and means the person to whom a taxable sale is made, or to whom taxable services are furnished. Contractors are deemed to be the consumers of all tangible personal property or taxable services purchased by them in the performance of a contract. See the definition of "contractor" in this rule. Also, see GR 9.17 regarding the purchase of materials by contractors performing taxable services.

D. CONTRACTOR. "Contractor" means any person who contracts or undertakes to construct, manage or supervise the construction, erection or substantial modification of any building or other improvement or structure affixed to real property. Persons who construct items of tangible personal property are not contractors. (See GR-21.)

E. DEPARTMENT. "Department" means and refers to the Arkansas Department of Finance and Administration and its agents. For purposes of these rules, the terms "Department" and "DFA" may be used interchangeably.

F. DOING BUSINESS OR ENGAGING IN BUSINESS. "Doing Business" is synonymous with "engaging in business" and means any and all local activity regularly and persistently pursued by a seller or seller's agents, employees, or representatives, with the object of gain, profit, or advantage, and which results in a sale, delivery, and/or the transfer of the possession of any tangible personal property by the seller to the consumer, at or from any point in Arkansas, whether from warehouse, store, office, storage point, rolling store, motor vehicle, delivery conveyance, or by any method or device under the control of seller effecting such local delivery, without regard to the terms of sale with respect to point of acceptance of the order, point of payment, or any other condition. Doing business, as set out herein, is equally applicable to sellers of services which are subject to the gross receipts tax.

G. ESTABLISHED BUSINESS. "Established Business" means any business operated or conducted by any person in a continuous manner for any length of time from an established place or in an established manner.

H. GROSS RECEIPTS - GROSS PROCEEDS - SALES PRICE.

1. "Gross receipts" or "gross proceeds" is synonymous with "sales price" and means the total amount of consideration, including cash, credit, property, and services, for which tangible personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise. Sales price includes consideration received by the seller from third parties as follows:

a. The seller actually receives the consideration from a party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale;

b. The seller has an obligation to pass the price reduction or discount through to the purchaser;

c. The amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchaser; and

d. One of the following criteria is met:

(1) The purchaser presents a coupon, certificate, or other documentation to the seller to claim a price reduction or discount where the coupon, certificate, or documentation is authorized, distributed, or granted by a third party with the understanding that the third party will reimburse any seller to whom the coupon, certificate, or documentation is presented;

(2) The purchaser identifies himself or herself to the seller as a member of a group or organization entitled to a price reduction or discount (a "preferred customer" card that is available to any patron does not constitute membership in such a group); or

(3) The price reduction or discount is identified as a third party price reduction or discount on the invoice received by the purchaser or on a coupon, certificate, or other documentation presented by the purchaser. (See GR-18.)

2. The following cannot be deducted from the sales price:

a. The seller's cost of the property sold;

b. The cost of materials used, labor or service cost, interest, any loss, any cost of transportation to the seller, any tax imposed on the seller, and any other expense of the seller;

c. Any charge by the seller for any service necessary to complete the sale, other than a delivery charge or an installation charge;

d. Delivery charge;

e. The value of exempt tangible personal property given to the purchaser, if taxable and exempt tangible personal property have been bundled together and sold by the seller as a single product or piece of merchandise (see the definition of "bundled transaction" in this rule and GR-93 for the treatment of bundled transactions); and

f. Credit for any trade-in unless specifically provided by law.

3. A separately stated installation charge is not part of the sales price and not taxable unless it is a specifically taxable service.

4. Sales price does not include the following:

a. A discount including cash, term, or a coupon that is not reimbursed by a third party and that is allowed by a seller and taken by a purchaser on a sale;

b. Interest, financing, or a carrying charge from credit extended on the sale of tangible personal property or services, if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser; and

c. Any tax legally imposed directly on the consumer that is separately stated on the invoice, bill of sale, or similar document given to the purchaser.

I. MACHINE. "Machine" means any device consisting of two (2) or more resistant, relatively constrained parts, which, by a certain predetermined intermotion, may serve to transmit and modify force and motion so as to produce some given effect or to do some desired kind of work. The term "machinery" shall mean mechanical devices or combinations of mechanical powers and devices purchased and used to perform some function and produce a certain effect or result. Hand tools are not machinery. (See GR-55(F).)

J. PERSON. "Person" means any individual, partnership, limited liability company, limited liability partnership, corporation, estate, trust, fiduciary, or any other legal entity. Person includes the state and any county, city, municipality, school district, or any other political subdivision or combination acting as a unit, in the plural or singular number.

K. PREPARED FOOD. "Prepared food" means food sold in a heated state or heated by the seller; food consisting of two (2) or more food ingredients mixed or combined by the seller for sale as a single item; or food sold with an eating utensil provided by the seller. Prepared food does not include food that is only cut, repackaged, or pasteurized by the seller, or eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer to prevent food-borne illnesses as recommended by the U.S. Food and Drug Administration.

L. RETAIL PERMIT. "Retail permit" means and refers to the sales tax permit as required by Ark. Code Ann. § 26-52-201.

M. SALE.

1. "Sale" means any transaction resulting in the transfer of either the title or possession, for a valuable consideration, of tangible personal property or taxable services regardless of the manner, method, instrumentality, or device by which such transfer is accomplished. Sale includes the exchange, barter, lease, or rental of tangible personal property or taxable services, or the sale, exchanging, or other disposition of admissions, dues, or fees to clubs, places of amusement, or recreational or athletic events or for the privilege of having access to or the use of amusement, athletic, or entertainment facilities.

2. Sale does not include the transfer of title to a vehicle by the vehicle owner to an insurance company as a result of the settlement of a claim for damages to the vehicle.

3. In the case of leases or rentals of tangible personal property, including motor vehicles and trailers, for less than thirty (30) days, the tax shall be paid on the basis of rental or lease payments made to the lessor of such tangible personal property during the term of the lease or rental regardless of whether Arkansas gross receipts or compensating use tax was paid by the lessor at the time of the purchase of the tangible personal property. In the case of leases or rentals of tangible personal property, including motor vehicles and trailers, thirty (30) days or more, the tax shall be paid on the basis of rental or lease payments made to the lessor of such tangible personal property during the term of the lease or rental unless Arkansas gross receipts or compensating use tax was paid at the time of purchase of the tangible personal property. (See GR-20.)

4. A financing arrangement which only gives a lender a security interest in tangible personal property will not subject such lender to the tax, if, prior to such financing arrangement, either the Arkansas gross receipts or compensating use tax has been paid on the purchase price of the tangible personal property by one of the parties to the financing arrangement.

N. SALES PRICE. See GR-3(H).

O. SALES TAX - GROSS RECEIPTS TAX. "Sales tax" and "gross receipts tax" are synonymous and mean the tax imposed by the Arkansas Gross Receipts Act of 1941, Ark. Code Ann. § 26-52-101 et seq.

P. SELLER. "Seller" is synonymous with "vendor" and means every person making a sale, lease, or rental of tangible personal property or taxable services.

Q. TANGIBLE PERSONAL PROPERTY. "Tangible Personal Property" means personal property which may be seen, weighed, measured, felt, touched, or is in any other manner perceptible to the senses. Tangible personal property includes electricity, water, gas, steam, and prewritten computer software.

R. TAXPAYER. "Taxpayer" means any person liable to remit the gross receipts tax or to make a report for the purpose of claiming any exemption from payment of gross receipts taxes.

S. TRANSPORTATION EQUIPMENT. "Transportation equipment" means any of the following:

1. Locomotives and railcars that are utilized for the carriage of persons or property in interstate commerce;

2. Trucks and truck-tractors with a Gross Vehicle Weight Rating of 10,001 pounds or greater, trailers, semi-trailers, or passenger buses that are (i) registered through the International Registration Plan; and (ii) operated under authority of a carrier authorized and certificated by the U.S. Department of Transportation or another federal authority to engage in the carriage of persons or property in interstate commerce;

3. Aircraft that are operated by air carriers authorized and certificated by the U.S. Department of Transportation or another federal or a foreign authority to engage in the carriage of persons or property in interstate or foreign commerce; or

4. Containers designed for use on and component parts attached or secured on the items set forth in GR-3(S)(1)-(S)(3).

006.05.08 Ark. Code R. 004-GR-3

Ark. Code Ann. §§ 26-52-103; 26-52-317; 26-52-521