Information You Should Know About New Ecommerce Sales Tax Laws in Arkansas
Things have changed a lot since the days when we went to the local mall or grocery store to do our shopping. The advent of online sales has led to consumers purchasing everything from their daily meals to gifts, household products, and clothing right from their computer or smartphone in the comfort of their own home. This modern convenience has had its drawbacks, though. One such issue has been the dilemma states face on how to collect sales tax on these items. For many years, no sales tax was collected or remitted on online sales. This was great for shoppers, but led to millions in lost tax revenues for state governments. All of that changed, however with the Supreme Court decision on South Dakota v. Wayfair, Inc. on June 21, 2018. This ruling has paved the way for state governments to enforce sales tax collection on ecommerce sales in Arkansas and around the country.
Understanding the Remote Seller Nexus
States across the country began trying to solve the problem of collecting online sales tax in 2008, enacting individual state legislation in an attempt to get online retailers to collect and remit these taxes. The “Remote Seller Nexus” is the term used to describe the provisions which affect these internet sales. The “nexus” is the connection that a business has with a state. This is necessary for the state to require a business to collect and remit sales tax on their goods. New laws which have been brought about through the South Dakota v. Wayfair Inc. ruling allow states to enforce ecommerce sales tax collection based on their sales volume or transactions in the state, regardless of whether the business has a physical location in the state. They refer to this relationship as economic nexus.
What Does This Court Decision Mean for Internet Sales Tax?
The State of Arkansas, along with most of the United States, now requires ecommerce businesses to charge and remit sales tax via the South Dakota v. Wayfair, Inc. ruling. There are five states which do not require retailers to collect a general sales tax on the products they sell. Many states have begun to enforce these laws affecting sales tax for online sales. On October 1, 2019 this economic nexus went into effect in five states. It is time to get educated on the specifics of this law and begin collecting and remitting sales tax if you have a business that sells to consumers in other states over the internet.
What Are the Laws for Online Sales Tax in Arkansas?
If your business has made online sales in Arkansas since July 1, 2019, and your sales transactions meet the required threshold, you must collect and remit state sales tax there. The laws in Arkansas set the threshold at $100,000 in aggregate sales, or 200 or more separate transactions. Upon reaching the threshold, businesses must register with the next transaction. Sales tax must be collected on all taxable sales in the state. The law does exclude marketplace sales from the threshold for individual sellers. This means that retail sales through a provider or facilitator who lists them in a marketplace and collects payment through a third party are exempt from online sales tax collection.
How Does Online Sales Tax Affect Your Company?
If you want to keep your business on the up-and-up, complying with new state online sales tax collection laws and remitting those taxes appropriately while still looking out for your own business revenues, you may feel overwhelmed. The sales tax laws for Arkansas contain specifics that you won’t want to ignore, so knowing how to take the appropriate measures and remit the proper taxes to the state is imperative. Any potential mistakes could create unexpected problems and additional fines for you down the road. Forix is here to help you through this transition and ensure that the management of your sales tax collection and remittance is handled properly. We partner with online tax service providers to make this process efficient, minimize compliance costs, and avoid errors that could result in fines for your company. Leave the forms, data collection, and filing to us, so that you can focus on growing your business while we take care of your state sales tax remittance.
Don’t be intimidated by the laws that have gone into effect since the 2018 South Dakota v. Wayfair, Inc. ruling. Although these new provisions will require a little extra time and dedication, it doesn’t have to take away from your business’ daily routine. Allow our experts at Forix to take the reins and keep you in line with the new Arkansas online sales tax laws, while you attend to more important matters for your company.
Disclaimer: The information in this blog post is provided for general informational purposes only and should not be construed as legal advice from Forix.