Online sales tax returns exceed expectations after 6 months as Arkansas law

LITTLE ROCK, Ark. — After the shortened holiday shopping season saw sales growth courtesy of online retail, Arkansas tax collectors are glad laws went in place earlier this year that compelled companies to collect and remit sales taxes.

“Collections are strong. It’s exceeded our expectation,” said Scott Hardin the spokesperson for the Department of Finance and Administration. “You’re generally looking at about $50-million annually generated through online sales.”

Those are projected figures for future years based on the six months since Arkansas joined dozens of other states in collecting a cut of online sales.

The U.S. Supreme Court cleared the way for collections in 2018 by ruling states could compel companies like Wayfair into sending them a tax. The company lost its case against South Dakota in June of that year.

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In Arkansas, Amazon already had plans in the works to begin collections, but lawmakers locked in all the other “marketplace facilitators.”

Now the money is rolling into DFA and is being eyed across the street at the State Capitol.

“We thought that those marketplace facilitators alone would account for $20-plus million a year,” Hardin said.  “We can say pretty confidently now that that number may be even doubled.”

That equals about $32 million heading back to the state this year.

The goal was to level the playing field for brick-and-mortar retail, including Arkansas giants like Walmart and Dillard’s. Objections came from advocates for smaller businesses who now face a miss mash of state tax laws and local levies. Early on, Hardin says it hasn’t hampered those companies because of how the law is written here and the uniform registration system Arkansas joined.

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“If it’s a company that’s not doing much business in Arkansas, less than $100,000 or less than 200 transactions, then sales tax is not a factor,” he said.

That allows for a way to still shop small and avoid the tax, but with more and more sellers taking part in marketplaces set up by Amazon, eBay and Etsy, the tax gets collected no matter the size of the maker or marketer. Meaning all the big boys playing ball, so you might as well get used to it. The state sure hopes you do.

“The money is coming back and being invested back into the state, and obviously ultimately staying in Arkansas, which is good news,” Hardin said.

The Arkansas sales tax rate is right in the middle when compared with its six neighboring states. It’s below the 7% in Tennessee and Mississippi, but well above the roughly 4% rates in Oklahoma, Missouri and Louisiana. The latter two are among the only three states left that have sales taxes but have not begun collecting from remote sellers. The third state is Florida, according to the National Conference of State Legislatures.