In Opinion No. 20190925, the Arkansas Department of Finance and Administration explained how the state would tax a proposed online peer-to-peer vehicle sharing platform. The opinion noted that the peer-to-peer platform in question would be considered a marketplace facilitator and discussed how local taxes will be sourced. But the Department declined to opine on
arkansas
Arkansas Department of Finance & Administration Issues Guidance Regarding Taxability of Virtual Services
The Arkansas Department of Finance & Administration issued an opinion stating that the provision of certain “virtual services,” including bookkeeping, project management, business analysis, email management, research, and customer service, provided via the Internet, are not subject to Arkansas sales tax. Arkansas sales tax is imposed on the gross proceeds from all sales of tangible…
Apples to Oranges: Arkansas finds no independent business versus non-business test for expenses
On April 1, 2019, the Arkansas Office of Hearings and Appeals held that a taxpayer could not deduct interest expense for long-term debt used to finance a cash dividend as a non-business expense allocable to Arkansas because there was no corresponding non-business income allocable to the state.
The taxpayer was a corporation based in Arkansas…
Giving Credit Where It Isn’t Due: Arkansas Office of Hearings and Appeals Treats Sales of Tax Credits as Business Income
On June 13, 2018, an Arkansas Administrative Law Judge concluded that a taxpayer’s proceeds from dispositions of tax credits were apportionable business income. In Arkansas, business income arises from either: (1) transactions and activity in the regular course of the taxpayer’s business (the transactional test); or (2) income from the acquisition, management and disposition of…
Arkansas Does Not Apply US-Canada Income Tax Treaty to State Income Tax
By Madison Barnett and Stephanie Do
Many foreign companies are surprised to learn that US states are not generally bound by income tax treaties entered into by the US with foreign countries. Under these treaties, for US federal income tax purposes, certain non-US corporations and residents of foreign countries may be exempt from tax or…
Unfair Apportionment in Arkansas: ALJ Requires Taxpayer to Use Marked-Based Method to Apportion Services Income
By Chris Mehrmann and Carley Roberts
An administrative law judge (ALJ) of the Arkansas Department of Finance and Administration upheld the denial of a taxpayer’s corporate income tax refund claim, after the taxpayer attempted to amend its returns to apply the cost of performance method of sourcing income. Arkansas has adopted section 18 of the…
There’s Something in the Water: Arkansas Denies Manufacturing Exemption to Equipment Used at Water Treatment Facility
By Stephen Burroughs and Scott Wright
The Supreme Court of Arkansas recently upheld use tax assessments imposed upon a contractor that purchased and installed equipment used in a water treatment facility expansion. Arkansas exempts from sales and use tax purchases of machinery and equipment used to create or expand a manufacturing or processing facility in…