006.05.06 Ark. Code R. 005-GR-92 - REBATES FOR QUALIFYING PURCHASES

A. DEFINITIONS.

1. "Qualifying purchase" means a purchase of tangible personal property or a taxable service:

a. For which the purchaser may take a business expense deduction pursuant to 26 U.S.C. § 162, as in effect on January 1, 2007;

b. For which the purchaser may take a depreciation deduction pursuant to 26 U.S.C. § 167, as in effect on January 1, 2007;

c. By an exempt organization under 26 U.S.C. § 501, as in effect on January 1, 2007, if the purchase would be subject to a business expense deduction or depreciation deduction if the purchaser were not an exempt organization under 26 U.S.C. § 501, as in effect on January 1, 2007; or

d. By a state, or any county, city, municipality, school district, state-supported college or university, or any other political subdivision of a state, if the purchase would be subject to a business expense deduction or depreciation deduction if the purchaser were not one (1) of the entities enumerated in this subdivision.

2. "Single transaction" means any sale of tangible personal property or a taxable service reflected on a single invoice, receipt, or statement for which an aggregate sales or use tax amount has been reported and remitted to the state for a single local taxing jurisdiction.

B. GENERALLY.

1. A purchaser that pays any municipal sales or use tax in excess of the tax due on the first $2,500.00 of gross receipts or gross proceeds from a qualifying purchase of tangible personal property or a taxable service in a single transaction is entitled to a credit or rebate of the excess amount of municipal sales or use tax paid on each single transaction.

2. A purchaser that pays any county sales or use tax in excess of the tax due on the first $2,500.00 of gross receipts or gross proceeds from a qualifying purchase of tangible personal property or a taxable service in a single transaction is entitled to a credit or rebate of the excess amount of county sales or use tax paid on each single transaction.

3. Except as provided in Subdivision (B)(4), the rebate applies to any local sales or use tax collected by the Director pursuant to any state tax law authorizing a county or municipality to levy a sales or use tax.

4. The rebate does not apply to local sales tax levied in accordance with Ark. Code Ann. §§ 26-52-303 or 26-75-502.

C. CLAIMS FOR CREDIT OR REBATE.

1. Self Rebate. A purchaser that holds an active Arkansas sales and use tax permit and files excise tax reports with the Department may offset the amount of credit or rebate claimed against any municipal or county sales or use tax due to be remitted with the return.

a. The purchaser must list each local code and the amount of additional tax paid to the seller for the qualifying purchase on the return.

b. If the total amount of the credit or rebate is being requested is larger than the local tax due for that month, then the purchaser will deduct the remaining credit or rebate from the state tax due on the return and remit the difference.

c. The purchaser must maintain documentation, such as photocopies of the invoices or receipts provided by the vendor, for which the credit or rebate is being requested.

2. File a Claim. A purchaser that qualifies for a rebate, but is not required to file a sales or use tax return as provided in GR-92(C)(1) may file a claim for a credit or rebate with the Director.

a. In order to request a refund of the local sales and use tax for qualifying purchases, the purchaser should complete the Claim for Local Cap Rebate Form Number ET-179A and the supplemental schedule Form Number ET-179B, if needed. The form requires the following:

(1) A listing of the invoices on which the local tax has been paid to the seller;

(2) A determination of the amount of refund owed to the purchaser; and

(3) Photocopies of the invoices for which the refund is being requested.

b. The completed form and copies of the invoices should be mailed to DFA Local Tax Rebate Unit, P.O. Box 3566, Little Rock, AR 72203.

c. The form may be obtained by contacting the Sales and Use Tax Section by telephone at (501) 682-7105 or may be downloaded from the Department's website at: www.state.ar.us/salestax and selecting Sales and Use Tax Forms.

D. TIME.

1. No credit or rebate will be paid for any claim filed after six (6) months (i.e., 180 days) from the date of the qualifying purchase or after six (6) months (i.e., 180 days) from the date of payment, if later.

a. Non-Direct Pay Permit Holders. For purchasers that do not hold a direct pay permit, the date of payment is the date the business pays tax to the vendor for the qualifying purchase. The date of payment is evidenced by a receipt provided by the vendor.

Example: On May 1st, Company A purchased several computers from Company B. Company A has an account with Company B and did not pay for the computers until May 20th. The time for Company A to claim the credit or rebate runs from May 20th.

b. Direct Pay Permit Holders. For purchasers that hold a direct pay permit, the date of payment is the date the business pays tax to the Department on the qualifying purchase.

Example: A business that holds a direct pay permit fails to self rebate and remits tax on the full sales price of a qualifying purchase. The date of payment is the date the business remits tax on the full sales price of the qualifying purchase.

2. A claim for a credit or rebate must be filed with the local taxing jurisdiction if, at the time the claim is filed, the local sales or use tax that is the subject of the claim has been out of existence for more than sixty (60) days.

3. For the purposes of Ark. Code Ann. § 26-52-523, a month is a thirty (30) day period.

E. INTEREST. No interest will accrue or be paid on an amount subject to a claim for a credit or rebate.

F. Claims for credit or rebate pursuant to Ark. Code Ann. § 26-52-523 and this rule are governed by the Arkansas Tax Procedure Act, § 26-18-101, et seq.

Notes

006.05.06 Ark. Code R. 005-GR-92

Ark. Code Ann. § 26-52-523