006.05.98 Ark. Code R. § 002 - Emergency Amendment to Regulation GR-3(C) - Manufacturers' Buydowns
Arkansas Gross Receipts Tax Regulation GR-3(C) is amended to add two new paragraphs, to be paragraphs (4)(a) and (4)(b), to read as follows:
Issued and hereby effective this 23th day of Feb 1998 in the City of Little Rock, Arkansas.
FINDING OF IMMINENT PERIL AND STATEMENT OF REASONS
The use of "buydowns" have become a popular selling incentive within this state. Buydowns are cash payments from the manufacturer to a retailer which allow the retailer to sell a particular product at a lower price. Buydowns are frequently used by manufacturers instead of issuing manufacturers' coupons. Retailers are confused about how sales tax is to be collected from a consumer if the selling price of an item is reduced based upon the buydown received by the retailer from the manufacturer. These buydowns occur solely between the manufacturer and retailer and should not be considered part of the taxable gross receipts paid by the ultimate consumer for the manufacturer's product.
Because retailers are confused concerning how to treat buydowns for sales tax purposes, some retailers are collecting sales tax from their customers on the value of any buydown while others do not. As a result, some consumers will be charged an excessive amount of sales tax on the sale of such products. Therefore, the Director of the Department of Finance and Administration and the Commissioner of Revenue find that a state of imminent peril exists requiring the issuance of the attached amendment to Gross Receipts Tax Regulation GR-3(C) on an emergency basis. This regulation is necessary to clarify this issue and to prevent taxpayers from collecting an improper or excessive amount of sales tax from their customers.
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