Pursuant to the authority vested in the Commissioner of Revenue
by Ark. Code Ann. §
in compliance therewith, the Commissioner of Revenue of the Arkansas Department
of Finance and Administration does hereby promulgate the following regulation
for the enforcement and administration of Sections 1 and 3 of Act 1232 of
1. EFFECTIVE DATE. This
regulation shall be effective as of January 1, 1998.
2. PURPOSE. This regulation is promulgated to
implement and clarify the allowance of a sales tax credit for the sale of a
used vehicle when the proceeds from such a sale are applied toward the purchase
price of another vehicle.
(A) "Consumer" shall mean any
private individual, business, organization or association.
(B) "Vehicle" shall mean an automobile,
truck, motorcycle (registered for highway use), trailer and
(C) "Sale" shall mean
the transfer of title to a used vehicle by a consumer (the seller) to another
individual or business enterprise (the buyer) in exchange for cash or the
equivalent of cash, such as a check or money order. A sale does not occur, and
therefore no credit will be allowed, when the title to a damaged vehicle is
transferred by a consumer to an insurance company in exchange for a cash
settlement paid by the insurance company.
(D) "Trade-in" shall mean a vehicle is taken
by a seller as a credit or partial payment on the sale of another
(A) If a consumer purchases a
vehicle and within forty-five (45) days of the date of purchase, either prior
to or after such purchase, sells a different vehicle in lieu of a trade-in, the
consumer will be entitled to a credit against the sales or use tax due on his
or her newly purchased vehicle as set forth in paragraphs 4(B) and
(B) If the consideration for
the vehicle purchased by the consumer is greater than the proceeds from the
sale of the used vehicle, the consumer shall pay sales or use tax on only the
net difference between these amounts.
(C) if the vehicle purchased by the consumer
cost less than the proceeds received from the vehicle sold by the consumer in
lieu of a trade-in, the consumer shall pay no sales tax on his or her newly
purchased vehicle. However, the credit shall not exceed the price paid by the
consumer for the newly purchased vehicle.
(A) In order to obtain the sales tax credit
as set forth in this regulation, the consumer must properly complete and then
submit the appropriate form to the Department. If the vehicle sold by the
consumer in lieu of a trade-in is sold prior to the
time the consumer registers and pays sales tax on his or her newly purchased
vehicle, an Affidavit for Sales Tax Credit must be submitted to the Revenue
Officer at the time the newly purchased vehicle is registered. If the vehicle
sold by the consumer in lieu of a trade-in is sold
after the consumer has already registered and paid
sales tax on his or her newly purchased vehicle, a Refund Claim form and a copy
of the newly purchased vehicle's registration certificate must be submitted by
the consumer to the Department's Tax Credits and Special Refunds
(B) The affidavit and
refund forms will be provided by the Department. The consumer shall be
responsible for properly completing the form. Arkansas law provides that it is
a felony to knowingly submit a form containing false information.
REFUNDS. If the vehicle sold by
the consumer in lieu of a trade-in is sold after
consumer has already registered and paid sales tax on his or her newly
purchased vehicle, the consumer must request a refund of any sales tax to which
the consumer is rightfully entitled under this regulation. The consumer must
submit a Refund Claim form and a copy of the newly purchased vehicle's
registration certificate to the following excise tax office:
Arkansas Department of Finance and Administration
Tax Credits and Special Refunds Section
Ledbetter Building, Room 203
P. O. Box 8054
Little Rock, AR 72203-8054
7. MULTIPLE SALES. If the consumer sells more
than one vehicle within the 45 day periods prior to or after purchasing a
vehicle, the consumer shall be entitled to claim all of the sales as sales "in
lieu of a trade-in" for sales tax credit. However, the cumulative credit shall
not exceed the price paid by the consumer for his or her newly purchased
vehicle and shall not be carried forward.
8. TRADE-IN. Consumers who make a trade-in on
the purchase of a vehicle may also take a sales tax credit against the purchase
price for any used vehicles sold by the consumer within forty-five (45) days
either prior to or after the purchase. Any such credit shall be limited to the
cash proceeds received by the consumer and shall in no event exceed the balance
paid by the consumer for his or her newly purchased vehicle after receiving
credit for the vehicle traded-in.
9. The tax credit set forth in this
regulation shall be available only to consumers who purchase a vehicle on or
after January 1, 1998.