LITTLE ROCK — Gov. Asa Hutchinson and state legislators Friday hailed a decision by Amazon to begin collecting sales taxes on purchases in Arkansas.
“The announcement from Amazon to start the sales tax collection for Arkansas in March is laudable and good news for the state,” Hutchison said in a statement.
“This step by Amazon has been voluntary and reflects the new landscape in which retailers recognize the practicality and fairness of sales tax being treated equally between online sales and in person store sales. This decision also shifts the responsibility of sales tax payment from the customer to the retailer at the time of checkout — providing further clarity and efficiency to the current and often misunderstood Arkansas law,” he said.
Currently, Arkansas law requires people who make online purchases to self-report them and submit tax payments to the state. The announcement by Amazon comes while state lawmakers are considering two bills on the issue.
Senate Bill 140 by Sen. Jake Files, R-Fort Smith, would require an out-of-state seller with no physical presence in Arkansas that sells more than $100,000 worth of products or makes at least 200 transactions in Arkansas in a calendar year to begin collecting sales taxes. It also would allow the state to take a seller to court to recover sales tax revenue.
The bill has cleared the Senate and is expected to be taken up by the House Revenue and Taxation Committee next week.
Files said Friday the decision by Amazon “is definitely a part of the puzzle, but it’s not all of it.”
Files said his bill is still needed to force other online retailers like Zappos and Overstock.com to collect sales taxes at the point of sale.
House Bill 1388 by Rep. Dan Douglas, R-Bentonville, would require a seller that is based out of state and has no physical presence in Arkansas to notify every Arkansas customer at the time of a purchase that under existing Arkansas law, the customer is required to file a tax return and pay sales taxes on purchases from the seller.
Failing to provide the notification at the time of a purchase could be punished with a fine of $5 for each failure to provide notice.
Also, by Jan. 31 of each year, the seller would have to provide each Arkansas customer with notice of the total amount the customer spent on purchases from the seller in the previous calendar year or face a fine of $10 for each failure to provide notice.
The seller also would have to provide to the state Department of Finance of Administration an annual report of sales to each Arkansas customer, listing the customer’s name, the amount spent and the delivery address or addresses. Failing to comply could be punished with a fine of $10 for each customer whose information is not reported.
The bill has cleared the House and is expected to be considered next week by the Senate Revenue and Taxation Committee.
Douglas said Friday the decision by Amazon “is good news.”
“Now we’ve got Amazon on our side. We need to make the rest of them operate on the same playing field also,” he said.