Federal Aviation Administration 

Attn: Director of Airport Compliance and Management Analysis 

800 Independence Avenue SW 

Washington, DC 20591 

Dear Sir or Madam: 

The Arkansas Department of Finance and Administration (DF A) is the primary tax collection agency for the State of Arkansas and is the agency responsible for collecting both state, city, and county sales taxes 

on aviation fueL DFA recognizes that the Federal Aviation Administration (FAA) has adopted policies and procedures addressing the requirement that state and local taxes on aviation fuel are considered airport 

revenue subject to the revenue-use requirement, except those taxes in effect December 30, 1987. DFA 

also understands that noncompliant states are expected to submit an action plan to the FAA outlining the strategic plan to come into compliance with these revenue use requirements. 

Each state, city, and county sales and use tax levied on aviation fuel by the State of Arkansas or one of its 

political subdivisions has been reviewed to ensure compliance with federal law. It is the conclusion of 

DFA that all state and local sales and use taxes administered byDFA are in full compliance with federal 

requirements. This conclusion is based upon the fact that sales and use taxes levied upon aviation fuel under any city or county tax enacted after December 30, 1987 are currently deposited for use by the ap- propriate local airport authority. 

With regard to those city and county sales and use taxes levied prior to December 30, 1987 and still in effect, it is DF As conclusion that each of those taxes qualifies for the grandfather provisions as not subject 

to the airport revenue use requirement. Attached to this letter is a packet of information for each local 

sales and use tax enacted prior to December 30, 1987 by a city or county located within the State of Arkansas. A copy of each ordinance and any subsequent amendments are attached for each tax levy. A co- versheet is also included providing the enactment date of each ordinance, the ordinance number, the appli- cable tax rate, the purpose or use of each tax, the applicability of the tax, administrative costs, the applica- ble credits and exemptions, and a list of any subsequent amendments. Finally, each coversheet provides a brief explanation regarding the reason DF A concludes that the tax qualifies for the grandfather provision. 

With regard to state sales and use taxes, DF A submits that the state gross receipts, or sales, tax is being applied in a manner compliant with FAA Policy & Procedures Concerning the Use of Airport Revenue; 

Proceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendment) adopted on November 7, 2014. 

Specifically, 4.5% of the 6.5% state tax on aviation fuel is designated as special revenue to the Arkansas 

Department of Aeronautics as a "local airport system" under 49 U.S.C. § 47133(a) in so far as a state tax 
The Arkansas Gross Receipts Tax was originally enacted in 1941. See Ark. Acts 1941, No. 368. The 

Gross Receipts tax applies to all sales of tangible personal property and to specified services. See Ark. Code Ann. § 26-52-301 and -302. The State of Arkansas provides for specific reporting criteria that dis- tinguishes the taxes remitted to DF A on aviation fuel transactions from the taxes remitted on other taxable 

transactions to allow for the tax revenue of the former to be appropriated or disbursed in compliance with FAA Policy & Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Aviation 

Fuel (79 Fed. Reg. 6628)(Amendment). 

The state gross receipts tax on aviation fuel, aircraft, aviation services, aircraft parts and accessories, and other gross receipts taxes remitted by aircraft dealers, airports, and flying fields is classified as special 

revenue for the Arkansas Department of Aeronautics. See, e.g., Ark. Code Ann. § 19-6-402; and§ 27- 115-11 0( constitutional tax levies and certain special revenue gross receipts taxes such as educational adequacy are not designated as special revenue for the Department of Aeronautics) . Specifically, Ark. Code Ann. § 21-115-110(!)(6) desigoates all general sales tax revenue derived from the sale of aviation fuel, aircraft, aviation services, aircraft parts and accessories, and other gross receipts taxes remitted by aircraft dealers, airports, and flying fields to be special revenue, that is revenue that may only be used for the stat- utorily defined purposes. This special revenue is deposited in the Arkansas Department of Aeronautics Fund created for the use of the Arkansas Department of Aeronautics, after an administrative deduction for 

State Central Services to offset collection costs pursuant to Ark. Code Ann. § 19-5-203. Ark. Code Ann. 

§ 19-6-402. Both the Arkansas Department of Aeronautics, in 1941, and the Departmeot of Aeronautics Fund, in 1973, demonstrate specific funding priorities for Arkansas aeronautics that predate the FAA Policy & Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendment). 

The Arkansas Department of Aeronautics is tasked with the development and maintenance of the State 

aviation program in Ark. Code Ann. § 27-115-101 through -110. This expresslyiocludes the "con- struct[ion] and improv[ ement] of airports, civil airways, and other air navigation facilities .... " Ark. Code Ann. § 27-115-11 0( d). The current level of funding for the Arkansas Department of Aeronautics exceeds the minimum standards set in FAA Policy & Procedures Concerning the Use of Airport Revenue; Pro- ceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendment) because the State of Arkansas designates additional tax revenue from aeronautic-related transactions to the Arkansas Department of Aero- nautics. 

The specific pledge of state gross receipts tax revenue on the sale of aviation fuel to the Arkansas Depart- ment of Aeronautics meets the requirements ofF AA Policy & Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendmeot) and remedies any de- ficiency at the State level by appropriating additional gross receipts tax revenue of other aeronautic-related 

transactions to the Arkansas Department of Aeronautics exceeding the FAA minimum standards. 
Sincerely, 

John H. Theis 

Assistant Commissioner of Revenue 

Policy and Legal 

Cc: Paul Gehring, Chief Counsel 

Revenue Legal Counsel 

Tom Atchley, Administrator 

Excise Tax Administration 

Roberta Ovennan, Manager 

Sales and Use Tax 
Federal Aviation Administration 

Attn: Director of Airport Compliance and Management Analysis 

800 Independence Avenue SW 

Washington, DC 20591 

Dear Sir or Madam: 

The Arkansas Department of Finance and Administration (DFA) is the primary tax collection agency for the State of Arkansas and is the agency responsible for collecting both state, city, and county sales taxes 

on aviation fueL DFA recognizes that the Federal Aviation Administration (FAA) has adopted policies and procedures addressing the requirement that state and local taxes on aviation fuel are considered airport 

revenue subject to the revenue-use requirement, except those taxes in effect December 30, 1987. DFA also understands that noncompliant states are expected to submit an action plan to the FAA outlining the strategic plan to come into compliance with these revenue use requirements. 

Each state, city, and county sales and use tax levied on aviation fuel by the State of Arkansas or one of its political subdivisions has been reviewed to ensure compliance with federal law. It is the conclusion of 

DF A that all state and local sales and use taxes administered by DF A are in full compliance with federal requirements. This conclusion is based upon the fact that sales and use taxes levied upon aviation fuel under any city or county tax enacted after December 30, 1987 are currently deposited for use by the ap~ propriate local airport authority. 

With regard to those city and county sales and use taxes levied prior to December 30, 1987 and still in effect, it is DF As conclusion that each of those taxes qualifies for the grandfather provisions as not subject to the airport revenue use requirement. Attached to this letter is a packet of information for each local sales and use tax enacted prior to December 30, 1987 by a city or county located within the State of Arkansas. A copy of each ordinance and any subsequent amendments are attached for each tax levy. A co· versheet is also included providing the enactment date of each ordinance, the ordinance number, the appli- cable tax rate, the purpose or use of each tax, the applicability of the tax, administrative costs, the applica~ ble credits and exemptions, and a list of any subsequent amendments. Finally, each coversheet provides a brief explanation regarding the reason DFA concludes that the tax qualifies for the grandfather provision. 

With regard to state sales and use taxes, DF A submits that the state gross receipts, or sales, tax is being applied in a manner compliant with FAA Policy & Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendment) adopted on November 7, 2014. Specifically, 4.5% of the 6.5% state tax on aviation fuel is designated as special revenue to the Arkansas Department of Aeronautics as a '•local airport system" under 49 U.S.C. § 47133(a) in so far as a state tax 
The Arkansas Gross Receipts Tax was originally enacted in 1941. See Ark. Acts 1941, No. 368. The Gross Receipts tax applies to all sales of tangible personal property and to specified services. See Ark. Code Ann.§ 26-52-301 and -302. The State of Arkansas provides for specific reporting criteria that dis- tinguishes the taxes remitted to DF A on aviation fuel transactions from the taxes remitted on other taxable transactions to allow for the tax revenue of the former to be appropriated or disbursed in compliance with FAA Policy & Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Aviation 

Fuel (79 Fed. Reg. 6628)(Amendment). 

The state gross receipts tax on aviation fuel, aircraft, aviation services, aircraft parts and accessories, and other gross receipts taxes remitted by aircraft dealers, airports, and flying fields is classified as special revenue for the Arkansas Department of Aeronautics. See, e.g., Ark. Code Ann.§ 19-6-402; and§ 27- 115-11 0( constitutional tax levies and certain special revenue gross receipts taxes such as educational adequacy are not designated as special revenue for the Department of Aeronautics) . Specifically, Ark. Code Ann. § 21-115-11 O(f)(6) designates all general sales tax revenue derived from the sale of aviation fuel, aircraft, aviation services, aircraft parts and accessories, and other gross receipts taxes remitted by aircraft dealers, airports, and flying fields to be special revenue, that is revenue that may only be used for the stat- utorily defined purposes. This special revenue is deposited in the Arkansas Department of Aeronautics Fund created for the use of the Arkansas Department of Aeronautics, after an administrative deduction for State Central Services to offset collection costs pursuant to Ark. Code Ann.§ 19-5-203. Ark. Code Ann. § 19-6-402. Both the Arkansas Department of Aeronautics, in 1941, and the Department of Aeronautics Fund, in 1973, demonstrate specific funding priorities for Arkansas aeronautics that predate the FAA Policy & Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendment). 

The Arkansas Department of Aeronautics is tasked with the development and maintenance of the State aviation program in Ark. Code Ann. § 27-115-101 through -II 0. This expressly includes the "con- struct[ion] and improv[ement] of airports, civil airways, and other air navigation facilities .... " Ark. Code Ann. § 27-115-IIO(d). The current level of funding for the Arkansas Department of Aeronautics exceeds the minimum standards set in FAA Policy & Procedures Concerning the Use of Airport Revenue; Pro- ceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendment) because the State of Arkansas des- ignates additional tax revenue from aeronautic-related transactions to the Arkansas Department of Aero- nautics. 

The specific pledge of state gross receipts tax revenue on the sale of aviation fuel to the Arkansas Depart- ment of Aeronautics meets the requirements of FAA Policy & Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628)(Amendment) and remedies any de- ficiency at the State level by appropriating additional gross receipts tax revenue of other aeronautic-related transactions to the Arkansas Department of Aeronautics exceeding the FAA minimwn standards. 
Sincerely, ;f), ~ 

Jolm H. Theis 

Assistant Commissioner of Revenue 

Policy and Legal 

Cc: Paul Gehring, Chief Counsel 

Revenue Legal Counsel 

Tom Atchley, Administrator 

Excise Tax Administration 

Roberta Overman, Manager 

Sales and Use Tax