Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Rule 006.05.97-003 - Gross Receipts Regulations - GR-9(C) - Service Contracts, Maintenance Agreements & Extended Warranties; GR-12(D) - Exemption for Rental Motor Vehicles; and GR-20(C)(E) and (G) - Long Term Lease of Vehicles.

Current through Register Vol. 49, No. 6, June, 2024
HNDING OF IMMINENT PERIL AND STATEMENT OF REASONS
During the 81st General Assembly, the Arkansas Legislature
				passed Act 1076 of 1997. This act provided the following changes to existing
				law:
1) Imposed sales tax on the gross
			 receipts derived from the sale of service contracts covering taxable
			 services;
2) Provided an exemption
			 from sales and use tax for motor vehicles used for long-term lease;
			 and,
3) Levied a new 1.5% long-term
			 rental tax on the lease of motor vehicles.
This regulation is necessary in order to provide an orderly
				implementation of Act 1076 and to provide needed direction for motor vehicle
				lessors. Without this regulation, lessors of motor vehicles may not properly
				claim the exemption or collect tax. The provisions of this regulation will
				become effective on August 1, 1997.
EMERGENCY REGULATION
These amendments to the Arkansas Gross Receipts Tax Regulations
				are necessary in order to properly implement and enforce Act 1076 of 1997 which
				becomes effective on August 1, 1997.
I.
Gross Receipts Regulation GR-9(C)
			 is amended to read as follows:
"C.
			 Service Contracts, Maintenance Agreements, & Extended Warranties
1. Sales tax shall apply to the gross
			 receipts derived from the sale of contracts, including service contracts,
			 maintenance agreements and extended warranties, which in whole or in part
			 provide for the future performance of or payment for services which are subject
			 to gross receipts tax. The seller of the contract must collect and remit the
			 tax due on the sale of the contract except when the contract is sold
			 simultaneously with a motor vehicle in which case the purchaser of the vehicle
			 shall pay sales tax on the purchase of the contract at the time of vehicle
			 registration.
2. Sales tax shall
			 not be collected from the consumer on labor or parts used in the performance of
			 services covered by a taxable service contract, maintenance agreement or
			 extended warranty.
3. Examples:
a. Consumer purchases a new vehicle and an
			 extended warranty at the same time. When customer registers the vehicle, he
			 will pay sales tax on the purchase price of the vehicle and the purchase price
			 of the extended warranty. Service and parts provided under the warranty will
			 not be subject to sales tax.
b.
			 Consumer purchases a new computer and a service contract. The seller of the
			 computer collects sales tax on the purchase price of the computer and the
			 service contract. Service and parts provided under the warranty will not be
			 subject to sales tax.
4.
			 If the seller of a taxable contract allows the purchaser to pay for the
			 contract in monthly or other periodic installments, then the seller may report
			 and remit sales tax on the periodic payments.
5. Emergency Regulation 1996-4 is repealed
			 effective July 31, 1997. This amendment is effective on August 1,
			 1997."