Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › GROSS RECEIPTS TAX RULES › Rule 006.05.06-005-GR-30 - EXEMPTIONS FROM TAX - CERTAIN LABOR SERVICES EXEMPT FROM TAX

Current through Register Vol. 49, No. 6, June, 2024
A. Any person who
				performs taxable labor for any other person who holds a retail permit need not
				collect and remit tax upon labor services performed for that person holding the
				retail permit if, and only if, the labor is to be charged to, and the tax
				collected from, the ultimate consumer by the person purchasing the taxable
				labor.
Example: Seller operates an automobile paint and body shop.
				  Retailer, an automobile dealer, contracts with Seller to repair and paint
				  automobiles for those consumers to whom Retailer has sold automobiles. Retailer
				  performs the necessary engine repairs to the damaged automobiles but contracts
				  with Seller to perform the body and paint work. If Retailer bills the consumer
				  for all work performed by both Seller and Retailer, and collects the applicable
				  tax on the work, then Seller need not collect tax from Retailer.
B. The tax does not apply to the
				sale of service provided by coin-operated car washes where the car-washing
				equipment is activated by the insertion of a coin or coins into a slot or
				receptacle and where the labor of washing the exterior of the car or motor
				vehicle is performed solely by the customer or by mechanical
				equipment.
C. The tax does not
				apply to the sale of services performed on watches and clocks which are
				received by mail or common carrier from outside this State and which, after the
				service is performed, are returned by mail or common carrier, or in the
				repairman's own conveyance, to points outside this State.
D. Prior to December 1, 2004, the tax does
				not apply to the sale of repair or maintenance services of railroad parts,
				railroad cars and equipment brought into the State of Arkansas solely and
				exclusively for the purpose of being repaired, refurbished, modified, or
				converted within this State. The tax does apply to any parts, materials, or
				supplies purchased in the repair, refurbishing, conversion or modification of
				railroad parts, railroad cars, and equipment. After December 1, 2004, the tax
				does not apply to the parts or labor used in the repair and maintenance of
				railroad parts, railroad cars and equipment owned by railroad companies or
				carriers.
E. The gross proceeds or
				gross receipts derived from the repair or refurbishing of telephone instruments
				are exempt if the instruments are sent into Arkansas for repair and then
				shipped out of Arkansas to the state of origin.
F. The gross receipts or gross proceeds
				derived from the repair or remanufacture of industrial metal rollers is exempt
				from tax if:
1. The rollers have a
				remanufactured, nonmetallic material covering on all or part of the roller
				surface; and
2. The rollers are
				brought into Arkansas solely and exclusively for the purpose of repair or
				manufacture; and
3. The rollers are
				shipped back to their state of origin after repair or remanufacture.