Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Rule 006.05.98-006 - Arkansas Gross Receipts Tax Regulation GR-53 - Exemptions from Tax-Sales for Resale Manufacturers, Compounders and Processors (Amended 1997)

Current through Register Vol. 49, No. 6, June, 2024
Gross Receipts Tax Regulation GR-53(A) is hereby amended to
				read as follows:
"The gross receipts or gross proceeds derived from sales for
				resale to persons regularly engaged in the business of reselling the articles
				or services purchased whether purchased within or without the State are exempt
				from the tax; provided, however, that such sales within the state are made to
				persons to whom sales tax permits have been issued as provided in Ark. Code
				Ann. §
								26-52-201 et seq.
				and regulation number GR-72. (See also GR-74.)"
Gross Receipts Tax Regulation GR-53(B) is hereby amended to
				read as follows:
"It is necessary that the person claiming the benefits of this
				sale for resale exemption prove to the seller that he is engaged in the
				business of reselling the articles or services purchased by him. The purchaser
				must provide the seller with the purchaser's retail permit number if the sale
				is made within Arkansas. In addition to furnishing his retail permit number to
				the seller, the purchaser must certify in writing to the seller that he (the
				purchaser) is engaged in the business of reselling the articles or services
				purchased. Failure to so certify, or to falsely certify with the knowledge that
				the items or services purchased are not for resale, shall be sufficient grounds
				upon which the Commissioner may cause the purchaser's retail permit to be
				canceled. Certification may be made on the bill, invoice or sales slip retained
				by the seller by furnishing a certification letter to the seller which contain
				the following:
(1) the name and
			 address of the purchaser;
(2) the
			 retail permit number of the permit issued to the purchaser;
(3) a statement that the purchaser is engaged
			 in the business of reselling the articles or services purchased;
(4) a statement that the articles or services
			 purchased are purchased for resale;
(5) the signature of the purchaser or a
			 person authorized to legally bind the purchaser.
If certification is made directly on the bill, sales slip or
				invoice, the purchaser need only note his retail permit number and write the
				following statement (or a reasonable approximation thereof): 'I, (name,
				position, business name), hereby certify that the (materials or services)
				listed on the (bill, invoice or sales slip) are purchased for resale and that I
				am regularly engaged in the business of reselling the (items or services) noted
				on this (bill, invoice or sales slip).' The purchaser or his authorized agent
				must then sign the bill, invoice or sales slip and return a copy thereof to the
				seller for his records.
Alternatively, certification may be made in compliance with
				this regulation by completing the Resale Certificate printed as Exhibit 'A'
				following this regulation."
Gross Receipts Tax Regulation GR-53(C) is hereby amended to
				read as follows:
"If a retail permit holder purchases goods, services, wares,
				and merchandise from a seller on a regular basis, then the permit holder may
				furnish the Resale Certificate or certification letter described in Section (B)
				of this regulation to the seller and the seller may subsequently make sales of
				tangible personal property or services to retail permit holder without
				requiring a certification letter or certification statement for each subsequent
				sale. The retail permit holder must notify the seller of all purchases which
				are not for resale and remit the applicable amount of tax thereon. If the
				retail permit holder fails to so notify the seller of purchases not intended
				for resale, then sufficient grounds shall exist for the Commissioner to cancel
				the retail permit of the retail permit holder who failed to so notify the
				seller."
Gross Receipts Tax Regulation GR-53(D) is hereby amended to
				read as follows:
"D. SELLER OF GOODS
			 OR SERVICES - LIABILITY FOR TAX
(1) The seller
			 of items or services intended for resale must satisfy the requirements of
			 Section (B) or (C) of this regulation. If the seller does not require the
			 purchaser to perform the requirements listed in Section (B) or (C) and the sale
			 was otherwise taxable, then the seller shall be liable for the tax upon the
			 gross receipts or gross proceeds derived from the sale of the items or
			 services.
(2) If the seller of
			 items or services intended for resale accepts a certification or completed
			 Resale Certificate in good faith, then the seller shall not be liable for tax
			 on the gross receipts from the sale of goods regardless of the subsequent
			 taxable use of the goods or services by the purchaser. A seller takes a Resale
			 Certificate in good faith if he has no actual knowledge at the time of the sale
			 that the purchaser is not entitled to the resale exemption. Actual knowledge
			 may be implied from a previous course of dealing, knowledge of the purchaser's
			 business, knowledge or the purchaser's intended use for the goods or services
			 or other facts and circumstances which should cause a reasonable person to
			 refuse to accept the Resale Certificate as a basis for exempting the
			 transaction from sales tax."
Gross Receipts Tax Regulation GR-53(E) is hereby amended to
				read as follows:
"(1) Goods, services,
			 wares, merchandise and property sold for use in manuf acrtrtnringv compounding,
			 processing, assembling or preparing for sale, can be classified as having been
			 sold for resale purposes only in the event such goods, services, wares,
			 merchandise or property becomes a recognizable integral part of the
			 manufactured, compounded, processed, assembled or prepared products. Sales of
			 goods, services, wares, merchandise, and property not conforming to this
			 requirement are classified as being for consumption or use of the purchaser
			 thereof and are taxable. For purposes of this Section, the following
			 definitions shall apply:
(a) The term
			 'recognizable' means capable of being recognized in the finished product. The
			 capability to recognize the effect of goods, wares, merchandise, or property
			 upon the finished product is insufficient to establish that the goods, wares,
			 merchandise or property has been resold.
(b) The term 'integral' means essential to
			 the completeness of the finished product.
(2) Services shall be considered a
			 'recognizable' and 'integral' part of a finished product if:
(a) The services were actually performed on
			 the items or articles being sold; and
(b) The services enhance the value of the
			 items being sold.
Other services performed for the business engaged in
				manufacturing, compounding, processing, assembling, or preparing items for sale
				shall not be entitled to the sale for resale exemption."