Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Rule 006.05.91-007 - Sale of Motor Vehicles, Trailers, and Semitrailers Perm. Reg.

Current through Register Vol. 49, No. 6, June, 2024
A. GENERAL
			 INFORMATION
All sales of new and used motor vehicles, trailers and
				semitrailers are subject to sales or use tax. The tax is to be collected as
				follows:
1. Tax due on vehicles and
			 trailers which are required by Arkansas law to be registered and licensed for
			 use on public streets and highways shall be paid by the purchaser at the time
			 of registration and application for certificate of title.
2. For purposes of this regulation, motor
			 vehicles which are not required by Arkansas law to be registered and licensed
			 for use on public streets and highways are:
1) mopeds, motorcycles, and motor-driven
			 cycles which are designed or manufactured exclusively for competition or
			 off-road use, and
2) three and
			 four-wheel, all-terrain cycles and motorized bicycles.
3. Tax due on the sale of mopeds,
			 motorcycles, and motor-driven cycles which are designed or manufactured
			 exclusively for competition or offroad use is to be collected by the seller on
			 the full purchase price without regard to trade-in.
4. Tax due on the sale of three and
			 four-wheel, all-terrain cycles and motorized bicycles shall be collected by the
			 seller on the full purchase price without regard to trade-in.
5. Tax due on the sale of motorcycles and
			 motor-driven cycles registered for street use is to be paid by the purchaser at
			 the time of registration and application for certificate of title. However,
			 when the motorcycle or motor-driven cycle was sold in such a condition that it
			 could not be licensed for street use and sales tax was collected and remitted
			 by the seller, upon the purchaser's subsequent application for a license to
			 operate the cycle upon the street, the purchaser shall be entitled to a credit
			 for the sales tax paid by the seller. The purchaser shall present proper proof
			 of such payment of sales tax at the time of registration.
CALCULATION OF TAX DUE
1.
Motor Vehicles Required by Law
			 to be Licensed and Registered
a.
			 If the total gross receipts or gross proceeds for the sale of a new or used
			 motor vehicle or trailer is less than $2,000,000, then the sales or use tax is
			 not due on the vehicle or trailer.
b. If the total gross receipts or gross
			 proceeds for the sale of a motor vehicle or trailer is $2,000.00 or more, then
			 the sales or use tax will be due on the difference between the total gross
			 receipts or gross proceeds for the motor vehicle and any credit resulting from
			 the trade-in of a used motor vehicle or trailer.
c. The term "Gross Receipts" or "Gross
			 Proceeds" means the total amount of consideration for the sale of the motor
			 vehicle or trailer, whether the consideration is in money or otherwise and
			 including any manufacturer's or dealer's rebates and federal luxury excise tax,
			 without any deduction therefor on account of the cost of the property sold,
			 labor service performed, interest paid by the retailer, losses or any expenses
			 whatsoever. Federal manufacturer's excise taxes are not a part of the "Gross
			 Receipts" or "Gross Proceeds" if the excise taxes are separately stated or
			 separately billed to the consumer. The term "Gross Receipts" or "Gross
			 Proceeds" includes the value of any property taken in lieu of or in addition to
			 money as consideration for a sale.
d. Local Tax: The local sales or use tax
			 levied by the city and county of the purchaser's residence shall be due on the
			 sale of the motor vehicle. A corporation or partnership is a resident of any
			 city and county in which it maintains an office or place of business.
e. For all motor vehicles and trailers
			 purchased after November 3, 1989, no credit will be allowed for sales or use
			 taxes paid to another state on purchases of motor vehicles, trailers or
			 semitrailers which were first registered by the purchaser in
			 Arkansas.
f. Warranties: Sales or
			 use tax is due on the gross receipts or proceeds received for an extended
			 warranty on a new or used vehicle offered either by the manufacturer or the
			 dealer. When the extended warranty is purchased at the time the new or used
			 vehicle is sold, the price of the warranty is to be included in the total gross
			 receipts or proceeds on which tax is collected at the time of registration.
			 Effective May 1, 1991, used car dealers are no longer required to collect sales
			 tax on extended warranties on used vehicles when the warranty is sold at the
			 time the car is sold or prior to registration of the vehicle. Tax on used car
			 warranties is to be paid by the purchaser to the Director at the time of
			 registration. The dealer will be liable for sales tax on the warranty if the
			 warranty is sold at the same time as the vehicle but is billed to the customer
			 on a separate invoice. If the dealer or manufacturer sells a warranty on a new
			 or used car after the car has been registered, the dealer or manufacturer must
			 continue to collect sales tax on the warranty and local tax on these sales is
			 calculated at the rate of the city and county in which the sale
			 occurred.
g. Trade-in credit shall
			 be allowed only if the item taken in trade for the sale of a motor vehicle,
			 trailer or semitrailer is a motor vehicle, trailer or semitrailer.
2.
Motor Vehicles Not
			 Required to be Licensed and Registered
a. The trade-in deduction in Act 3 of 1991
			 does not apply to vehicles not required by Arkansas law to be licensed and
			 registered for use on public streets and highways, as defined in paragraph A(2)
			 of this regulation.
b. Local tax
			 shall be calculated on sales of vehicles not registered and licensed for use on
			 public streets and highways at the rate levied, if any, by the city and county
			 in which the sale occurred.