Quick Answer: You need to get a sales tax permit in Arkansas if you have physical presence or meet economic nexus requirements. More detailed information on nexus requirements in Arkansas is included below.
Your business owes sales tax in any states where it has “sales tax nexus”. In short, if you have sales tax nexus you need to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit.
Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, an economic presence, or by other factors. Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.
Once you determine that you have sales tax nexus in Arkansas, your next step is to register for a sales tax permit in the state. Check out our blog post on getting a sales tax permit in Arkansas for more information about that process. If you are not interested in doing the work of getting the permit yourself, TaxValet can handle the permit registration for you with our Sales Tax Permit Registration Service.
1. Economic nexus in Arkansas
If you made $100,000 of sales in Arkansas or 200 transactions in a year, then you are required to register for, collect, and pay sales tax to the state. If you meet this threshold, it does not matter if you have a physical presence in Arkansas. Nexus has been created based on your volume of sales. See the Arkansas Department of Finance and Administration for more information.
2. Physical presence in Arkansas
The following creates a physical presence nexus in Arkansas:
a. An office or place of business, such as a retail store.
b. A warehouse or inventory stored in the state, this includes inventory stored by Amazon. If you are an Amazon FBA seller, Amazon may store your inventory in Arkansas. This may create physical nexus for your business.
c. Employees, agents or representatives in the state.
For more information see ARKANSAS RULES under the heading “ Doing Business or Engaging in Business” in Arkansas.
If you are an online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), sales tax will be remitted by the marketplace. However, the state economic and physical nexus rules apply to Marketplace Sellers, therefore, you may still need a sales tax permit in Arkansas if you meet any of the above thresholds. You may exclude your marketplace sales for the purpose of calculating whether you have met the economic threshold requirements.
For more information, see the Arkansas Department of Finance and Administration frequently asked questions page.
If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, check out our Sales Tax Starter Kit service. In fact, if at any point you are stuck and want a team of experts to handle all of this for you, don’t hesitate to contact us.