Tax collected by seller — Prohibited practice — Tax due on gross receipts — Local taxes

(a) The gross receipts tax must be collected by the seller of tangible personal property or taxable services in all cases except those cases where the tax is to be paid directly to the state by the purchaser.

# (b) Tax rate

(b) Tax rate.

(1) The amount of state tax to be collected by the seller is six percent (6%) of the gross receipts or gross proceeds derived from the sale.

# (2) Manufacturing utilities

(2) Manufacturing utilities.

(A) As of July 1, 2008, the state tax rate on sales of natural gas or electricity to a manufacturer for use directly in the manufacturing process is four percent (4%) of the gross receipts or gross proceeds derived from the sale.

(B) From July 1, 2007, through June 30, 2008, the state tax rate on sales of natural gas or electricity to a manufacturer for use directly in the manufacturing process was four and one-half percent (4 1/2%) of the gross receipts or gross proceeds derived from the sale.

(C) See 26 CAR pt. 32, Reduced Sales Tax Rate for Natural Gas or Electricity Used Directly in the Manufacturing Process.

# (3) Food and food ingredients

(3) Food and food ingredients.

(A) As of July 1, 2007, the state tax rate on sales of food and food ingredients is three percent (3%) of the gross receipts or gross proceeds derived from the sale.

(B) See 26 CAR pt. 31, Special Rules for Sales of Food and Food Ingredients and Prepared Food.

# (c) Computation

(c) Computation.
(1)(A) In computing the tax to be collected upon any particular sale, sellers may elect to compute the tax due on a transaction on a per item or an invoice basis.

(B) However, sellers must apply the rounding rule to the aggregated state and local sales or use taxes.

# Rounding rule

(2) Rounding rule. Sellers must utilize the following rounding algorithm for sales or use tax computation:

(A) Tax computation must be carried to the third decimal place; and

(B) The tax must be rounded to a whole cent using a method that rounds up to the next cent whenever the third decimal place is greater than four (4).
Example 1: Computing tax on an item basis. XYZ retailer sells a book and a magazine to Purchaser A. The sales price of the book is seventeen dollars and ninety-five cents ($17.95), and the sales price of the magazine is six dollars ($6.00). The applicable state sales tax rate is six percent (6.0%). XYZ retailer elects to compute the tax due on a per item basis. The state tax on the book is one dollar and eight cents ($1.08) (6% of $17.95 = $1.077). The state tax on the magazine is thirty-six cents ($0.36) (6% of $6.00 = $0.36). The total state tax computed on a per item basis is one dollar and forty-four cents ($1.44).
Example 2: Computing tax on an invoice basis. XYZ retailer sells a book and a magazine to Purchaser A. The sales price of the book is seventeen dollars and ninety-five cents ($17.95) and the sales price of the magazine is six dollars ($6.00). The applicable state sales tax rate is six percent (6.0%). XYZ retailer elects to compute the tax due on an invoice basis. The invoice price before tax is twenty-three dollars and ninety-five cents ($23.95). The total state tax computed on the invoice basis is one dollar and forty-four cents ($1.44) (6% of $23.95 = $1.437).

# (d) Liability

(d) Liability.

(1) Sellers are liable for the sales tax derived from all taxable sales during the taxable period at the combined state, city, and county sales tax rate.

(2) See 26 CAR § 30-1210.

# (e) Local taxes

(e) Local taxes.

(1) Towns, cities, and counties have authority under Arkansas law to levy sales taxes.

(2) Taxpayers should contact the Sales and Use Tax Section of the Revenue Division of the Department of Finance and Administration if they have a question as to whether they are within a jurisdiction that requires them to collect and remit a local tax.

(3) When the Commissioner of Revenue is authorized or required to collect or administer a local sales tax, that tax shall be administered in accordance with this part.

(4) See 26 CAR § 30-1224 for specific rules concerning the administration of local sales taxes.