AR Marketplace Facilitator Act

Arkansas’s Marketplace Facilitator Sales Tax Law, Explained

by Sarah Craig

Good news for marketplace sellers! The state of Arkansas now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Walmart or Amazon.

This means that if you sell on a platform like eBay, then eBay will collect sales tax from your Arkansas buyers on your behalf, and remit it to the state. 

But as usual, there are always a few wrinkles here when it comes to eCommerce sales tax. 

This post will explain what online sellers need to know about the Arkansas marketplace facilitator law, and answer your frequently asked questions. 

Overview of the Arkansas Marketplace Facilitator Law

Arkansas’s marketplace facilitator law states that marketplaces are required to collect and remit sales tax on sales facilitated through the marketplace effective July 1, 2019.

Quick Facts about the Arkansas Marketplace Facilitator Law

    • Effective date: July 1, 2019
    • Threshold: Arkansas has passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective July 1, 2019.
    • State law information: Read the full text of the Arkansas Marketplace Facilitator Law
  • Marketplaces that have adopted this law: 

Frequently asked Questions about Marketplace Facilitator Laws

What exactly is a marketplace facilitator in Arkansas?

Arkansas law defines a marketplace facilitator as “a person that facilitates the sale of tangible personal property, taxable services, a digital code, a digital magazine, or specified digital products.”

Online sales platforms like Walmart and eBay are considered marketplace facilitators under Arkansas law. 

A software like Shopify or Magento that allows online sellers to build and manage their own stores would not be considered a marketplace facilitator. 

Does this mean I can stop collecting Arkansas sales tax?

It depends. Every business’s sales tax situation is unique to that business. 

Let’s look at a couple of common scenarios for businesses who have sales tax nexus in Arkansas. 

Example #1: You only make sales on online marketplaces. 

In this example, you only sell on Amazon and eBay. Because Amazon and eBay are both now collecting sales tax from buyers on your behalf, you are not required to collect sales tax from your buyers. (However, you may still be required to file periodic sales tax returns. See “Does this mean I can cancel my Arkansas sales tax permit?” below.)

Example #2: You sell on online marketplaces and your own online store and/or brick and mortar store.

In this case, you’d still be required to collect sales tax from buyers who purchase from you through your own online store (for example, via your WooCommerce or Ecwid store). And you would still be required to collect sales tax from your brick and mortar customers. 

Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.

Does this mean I can cancel my Arkansas sales tax permit?

No. Arkansas’s marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. Arkansas’s taxing authority has said that if you are already registered to collect Arkansas sales tax, you should remain registered

Do I still need to file an Arkansas sales tax return?

If you are registered to collect sales tax in Arkansas (i.e. you have an active Arkansas sales tax permit) then the state still requires that you file sales tax returns.

If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a “zero return.” (This is a return showing that you do not have any sales tax to remit to the state.)

Be cautious here. If you are registered for a sales tax permit and do not file, the state can assess penalties even though you don’t have any sales tax to remit! We have, unfortunately, talked to too many sellers who have found this out the hard way when a tax penalty bill arrives.

What do I do with any Arkansas sales tax I have already collected?

If you have already collected Arkansas sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket. 

Example:

Let’s say you sell on Amazon and Arkansas requires you to file and remit sales tax quarterly. Though Amazon began collecting sales tax on your behalf on July 1, 2019, if you have any sales tax in your bank account that you collected throughout Q2 2019, you will still need to remit that to the Arkansas Department of Finance and Administration or face a penalty. 

Does TaxJar handle this for me? 

Yes. 

TaxJar AutoFile Handles Arkansas Sales Tax Automatically

TaxJar AutoFile automatically compiles your sales tax data the way the state of Arkansas wants it filed. 

If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations. 

If you currently AutoFile your Arkansas  sales tax returns, you don’t need to do a thing. It’s handled!

TaxJar Reports Give You all the Info You need to File Manually

If you prefer to file manually, your TaxJar Reports also reflect what the Arkansas Department of Finance and Administration wants to see on your tax return. 

Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.

Further reading on Arkansas sales tax and marketplace facilitator laws:

Do you have questions or something to say about the Arkansas marketplace facilitator law? Start the conversation in the comments!

Start your 30 day free trial of TaxJar. No credit card required.