If you purchase a product that you intend to resell in the state of Arkansas, you can often avoid paying sales tax on the purchase by presenting your vendor with a resale certificate. Always keep in mind that you should only use your resale certificate to buy items you intend to resell or that you intend to use as a component part of an item for resale or incorporated into a service that will be taxed when it is sold. Any other use of an Arkansas resale certificate (such as buying personal items) is usually considered unlawful.
How to Use an Arkansas Resale Certificate
Arkansas provides reseller’s with an Exemption Certificate. If you wish to buy items for resale, fill out the entire certificate and present it to your vendor.
You can find full instructions on using an Arkansas resale certificate here.
If you are not registered to collect sales tax in Arkansas, you can use your state’s sales tax permit to buy items for resale from Arkansas vendors. Also keep in mind that vendors reserve the right to refuse to accept a resale certificate.
Important to note: In Arkansas, the buyer, not the vendor, is ultimately on the hook if use of a resale certificate turns out to be fraudulent. In other words, if state taxing authorities discover that you used a resale certificate for items you did not intend to resell you will be on the hook to pay the unpaid sale tax, plus penalties.
How to Accept an Arkansas Resale Certificate
If you are an Arkansas retailer and a buyer presents you with a resale certificate, you should do the following:
- Ensure the resale certificate is properly filled out – If the resale certificate is not completely filled out you could be on the hook for penalties. See more on the Arkansas Certificate of Exemption Instructions page.
- Verify that your buyer’s sales tax ID is valid – You can use your buyer’s Arkansas Sales Tax ID or their Streamlined Sales Tax number to verify the validity of their resale certificate at Arkansas’s Taxpayer Access Point. If your buyer’s sales tax ID is from another state, use this tool to verify sales tax IDs in all U.S. states.
- Keep a copy of the resale certificate – Do this in case of an audit. You can keep a copy in electronic or paper form.
- Don’t participate in fraud – This one is a no-brainer, but Arkansas Exemption Form’s instructions are careful to point out that if you collude with a buyer to avoid sales tax you could be on the hook for fines and penalties.
I hope this post has helped you determine how to use and accept an Arkansas resale certificate. If you have questions or something to say, please start the conversation in the comments below!