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Currently, sales of contracts, maintenance agreements, and warranties that involve the future performance of taxable services are subject to Arkansas sales tax. Services performed under those contracts are exempt from sales tax because tax was paid on the warranty agreement.
Arkansas does not require businesses to collect sales tax on the sale of digital goods or services.
Some customers are exempt from paying sales tax under Arkansas law. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale. Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.
Services performed on computer software are not subject to tax. If a software maintenance agreement includes updates (that are provided on media), then the maintenance agreement is taxable. Installation charges separately stated on the invoice or bill is not subject to the tax.
Under Arkansas law, providing access to, and use of, software over the internet is not a specifically enumerated taxable service.
Traditional Goods or Services Goods that are subject to sales tax in Arkansas include physical property, like furniture, home appliances, and motor vehicles. Arkansas charges a 1.5% reduced rate on the purchase of groceries. Some services in Arkansas are subject to sales tax.
More about the Arkansas Form AR1000NR Tax Return We last updated Arkansas Form AR1000NR in January 2022 from the Arkansas Department of Revenue. This form is for income earned in tax year 2021, with tax returns due in April 2022.
Additionally, Ark. Code Ann. § 26- 52-304(a)(2) (Repl. 2014) specifically provides that the repair and maintenance of computer equipment or hardware in any form is subject to Arkansas sales tax.
Service fees for the installation of software are subject to sales tax. Moreover, charges for software maintenance services including delivery of updates for prewritten software are generally taxable. However, maintenance contracts that only provide support services for canned software are not taxable.