Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 SENATE BILL 316 3
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By: Senator B. Johnson 5
By: Representative Beaty Jr. 6
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For An Act To Be Entitled 8
AN ACT TO AMEND THE SALES AND USE TAX LAWS CONCERNING 9
REBATES; TO REQUIRE THAT SALES AND USE TAX REBATES BE 10
ADMINISTERED AS REFUNDS; AND FOR OTHER PURPOSES. 11
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13
Subtitle 14
TO AMEND THE SALES AND USE TAX LAWS 15
CONCERNING REBATES; AND TO REQUIRE THAT 16
SALES AND USE TAX REBATES BE 17
ADMINISTERED AS REFUNDS. 18
19
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 20
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SECTION 1. Arkansas Code Title 26, Chapter 52, Subchapter 1, is 22
amended to add an additional section to read as follows: 23
26-52-112. Refunds. 24
Except as otherwise provided by law, a refund provided under this 25
chapter or the Arkansas Compensating Tax Act of 1949, § 26 -53-101 et seq. 26
shall be automatically provided to the taxpayer entitled to the refund. 27
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SECTION 2. Arkansas Code § 26 -52-427 is amended to read as follows: 29
26-52-427. Property purchased for use in performance of construction 30
contract — Definition. 31
(a) A contractor that purchases tangible personal property which 32
becomes a recognizable part of a completed structure or improvement to real 33
property and which is purchased for use or consumption in the performance of 34
construction contracts shall be entitled to a rebate on refund of any 35
additional gross receipts tax or compensating use tax levied by the state or 36 SB316
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any city or county if: 1
(1) The construction contract for which the tangible personal 2
property was purchased is entered into prior to the effective date of the 3
levy of the additional state, city, or county gross receipts tax or 4
compensating use tax; and 5
(2) The contractor paid the additional gross receipts or 6
compensating use tax to the seller. 7
(b) As used in this section, “construction contract” means a contract 8
to construct, manage, or supervise the construction, erection, or substantial 9
modification of a building or other improvement or structure affixed to real 10
property. “Construction contract” shall not mean a contract to produce 11
tangible personal property. 12
(c) The rebate refund provided by this section shall apply to tangible 13
personal property purchased within five (5) years from the effective date of 14
the levy of the additional state, city, or county gross receipts tax or 15
compensating use tax. 16
(d) The rebate refund provided by this section shall not apply to 17
cost-plus contracts which allow the contractor to pass any additional tax on 18
to the principal as a part of the contractor's costs. 19
(e) Interest shall not accrue or be paid on an amount subject to a 20
claim for rebate pursuant to refund under this section. 21
(f) The Secretary of the Department of Finance and Administration 22
shall promulgate rules and prescribe forms for claiming a rebate as provided 23
by the method of providing a refund under this section. 24
25
SECTION 3. Arkansas Code § 26 -52-447(f)-(i), concerning the sales tax 26
exemption related to the partial replacement and repair of certain machinery 27
and equipment, are repealed. 28
(f) A taxpayer may claim the benefit of the tax refund under this 29
section only by using one (1) of the following methods: 30
(1)(A) Both: 31
(i) Obtaining a direct pay or a limited direct pay 32
sales and use tax permit from the Department of Finance and Administration; 33
and 34
(ii) Self-refunding: 35
(a) At the time the taxpayer files his or her 36 SB316
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original sales and use tax report; or 1
(b) By later filing an amended sales or use 2
tax report with the department. 3
(B) The statutes of limitation stated in § 26 -18-306 apply 4
to claims made under this subdivision (f)(1). 5
(C) Interest shall not accrue or be paid on a refund 6
claimed under this subdivision (f)(1); or 7
(2)(A) Beginning July 1, 2018, for a taxpayer that does not hold 8
a direct pay or limited direct pay permit, holds an active Arkansas sales and 9
use tax permit, and files sales and use tax reports with the department, 10
filing a claim for a credit or rebate with the department. 11
(B)(i) The credit or rebate authorized under this 12
subdivision (f)(2) shall be obtained only by offsetting the amount of the 13
claimed credit or rebate against the state tax to be remitted with the 14
taxpayer's sales and use tax reports. 15
(ii) If the total amount of the credit or rebate 16
authorized under this subdivision (f)(2) is greater than the amount of the 17
state tax to be remitted with the taxpayer's sales and use tax reports, the 18
taxpayer is entitled to a refund of the difference between the amount of the 19
tax owed and the amount of the credit or rebate authorized under this 20
subdivision (f)(2). 21
(C) A taxpayer claiming a credit or rebate under this 22
subdivision (f)(2) shall electronically file all sales and use tax reports. 23
(D) A claim for credit or rebate under this subdivision 24
(f)(2) shall not be paid for a claim filed more than one (1) year following 25
the date of the qualifying sale or more than one (1) year following the date 26
of payment, whichever is later. 27
(E) Interest shall not accrue or be paid on an amount 28
subject to a claim for a credit or rebate under this subdivision (f)(2). 29
(g) A claim for a credit or rebate shall not be paid under subdivision 30
(f)(2) of this section for a sale made before July 1, 2018. 31
(h) A taxpayer shall not claim the benefit of the refund under this 32
section by filing a verified claim for refund with the department. 33
(i) The following provisions of the Arkansas Tax Procedure Act, § 26 -34
18-101 et seq., apply to claims for a refund under this section: 35
(1) The time limitations that apply to claims for a refund of an 36 SB316
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overpayment of state tax; and 1
(2) The procedures that apply to the disallowance or proposed 2
disallowance of claims for a refund. 3
4
SECTION 4. Arkansas Code § 26 -52-523(b)-(g), concerning the credit or 5
rebate on local sales and use tax, are amended to read as follows: 6
(b)(1) A purchaser that pays any municipal sales or use tax in excess 7
of the tax due on the first two thousand five hundred dollars ($2,500) of 8
gross receipts or gross proceeds from the purchase of a travel trailer or 9
from a qualifying purchase of tangible personal property, specified digital 10
products, a digital code, or a taxable service in a single transaction is 11
entitled to a credit or rebate refund of the excess amount of municipal sales 12
or use tax paid on each single transaction. 13
(2) A purchaser that pays any county sales or use tax in excess 14
of the tax due on the first two thousand five hundred dollars ($2,500) of 15
gross receipts or gross proceeds from the purchase of a travel trailer or 16
from a qualifying purchase of tangible personal property, specified digital 17
products, a digital code, or a taxable service in a single transaction is 18
entitled to a credit or rebate refund of the excess amount of county sales or 19
use tax paid on each single transaction. 20
(c)(1) A purchaser that is required by § 26 -52-501, § 26-52-509, or § 21
26-53-125 to file a sales or use tax return may file a claim for a credit or 22
rebate refund under this section with the Secretary of the Department of 23
Finance and Administration in connection with the sales or use tax return and 24
offset the amount of credit or rebate refund claimed against any municipal or 25
county sales or use tax due to be remitted with the return. 26
(2) A The secretary shall automatically issue a refund to a 27
purchaser that qualifies for a credit or rebate refund under this section and 28
is not required to file a sales or use tax return as provided in subdivision 29
(c)(1) of this section may file a claim for a credit or rebate under this 30
section with the secretary . 31
(3) If a rebate refund would be due under this section as a 32
result of the purchase of a travel trailer and if the gross receipts or 33
compensating use tax on the travel trailer is collected directly from the 34
purchaser by the Department of Finance and Administration under § 26 -52-510 35
or § 26-53-126, then the department shall collect only the amount of tax due 36 SB316
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less the amount to which the purchaser would be entitled under the rebate 1
refund provisions of this section. 2
(d) A credit or rebate under this section shall not be paid for a 3
claim filed more than one (1) year following the date of the qualifying 4
purchase or more than one (1) year following the date of payment, if later. 5
(e) A claim for a credit or rebate under this section shall be filed 6
with the local taxing jurisdiction if, at the time the claim is filed, the 7
local sales or use tax that is the subject of the claim has been out of 8
existence for more than sixty (60) days. 9
(f) No interest shall accrue or be paid on an amount subject to a 10
claim for a credit or rebate refund under this section. 11
(g)(e) The secretary may promulgate rules to administer this section, 12
including without limitation providing an administratively feasible method 13
for filing a claim for a credit or rebate providing refunds and any necessary 14
forms. 15
16
SECTION 5. Arkansas Code § 26 -53-138 is amended to read as follows: 17
26-53-138. Exemption for property purchased for use in performance of 18
construction contract — Definition. 19
(a) A contractor that purchases tangible personal property which 20
becomes a recognizable part of a completed structure or improvement to real 21
property and which is purchased for use or consumption in the performance of 22
construction contracts shall be entitled to a rebate on refund of any 23
additional gross receipts tax or compensating use tax levied by the state or 24
any city or county if: 25
(1) The construction contract for which the tangible personal 26
property was purchased is entered into prior to the effective date of the 27
levy of the additional state, city, or county gross receipts tax or 28
compensating use tax; and 29
(2) The contractor paid the additional gross receipts or 30
compensating use tax to the seller. 31
(b) As used in this section, “construction contract” means a contract 32
to construct, manage, or supervise the construction, erection, or substantial 33
modification of a building or other improvement or structure affixed to real 34
property. “Construction contract” shall not mean a contract to produce 35
tangible personal property. 36 SB316
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(c) The rebate refund provided by this section shall apply to tangible 1
personal property purchased within five (5) years from the effective date of 2
the levy of the additional state, city, or county gross receipts tax or 3
compensating use tax. 4
(d) The rebate refund provided by this section shall not apply to 5
cost-plus contracts which allow the contractor to pass any additional tax on 6
to the principal as a part of the contractor's costs. 7
(e) Interest shall not accrue or be paid on an amount subject to a 8
claim for rebate pursuant to refund under this section. 9
(f) The Secretary of the Department of Finance and Administration 10
shall promulgate rules and prescribe forms for claiming a rebate as provided 11
by the method of providing a refund under this section. 12
13
SECTION 6. Arkansas Code § 26 -53-149(f)-(i), concerning the use tax 14
exemption related to the partial replacement and repair of certain machinery 15
and equipment, are repealed. 16
(f) A taxpayer may claim the benefit of the tax refund under this 17
section only by using one (1) of the following methods: 18
(1)(A) Both: 19
(i) Obtaining a direct pay or a limited direct pay 20
sales and use tax permit from the Department of Finance and Administration; 21
and 22
(ii) Self-refunding: 23
(a) At the time the taxpayer files his or her 24
original sales and use tax report; or 25
(b) By later filing an amended sales or use 26
tax report with the department. 27
(B) The statutes of limitation stated in § 26 -18-306 apply 28
to claims made under this subdivision (f)(1). 29
(C) Interest shall not accrue or be paid on a refund 30
claimed under this subdivision (f)(1); or 31
(2)(A) Beginning July 1, 2018, for a taxpayer that does not hold 32
a direct pay or limited direct pay permit, holds an active Arkansas sales and 33
use tax permit, and files sales and use tax reports with the department, 34
filing a claim for the credit or rebate with the department. 35
(B)(i) The credit or rebate authorized under this 36 SB316
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subdivision (f)(2) shall be obtained only by offsetting the amount of the 1
claimed credit or rebate against the state tax to be remitted with the 2
taxpayer's sales and use tax reports. 3
(ii) If the total amount of the credit or rebate 4
authorized under this subdivision (f)(2) is greater than the amount of the 5
state tax to be remitted with the taxpayer's sales and use tax reports, the 6
taxpayer is entitled to a refund of the difference between the amount of the 7
tax owed and the amount of the credit or rebate authorized under this 8
subdivision (f)(2). 9
(C) A taxpayer claiming a credit or rebate under this 10
subdivision (f)(2) shall electronically file all sales and use tax reports. 11
(D) A claim for credit or rebate under this subdivision 12
(f)(2) shall not be paid for a claim filed more than one (1) year following 13
the date of the qualifying purchase or more than one (1) year following the 14
date of payment, whichever is later. 15
(E) Interest shall not accrue or be paid on an amount 16
subject to a claim for a credit or rebate under this subdivision (f)(2). 17
(g) A claim for a credit or rebate shall not be paid under subdivision 18
(f)(2) of this section for a purchase made before July 1, 2018. 19
(h) A taxpayer shall not claim the benefit of the refund under this 20
section by filing a verified claim for refund with the department. 21
(i) The following provisions of the Arkansas Tax Procedure Act, § 26 -22
18-101 et seq., apply to claims for a refund under this section: 23
(1) The time limitations that apply to claims for a refund of an 24
overpayment of state tax; and 25
(2) The procedures that apply to the disallowance or proposed 26
disallowance of claims for a refund. 27
28
SECTION 7. EFFECTIVE DATE. Sections 1-6 of this act are effective on 29
the first day of the calendar quarter following the effective date of this 30
act. 31
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