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Arkansas Amazon Tax Goes to Governor

As expected, the Arkansas House passed the new nexus bill, Senate Bill 738, also known as the Amazon tax”  and the bill has been sent to the Governor. This bill is similar to the bill passed in New York  in 2008 and appears to offer a similar ability to rebut the presumption of nexus.  As with all such matters, merchants should seek and retain professional  financial and legal counsel.

The Governor has five days to sign the law or veto, if he takes no action it will take effect. The House votes was 62 for and 28 against. The Senate votes were 26 for 7 against. If Governor Beebe was to veto, the legislature could override his veto with a majority vote.

Link to SB738

Excerpt from the new Arkansas nexus law:

(d)(1) If there is not an affiliated person with respect to a seller in the state, the seller is presumed to be engaged in the business of selling tangible personal property or taxable services for use in the state if the seller enters into an agreement with one (1) or more residents of the state under which the residents, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by a link on an Internet website or otherwise, to the seller.

(2) However, subdivision (d)(1) of this section applies only if  the cumulative gross receipts from sales by the seller to purchasers in the state who are referred to the seller by all residents according to the type of agreement described in subdivision (d)(1) of this section exceed ten thousand dollars ($10,000) during the preceding twelve (12) months.

(e)(1) The presumption in subsection (d) of this section may be rebutted by submitting proof that the residents with whom the seller has an agreement did not engage in any activity within the state that was significantly associated with the seller’s ability to establish or maintain the seller’s market in the state during the preceding twelve (12) months.

(2) Proof provided under subdivision (e)(1) of this section may consist of written statements from all of the residents with whom the seller has an agreement stating that they did not engage in any solicitation in the state on behalf of the seller during the preceding year if the statements were provided and obtained in good faith.

Both merchants and affiliates need to prepare for this law to take effect. This will take effect 90 days after this act becomes law. It is likely that some merchants will terminate relationships and will do so rather quickly. As we learned in New York, North Carolina, Rhode Island and Colorado,there are solutions. Affiliates will need to find replacement merchants but it can be done. Prepare and adapt; it’s not easy but it is possible.

{ 2 comments… add one }

  • Jason April 16, 2011, 1:42 am

    This law will never get a dime out of people by way of Amazon or any other company. These companies will just fire all of the affiliates. Basically, Wal-Mart is feeling the sting of the internet sales and they want all of us to suffer because of it. Amazon is crushing the life out of Wal-Mart and I hope they bring them to their knees. I am leaving the state of Arkansas and moving to Nevada. It’s going to be very expensive, but I’m going to stick with Amazon and all the other retailers that stand for freedom.

  • sales tax compliance April 11, 2012, 12:53 am

    Jason,
    why move to Nevada?
    Move to Oregon where there is no sales tax.

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