LITTLE ROCK — For the second time, the House Revenue and Taxation committee Thursday rejected a bill to force large out-of-state companies with no physical presence in Arkansas to collect sales taxes on purchases in the state or report those purchases to the state.
In a virtual replay of its Feb. 14 meeting, the panel rejected an amendment offered by Democrats that would have directed some Internet sales tax revenue to needs such as early childhood education, then failed to advance the bill when Democrats, who control 10 seats on the 20-seat panel, voted against it.
Sen. Jake Files, R-Fort Smith, the sponsor of Senate Bill 140, moved to expunge the vote on the bill so he could bring the bill back a third time. The motion passed.
Files told reporters he remains opposed to adding language to his bill that would earmark revenue for specific needs. But he said he believes a compromise is possible.
“I’m going to work with the governor’s office, because I believe the governor’s office can provide some leadership here and can help navigate this and hopefully bring some people together on it,” he said.
House Minority Leader Michael John Gray, D-Augusta, who unsuccessfully attempted Feb. 14 and Thursday to add earmarks to the bill, also said a compromise could be possible. He said he supported expunging the vote so the bill could be considered again.
“I think we’re moving in a positive direction to get this worked out for everyone,” he said.
Arkansas has a little-followed law on the books that requires people to pay a consumer use tax on purchases from out-of-state companies. Files’ bill, as originally filed, would require an out-of-state seller with no physical presence in Arkansas that sells more than $100,000 worth of products or makes at least 200 transactions in Arkansas in a calendar year to begin collecting sales taxes on purchases in the state.
The bill cleared the Senate in that form, but it has been amended in the House tax committee to allow a seller either to collect the tax or to report purchases to the state for tax collection purposes and notify customers in Arkansas that they are required to pay a consumer use tax to the state.
Amazon recently said it will begin collecting sales taxes in Arkansas, but other online sellers are not collecting taxes in the state.