Arkansas House to Vote on Tax Reform

The Arkansas House of Representatives will vote today on SB576, which contains major tax policy priorities that small businesses have advocated for many years. The proposal would reform that tax laws of the state, specifically the sales and use tax, the apportionment and allocation of income for tax purposes, corporate income tax rates, and net operating losses.

If adopted, this bill will make Arkansas’s corporate income taxes fairer and more competitive with other states.

Details of the amended bill include:
•• Require Remote Sellers and Marketplace Facilitators to Collect Sales Tax
•• Enforcement of existing tax obligations to pay for state and local services—not a new tax.
•• Puts our in-state sellers on equal footing with out-of-state sellers instead of a 10 percent price disadvantage.
•• Extend Net Operating Loss (NOL) Carryforwards to Prevent Double Taxation
•• This could potentially help any business in Arkansas. Currently, past years’ losses can only be offset against future years’ earnings for up to five years (worst in USA).
•• This will phase in an increase of the offset period to 10 years.
•• Adopt Single Sales Factor (SSF) Apportionment
•• Arkansas is one of a declining number of states that still use property and payroll factors to determine taxable income, effectively raising taxes on in-state businesses while giving out-of-state businesses a 50 percent tax cut.
•• Arkansas businesses are currently double taxed selling into states with SSF.
•• Going to SSF benefits businesses that invest in employees and property in Arkansas—particularly manufacturers, wholesalers, retailers and banks.
•• Decrease the corporate income tax rate from 6.5 percent to 5.9 percent
•• Modifies sales taxes paid by car washes.