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HB 1671

TO AMEND THE LAW CONCERNING THE GROSS RECEIPTS TAX; AND TO CREATE A GENERAL SALES AND USE TAX EXEMPTION FOR SALES TO QUALIFIED NONPROFIT ORGANIZATIONS.

2025 Regular Session Introduced by Justin Boyd and 1 co-sponsor

Act 1007 exempts small nonprofits in Arkansas from sales tax on purchases under $2,000, supporting community services and reducing their operational costs.

Notification that HB1671 is now Act 1007
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WeVote Research Nonpartisan
Bill Summary · HB 1671

Summary of House Bill 1671 (Act 1007)

Purpose and Intent

House Bill 1671, now known as Act 1007, aims to amend the existing laws regarding the gross receipts tax in Arkansas. The primary goal of this legislation is to establish a general sales and use tax exemption for sales made to qualified nonprofit organizations. This exemption is intended to support smaller nonprofits that provide essential community services to residents in need.

Key Provisions

  • Definition of Qualified Nonprofit Organization:

    • Must be recognized as a 501(c)(3) organization under federal law as of January 1, 2025.
    • Must have an annual operating budget of less than $200,000.
    • Must provide charitable community-based services within the state.

  • Sales Tax Exemption:

    • The exemption applies to sales of tangible personal property, taxable services, and taxable digital goods made to qualified nonprofit organizations, provided that the total gross receipts for the sale do not exceed $2,000.

  • Application Process:

    • Nonprofits seeking exemption status must apply to the Arkansas Department of Finance and Administration (DFA).
    • The DFA will issue an exemption certificate if the organization qualifies or provide a written explanation if the application is denied.
    • The DFA is also responsible for revoking the exemption if an organization no longer meets the criteria.

  • Exclusions:

    • The exemption does not apply to sales of certain items, including but not limited to:
    • Motor vehicles
    • Alcoholic beverages
    • Tobacco products
    • Household appliances
    • Mobile phones

  • Annual Reporting:

    • The DFA is required to report annually to the Legislative Council on the number of exemption certificates issued.

Impact

  • Affected Entities:

    • The legislation primarily benefits small nonprofit organizations that provide community services, allowing them to save on sales tax for qualifying purchases.

  • Fiscal Impact:

    • The exact fiscal impact on sales and use tax collections is currently undetermined. However, it is anticipated that there will be a loss in tax revenue due to the exemptions granted.

  • Implementation Costs:

    • The DFA will incur costs estimated at $36,000 for developing the application and verification process, along with additional personnel costs of approximately $235,406 for managing the program.

Procedural Aspects

  • Effective Date:

    • The act will take effect on the first day of the calendar quarter following its enactment.

  • Legislative Journey:

    • HB 1671 was introduced on March 4, 2025, and underwent several amendments before being passed by both the House and Senate. It was officially enacted as Act 1007 on April 22, 2025.

This summary provides an overview of House Bill 1671, highlighting its purpose, key provisions, potential impacts, and procedural details for better understanding by stakeholders and the general public.

Compiled from official sources — confirm details with the bill’s official record.

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