TO PROVIDE THAT THE LESSEE OF A LEASED MOTOR VEHICLE IS THE OWNER FOR PURPOSES OF THE ASSESSMENT AND PAYMENT OF PROPERTY TAXES; AND TO AMEND THE LAW CONCERNING LOCAL SALES AND USE TAXES ON CERTAIN TANGIBLE PERSONAL PROPERTY.

2025 Regular Session Introduced by Matt Stone and 1 co-sponsor

House Bill 1960 shifts property tax responsibility to lessees of motor vehicles in Arkansas, simplifying tax assessments and payments for both lessees and lessors.

Notification that HB1960 is now Act 1013

Purpose and Intent

House Bill 1960 (HB 1960) aims to clarify the ownership status of leased motor vehicles for the purposes of property tax assessment and payment in the state of Arkansas. The bill establishes that the lessee of a motor vehicle is considered the owner for tax purposes, thereby shifting the responsibility for property tax assessment and payment from the vehicle owner (lessor) to the lessee. Additionally, the bill amends existing laws concerning local sales and use taxes on certain tangible personal property.

Key Provisions

Ownership Definition:

The bill amends Arkansas Code § 26-26-706 and § 26-26-903 to define the "owner" of a leased motor vehicle as the lessee, provided the lease is for a period exceeding 30 days.

Assessment and Payment of Taxes:

It modifies Arkansas Code § 26-26-1408 to require lessees to assess their leased motor vehicles for personal property taxes during the annual assessment period from January 1 through May 31.

Local Sales and Use Tax:

The bill amends Arkansas Code § 26-73-301 and related sections to clarify the maximum tax limitation on local sales and use taxes for motor vehicles and other tangible personal property. It specifies that if a sale or lease involves periodic payments, the sales tax will be applied to the total amount of those payments.

Periodic Payments:

The bill outlines how sales and use taxes should be collected on periodic payments, ensuring clarity in tax collection practices.

Affected Parties

Lessee of Leased Vehicles: Individuals or businesses leasing motor vehicles will now be responsible for property tax assessments and payments.

Lessor (Vehicle Owners): Vehicle owners will no longer be responsible for property tax assessments on leased vehicles, potentially simplifying their tax obligations.

Local Governments: Changes in tax collection practices may affect local revenue streams from property taxes and sales taxes.

Procedural Aspects

Introduced: April 1, 2025

Status: HB 1960 has been enacted as Act 1013 as of April 22, 2025.

Legislative Journey: The bill passed through various readings and amendments in both the House and Senate, with significant actions including:

Senate Amendment #1 adopted on April 15, 2025.
Correctly enrolled and transmitted to the Governor's Office on April 16, 2025.

Conclusion

HB 1960 represents a significant shift in the tax responsibilities associated with leased motor vehicles in Arkansas. By designating lessees as the owners for tax purposes, the bill aims to streamline the assessment and payment process, potentially impacting both lessees and lessors in the state. The amendments to local sales and use tax laws further clarify tax obligations related to periodic payments, enhancing the overall tax framework for tangible personal property transactions.

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