If you run an Ecommerce or CPG business in Arkansas, securing an Arkansas Resale Certificate is a smart move to protect your margins and streamline operations.
This certificate allows you to purchase inventory and raw materials tax-free, helping you lower upfront costs, stay competitive in pricing, and remain compliant with Arkansas sales tax laws.
Understanding Resale Certificates in Arkansas
What is an Arkansas Resale Certificate?
In Arkansas, an Exemption Certificate is a document issued by the Arkansas Department of Finance and Administration that allows businesses to:
- Purchase goods without paying sales tax, provided these goods are intended for resale to their customers in the normal course of their business.
- Make tax-exempt purchases of inventory and materials that will become part of the products they sell by presenting a valid resale certificate to their suppliers.
The purpose is to prevent double taxation once at the wholesale level and again at the point of retail sale.
However, an Arkansas resale certificate is not a blanket exemption from all sales tax obligations. Businesses are still required to collect and remit sales tax on taxable sales to end consumers.
Why do you need a Resale Certificate in Arkansas?
Obtaining an Exemption Certificate in Arkansas offers several significant advantages for businesses that purchase goods for resale.
Here are some key benefits:
- Avoid Paying Sales Tax on Inventory: The most direct benefit is that you can purchase inventory and materials for resale without paying Arkansas’s sales tax upfront.
- Maintain Competitive Pricing: By not paying sales tax on the cost of goods, businesses have more flexibility in setting competitive prices for products in the Arkansas market. This can be a crucial advantage, especially in price-sensitive industries.
- Legal Compliance: Possessing and using a valid resale certificate for eligible purchases ensures businesses comply with Arkansas’s sales tax laws and regulations to avoid penalties.
In Arkansas, the specific form required for a resale certificate is the Arkansas Exemption Certificate (ST-391).
When filling out Form ST-391, a purchaser must include the Sales/Use Tax Permit Number to identify that it is registered with the Arkansas Department of Finance and Administration and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
An Arkansas Sales Tax Permit authorizes your business to collect and remit sales tax on taxable sales to customers. An Arkansas Exemption Certificate (ST-391), on the other hand, allows you to purchase goods tax-free from suppliers if those goods are intended for resale. To use a resale certificate, you must have an active sales tax permit.
Who Can Use a Resale Certificate in Arkansas?
Businesses that purchase goods for resale can use an Arkansas Exemption Certificate. To do so, the business must actively sell taxable tangible products and hold a valid Arkansas Sales Tax Permit.
How to Get a Resale Certificate in Arkansas: A Step-by-Step Guide
Getting a resale certificate in Arkansas is simple, but you’ll need to meet a few key requirements first. Here’s how to do it:
1. Make Sure You’re Eligible: Your business must sell taxable goods or services and be registered with the Arkansas Department of Finance and Administration. Only businesses with a valid Arkansas Sales Tax Permit can use a resale certificate.
2. Get an Arkansas Sales Tax Permit: If you don’t already have one, apply for an Arkansas Sales Tax Permit through the Arkansas Taxpayer Access Point (ATAP) website. This permit is required before you can issue or use a resale certificate.
Need help? Read our blog: How to Get a Seller’s Permit in Arkansas
3. Gather Your Business Information: You’ll need basic business details to complete the resale certificate, including:
- Your business legal name and any trade names.
- Your business address and contact information.
- Your Arkansas sales tax permit number (if already obtained)
- Your description and identification of the merchandise to be purchased.
- Your business activity
- Your reason for exemption
- Your authorized signature and date
4. Complete Form ST-391: Download and fill out the Arkansas Exemption Certificate (Form ST-391) from the Arkansas Department of Finance and Administration website. You’ll present this form to your suppliers when making tax-exempt purchases.
5. Submission: No submission is required in Arkansas. You don’t need to submit the resale certificate to the state. Instead, give the completed form directly to your suppliers when buying items for resale.
6. Pay Any Applicable Fees: There’s no cost to use Form ST-391, but you’ll need a valid Arkansas Sales Tax Permit, which costs $50 to register. To see if there’s a cost for the permit, check out our guide on Sales Tax Permit fees.
7. Understand Renewal Requirements: Your blanket exemption certificate remains valid if you have a recurring business relationship with the seller. This means you’re not required to renew or update the certificate as long as no more than 12 months pass between sales transactions.
How to Use a Resale Certificate in Arkansas
To properly utilize your resale certificate in Arkansas when making tax-exempt purchases for resale, you’ll need to present a valid copy of your Arkansas Sales and Use Tax Resale Certificate to your supplier at the time of purchase.
Arkansas generally does accept resale certificates issued by other states. However, there might be specific conditions:
- Good Faith Acceptance: Vendors in Arkansas will typically accept an out-of-state resale certificate in good faith, provided it contains all the necessary information (buyer’s name, address, seller’s permit number from the issuing state, reason for exemption, etc.)
- Reciprocity: The acceptance might be based on reciprocal agreements with the state that issued the certificate, and Arkansas also participates in the Streamlined Sales Tax Agreement (SSTA), which facilitates acceptance of a uniform certificate.
It’s always a good idea to confirm the vendor’s policy on accepting out-of-state certificates beforehand.
For more information regarding sales tax exemption laws in Arkansas, you may visit the state website.
Multi-Jurisdictional Resale Certificates
A multi-jurisdictional resale certificate is a standardized form to simplify tax-exempt purchases for businesses that operate and make purchases for resale across state lines.
Unlike a standard resale certificate issued by a single state, a multi-jurisdictional certificate aims to be recognized and accepted by multiple states as valid proof that the goods being purchased are intended for resale and are therefore exempt from sales tax at the time of purchase.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
There are two primary types of multi-jurisdictional resale certificates that a business operating in or selling to vendors in Arkansas might encounter:
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This is a widely recognized form accepted by a significant number of states (though not all). Arkansas accepts this form, provided it is properly completed. For Arkansas-based buyers, it should include their Arkansas Sales Tax Permit number. Out-of-state purchasers should include their home state’s registration number where indicated. You can find this form on the Multistate Tax Commission (MTC) website.
- Streamlined Sales Tax (SST) Certificate of Exemption: The state of Arkansas became a full member of the Streamlined Sales Tax on January 1, 2008. As such, it accepts the SST Certificate of Exemption for qualifying resale purchases. Businesses using either certificate must ensure they meet all Arkansas-specific requirements. Improper use or incomplete documentation can result in tax liability upon audit. You can find more information about the SST and its member states on the Streamlined Sales Tax Governing Board website.
Businesses need to verify whether Arkansas accepts these multi-jurisdictional certificates and if there are any specific requirements or limitations on their use within the state. This is to avoid any audit issues.
Responsibilities When Using or Accepting a Resale Certificate in Arkansas
Buyer Responsibilities
If you’re using an Arkansas resale certificate, you’re responsible for ensuring it’s used only for purchases of goods or services you intend to resell. Using it for personal or operational items (like office supplies or equipment) is illegal and may lead to penalties.
- Arkansas-based buyers: Provide a fully completed Form ST-391 to your suppliers for qualifying purchases.
- Out-of-state buyers: Arkansas generally accepts the Streamlined Sales Tax (SST) Certificate of Exemption and the Multistate Tax Commission (MTC) Uniform Sales & Use Tax Resale Certificate when properly completed by out-of-state purchasers. Arkansas vendors will accept a valid resale permit issued by your home state, provided they include your home state’s sales tax permit number.
Seller Responsibilities
As a seller in Arkansas, accepting a resale certificate comes with the responsibility of verifying and retaining proper documentation for tax-exempt sales. You must:
- Accept the certificate in good faith
- Ensure it includes all required information: buyer’s name, address, sales tax permit number (or equivalent), reason for exemption, and signature.
- Reject the certificate if the items aren’t for resale (e.g., personal or business use)
Keep records for at least 6 years: A properly completed resale certificate is your official proof of why sales tax wasn’t collected. You must retain it in your records for at least six years in case of a sales tax audit by the Director of the Department of Finance and Administration.
Frequently Asked Questions About the Arkansas Resale Certificate
Are There Penalties for Misusing a Resale Certificate in this State?
Yes. Improper use of a resale certificate, such as using it for personal or non-resale purchases, can result in serious penalties. Always use Form ST-391 correctly and only for qualified resale purchases to avoid issues.
Does an Arkansas Resale Certificate Expire?
The Exemption Certificate (Form ST-391) expires if not used within a twelve-month timeframe.
How Do I Verify a Resale Certificate in Arkansas?
If you’re a seller in Arkansas, here’s how to validate a buyer’s resale certificate:
- Request a completed Form ST-391 from the buyer.
- Visit the Arkansas Taxpayer Access Point (ATAP) to verify the validity of the resale certificate.
- Scroll down to “Inquiries” & click “Validate Sales Tax Permit”
- Use either the Sales and Use Tax Permit or Streamlined Sales Tax ID.
- Enter the Permit ID number and click Submit.
How TaxHero Can Help
Managing sales tax compliance and resale certificates in Arkansas doesn’t have to be complicated. TaxHero simplifies the process, from keeping your Arkansas Sales Tax Permit active to ensuring you use resale certificates correctly.
Save time. Avoid penalties. Stay compliant.
Schedule a Demo to see how TaxHero can streamline your Arkansas resale certificate process today!