HB1194
To Exempt A Manufacturer's Rebate On A Motor Vehicle From Sales And Use Tax; And To Exclude A Manufacturer's Rebate On A Motor Vehicle From The Definition Of "sales Price" Used For Purposes Of Determining Sales And Use Taxes.
Last Action (May 1, 2023): Died in House Committee at Sine Die Adjournment
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AI-Generated Summary
House Bill 1194 amends the Arkansas Gross Receipts Act of 1941 and the Arkansas Compensating Tax Act of 1949 to modify the definition of 'sales price.' Specifically, the bill excludes manufacturer's rebates on motor vehicles from the definition of gross receipts or sales price used to calculate state sales and use taxes. Under current law, these rebates may be considered part of the taxable price, meaning consumers pay sales tax on the full price of a vehicle before the rebate is applied. By excluding the rebate, the bill ensures that sales tax is only applied to the actual amount paid by the consumer after the manufacturer's incentive is deducted. This change applies to both the sales tax and the compensating (use) tax structures in Arkansas. The bill includes an effective date set for the first day of the calendar quarter following the bill's enactment.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are consumers who purchase new motor vehicles in Arkansas and utilize manufacturer's rebates to lower their out-of-pocket costs. By excluding these rebates from the taxable sales price, these buyers will pay slightly less in total sales and use taxes on their vehicle purchases.
Who Might Suffer?
The primary entity negatively impacted is the state government, including state and local tax jurisdictions, which will experience a reduction in total sales and use tax revenue. Because the tax base for vehicle sales is effectively narrowed by the exclusion of these rebates, there will be a decrease in the tax funds collected from automotive transactions.
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