| Current Tax Rate:
As of 01/01/07 the local tax rate is 9.25%. This is comprised
of 6% State tax, 2.00% City of Fayetteville tax, and 1.25% Washington County
tax.
Sales Tax Changes: D
F & A Document - 2008 Tax Changes
Effective January 1, 2008, the State of Arkansas changed the way that
sales tax is calculated and paid for invoices exceeding $2500.00.
The State of Arkansas is now a participant in the Streamlined Sales Tax
(SST) which is designed to facilitate the collection of sales tax on internet
and catalog sales on a national basis. SST does not allow the use
of Arkansas’ local tax caps.
For all invoices exceeding $2500.00 with an invoice date of 1/1/08
or greater, the vendor will start charging the actual sales tax for the
location, without taking into consideration any local tax cap. The
good news is that the State of Arkansas is allowing for reimbursement of
the excess sales tax that is paid on an invoice if we provide the appropriate
information to the State within 6 months of the purchase.
The University of Arkansas, when taking this all into consideration,
did not want to go down the road of having the department pay the entire
sales tax amount, then requesting a state reimbursement for the excess
sales tax paid, and then coming up with a process for distributing that
excess sales tax money back to the department cost center(s) that paid
the invoice. Instead the BASIS team modified the Accounts Payable
functions to now provide the following:
-
Vendor provides invoice that now includes state and local sales tax without
capping the local taxes.
-
A/P pays invoice, but when logged in ILOG the BASIS system defines how
much of the vendor’s sales tax is the ‘correct /capped’ amount and how
much is the ‘excess’ amount. (Both of these amounts are displayed
on ILOG)
-
The vendor receives payment for the entire invoice, BUT the department
cost center(s) that paid for the goods is only expensed for the amount
of the goods with the ‘correct/capped’ sales tax amount. A centrally
funded cost center is used to expense the ‘excess’ sales tax.
-
Financial Affairs will request a reimbursement from the State of Arkansas
for the ‘excess’ sales tax that was paid.
Bottom Line: Departments will still only have the capped amount expensed
against their cost centers.
DFA
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