Sales Tax State Activity Update - May 2005

Arkansas Redefines Telecommunications

A bill introduced by Representative David Evans (D.) that clarifies the taxability of various innovative and rapidly growing telecommunications services has been signed into law by Gov. Mike Huckabee (R.).

HB 2728, now Act 1879, states that "telecommunications services subject to tax include the one-way or two-way transmission of messages, voice message, images, or other real-time or essentially real-time communications whether accomplished by any means including wire, cable, fiber optics, laser, microwave, radio satellite, voice-over Internet protocol, or similar facilities."

The Act further states that a taxable service shall include any taxable telephone, telecommunications, or telegraph service charged to an Arkansas place of primary use. Place of primary use means the location of the telecommunications equipment from which telecommunications services are originated or at which telecommunications services are received by a buyer. If the location of the telecommunications equipment is not a defined location, "place of primary use" means the location where a buyer makes primary use of the telecommunications equipment as defined by telephone number, authorization code, or location where bills are sent.

The bill was passed in order to preserve the current collection of sales tax on telecommunications services. The Act contained an emergency clause and was effective on the date it was approved by the Governor.

(HB 2728, [Act 1879], approved by the Governor 4/8/2005)

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