Bill Summary – FastDemocracy

Stricken language would be deleted from and underlined language would be added to present law.
 State of Arkansas
 93rd General Assembly                        A Bill
 Regular Session, 2021                                                             HOUSE BILL 1453
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 By: Representatives Underwood, Carr, Haak, Lundstrum, Payton
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                                   For An Act To Be Entitled
                 AN ACT TO PROVIDE A SALES AND USE TAX EXEMPTION FOR
                 USED MOTOR VEHICLES; TO AMEND THE DIRECT PAYMENT OF
                 TAX BY A CONSUMER-USER FOR CERTAIN MOTOR VEHICLES;
                 AND FOR OTHER PURPOSES.
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                                               Subtitle
                         TO PROVIDE A SALES AND USE TAX EXEMPTION
                         FOR USED MOTOR VEHICLES; AND TO AMEND
                         THE DIRECT PAYMENT OF TAX BY A
                         CONSUMER-USER FOR CERTAIN MOTOR
                         VEHICLES.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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        SECTION 1.       Arkansas Code Title 26, Chapter 52, Subchapter 4, is
 amended to add an additional section to read as follows:
        26-52-453.       Used motor vehicles.
        The gross receipts or gross proceeds derived from the sale of a used
 motor vehicle are exempt from the gross receipts tax levied by this chapter
 and the compensating use tax levied by the Arkansas Compensating Tax Act of
 1949,  26-53-101 et seq.
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        SECTION 2.       Arkansas Code  26-52-510 is amended to read as follows:
        26-52-510.       Direct payment of tax by consumer-user  New and used motor
 vehicles, and new and used trailers, or semitrailers  Definition.
        (a)(1)       On or before the time for registration as prescribed by  27-
 14-903(a), a consumer shall pay to the Secretary of the Department of Finance
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 and Administration the tax levied by this chapter and all other gross
 receipts taxes levied by the state with respect to the sale of a new or used
 motor vehicle, or a new or used trailer, or semitrailer required to be
 licensed in this state, instead of the taxes being collected by the dealer or
 seller.
            (2)   The secretary shall require the payment of the taxes at the
 time of registration before issuing a license for the new or used motor
 vehicle, or the new or used trailer, or semitrailer.
            (3)(A)     The taxes apply regardless of whether the motor vehicle,
 trailer, or semitrailer is sold by a vehicle dealer or an individual,
 corporation, or partnership not licensed as a vehicle dealer.
                     (B)   The exemption in  26-52-401(17) for isolated sales
 does not apply to the sale of a motor vehicle, trailer, or semitrailer.
            (4)   If the consumer fails to pay the taxes when due:
                     (A)   There is assessed a penalty equal to ten percent (10%)
 of the amount of taxes due; and
                     (B)   The consumer shall pay to the secretary the penalty
 under subdivision (a)(4)(A) of this section and the taxes due before the
 secretary issues a license for the motor vehicle, trailer, or semitrailer.
      (b)(1)(A)   Except as provided in this section, when a used motor
 vehicle, trailer, or semitrailer is taken in trade as a credit or part
 payment on the sale of a new or used motor vehicle, or a new or used trailer,
 or semitrailer, the tax levied by this chapter and all other gross receipts
 taxes levied by the state shall be paid on the net difference between the
 total consideration for the new or used motor vehicle, or the new or used
 trailer, or semitrailer sold and the credit for the used motor vehicle,
 trailer, or semitrailer taken in trade.
                     (B)   However, if the total consideration for the sale of
 the new or used motor vehicle, or the new or used trailer, or semitrailer is
 less than four thousand dollars ($4,000), no tax shall be is due.
                     (C)(i)   When a used motor vehicle, trailer, or semitrailer
 is sold by a consumer, rather than traded-in as a credit or part payment on
 the sale of a new or used motor vehicle, or a new or used trailer, or
 semitrailer, and the consumer subsequently purchases a new or used motor
 vehicle, or a new or used trailer, or semitrailer of greater value within
 forty-five (45) days of the sale, the tax levied by this chapter and all
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 other gross receipts taxes levied by the state shall be paid on the net
 difference between the total consideration for the new or used motor vehicle,
 or the new or used trailer, or semitrailer purchased subsequently and the
 amount received from the sale of the used motor vehicle, trailer, or
 semitrailer sold in lieu of a trade-in.
                        (ii)(a)       Upon registration of the new or used motor
 vehicle, a consumer claiming the deduction provided by subdivision
 (b)(1)(C)(i) of this section shall provide a bill of sale signed by all
 parties to the transaction which that reflects the total consideration paid
 to the seller for the new motor vehicle.
                                (b)    A copy of the bill of sale shall be
 deposited with the revenue office at the time of registration of the new or
 used motor vehicle.
                                (c)    The deduction provided by this section
 shall not be allowed unless the taxpayer claiming the deduction provides a
 copy of a bill of sale signed by all parties to the transaction which that
 reflects the total consideration paid to the seller for the new motor
 vehicle.
                        (iii)     If the taxpayer claiming the deduction
 provided in this section fails to provide a bill of sale signed by all
 parties to the transaction which that reflects the total consideration paid
 to the seller for the vehicle, tax shall be is due on the total consideration
 paid for the new or used motor vehicle, or the new or used trailer, or
 semitrailer without any deduction for the value of the item sold.
            (2)(A)(i)   When a motor vehicle dealer removes a motor vehicle
 from its inventory and the motor vehicle is used by the dealership as a
 service vehicle, the dealer shall register the motor vehicle, obtain a
 certificate of title, and pay sales tax on the listed retail price of the new
 motor vehicle.
                        (ii)(a)       When the motor vehicle dealer returns the
 service vehicle to inventory as a used motor vehicle and replaces it with a
 new motor vehicle for dealership use as a service vehicle, the dealer shall
 pay sales tax on the difference between the listed retail price of the new
 service vehicle to be used by the dealership and the value of the used
 service vehicle being returned to inventory.
                                (b)    The value of the used service vehicle
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 shall be the highest listed wholesale price reflected in the most current
 edition of the National Automobile Dealers Association's Official Used Car
 Guide.
                       (B)(i)     As used in this subsection, service vehicle means
 a motor vehicle driven exclusively by an employee of the dealership and used
 either to transport dealership customers or dealership parts and equipment.
                                (ii)    Service vehicle does not include motor
 vehicles which that are rented by the dealership, used as demonstration
 vehicles, used by dealership employees for personal use, or used to haul or
 pull other vehicles.
          (c)   All parts and accessories purchased by motor vehicle sellers for
 resale or used by them for the reconditioning or rebuilding of used motor
 vehicles intended for resale are exempt from gross receipts tax, provided
 that the motor vehicle seller meets the requirements of  26-52-401(12)(A)
 and applicable rules promulgated by the secretary.
          (d)   Nothing in this section shall be construed to This section does
 not repeal any exemption from this chapter.
          (e)   A credit is not allowed for sales or use taxes paid to another
 state with respect to the purchase of a motor vehicle, trailer, or
 semitrailer that was first registered by the purchaser in Arkansas.
          (f)(1)(A)   Any motor vehicle dealer licensed pursuant to  27-14-
 601(a)(6) who has purchased a used motor vehicle upon payment of all
 applicable registration and title fees may register the vehicle for the sole
 purpose of obtaining a certificate of title to the vehicle without payment of
 gross receipts tax, except as provided in subdivision (f)(1)(B) of this
 section.
                       (B)(i)     The sale of a motor vehicle from the original
 franchise dealer to any other dealer, person, corporation, or other entity
 other than a franchise dealer of the same make of vehicle and which sale is
 reflected on the statement of origin shall be subject to gross receipts tax.
                                (ii)    The vehicle shall be considered a used motor
 vehicle which shall be registered and titled, and tax shall be paid at the
 time of registration.
                                (iii)   The provisions of subdivision (f)(1)(A) of
 this section shall not apply in those instances.
                (2)   No license plate shall be provided with the registration,
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 and the used vehicle titled by a dealer under this subsection may not be
 operated on the public highways unless there is displayed on the used vehicle
 a dealer's license plate issued under the provisions of  27-14-
 601(a)(6)(B)(ii).
      (g)(1)(A)     For purposes of this section, the total consideration for a
 used motor vehicle shall be presumed to be the greater of the actual sales
 price as provided on the bill of sale, invoice or financing agreement, or the
 average loan value price of the vehicle as listed in the most current edition
 of a publication which is generally accepted by the industry as providing an
 accurate valuation of used vehicles.
                        (B)   If the published loan value exceeds the invoiced
 price, then the taxpayer must establish to the secretary's satisfaction that
 the price reflected on the invoice or other document is true and correct.
                        (C)   If the secretary determines that the invoiced price is
 not the actual selling price of the vehicle, then the total consideration
 will be deemed to be the published loan value.
               (2)(A)     For purposes of this section, the total consideration for
 a new or used trailer or semitrailer shall be is the actual sales price as
 provided on a bill of sale, invoice, or financing agreement.
                        (B)(2)   The secretary may require additional information to
 conclusively establish the true selling price of the new or used trailer or
 semitrailer.
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      SECTION 3.        Arkansas Code  26-53-126 is amended to read as follows:
      26-53-126.        Tax on new and used motor vehicles, and new and used
 trailers, or semitrailers  Payment and collection.
      (a)(1)     Upon being registered in this state, a new or used motor
 vehicle, or a new or used trailer, or semitrailer required to be licensed in
 this state is subject to the tax levied in this subchapter and all other use
 taxes levied by the state regardless of whether the motor vehicle, trailer,
 or semitrailer was purchased from a dealer or an individual.
               (2)(A)     On or before the time for registration as prescribed by 
 27-14-903(a), the person making application to register the motor vehicle,
 trailer, or semitrailer shall pay the taxes to the Secretary of the
 Department of Finance and Administration instead of the taxes being collected
 by the dealer or individual seller.
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                        (B)   The secretary shall collect the taxes before issuing a
 license for the motor vehicle, trailer, or semitrailer.
               (3)   The exemption in  26-52-401(17) for isolated sales does not
 apply to the sale of a motor vehicle, trailer, or semitrailer.
               (4)   If the person making application to register the motor
 vehicle, trailer, or semitrailer fails to pay the taxes when due:
                        (A)   There is assessed a penalty equal to ten percent (10%)
 of the amount of taxes due; and
                        (B)   The person making application to register the motor
 vehicle, trailer, or semitrailer shall pay to the secretary the penalty under
 subdivision (a)(4)(A) of this section and the taxes due before the secretary
 issues a license for the motor vehicle, trailer, or semitrailer.
      (b)(1)     When a used motor vehicle, trailer, or semitrailer is taken in
 trade as a credit or part payment on the sale of a new or used motor vehicle,
 or a new or used trailer, or semitrailer, the tax levied in this subchapter
 and all other use taxes levied by the state shall be paid on the net
 difference between the total consideration for the new or used motor vehicle,
 or the new or used trailer, or semitrailer sold and the credit for the used
 motor vehicle, trailer, or semitrailer taken in trade.
               (2)   However, if the total consideration for the sale of the new
 or used motor vehicle, or the new or used trailer, or semitrailer is less
 than four thousand dollars ($4,000), no tax shall be is due.
               (3)(A)     When a used motor vehicle, trailer, or semitrailer is
 sold by a consumer, rather than traded in as a credit or part payment on the
 sale of a new or used motor vehicle, or a new or used trailer, or
 semitrailer, and the consumer subsequently purchases a new or used motor
 vehicle, or a new or used trailer, or semitrailer of greater value within
 forty-five (45) days of the sale, the tax levied by this chapter and all
 other gross receipts taxes levied by the state shall be paid on the net
 difference between the total consideration for the new or used motor vehicle,
 or the new or used trailer, or semitrailer purchased subsequently and the
 amount received from the sale of the used motor vehicle, trailer, or
 semitrailer sold in lieu of a trade-in.
                        (B)(i)   Upon registration of the new or used motor vehicle,
 consumers claiming the deduction provided by subdivision (b)(3)(A) of this
 section shall provide a bill of sale signed by all parties to the transaction
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 which that reflects the total consideration paid to the seller for the new
 motor vehicle.
                            (ii)    A copy of the bill of sale shall be deposited
 with the revenue office at the time of registration of the new or used motor
 vehicle.
                            (iii)   The deduction provided by this subdivision
 (b)(3) shall not be allowed unless the taxpayer claiming the deduction
 provides a copy of a bill of sale signed by all parties to the transaction
 which that reflects the total consideration paid to the seller for the new
 motor vehicle.
                      (C)   If the taxpayer claiming the deduction provided in
 this subdivision (b)(3) fails to provide a bill of sale signed by all parties
 to the transaction which that reflects the total consideration paid to the
 seller for the vehicle, tax shall be is due on the total consideration paid
 for the new or used motor vehicle, or the new or used trailer, or semitrailer
 without any deduction for the value of the item sold.
      (c)   The tax imposed by this subchapter shall does not apply to a motor
 vehicle, trailer, or semitrailer to be registered by a bona fide nonresident
 of this state.
      (d)   Nothing in this section shall be construed to This section does
 not repeal any exemption from this subchapter.
      (e)(1)      Upon payment of all applicable registration and title fees, any
 motor vehicle dealer licensed pursuant to  27-14-601(a)(6) who has purchased
 a used motor vehicle may register the vehicle for the sole purpose of
 obtaining a certificate of title to the vehicle without payment of use tax.
               (2)   No license plate shall be provided with the registration,
 and the used vehicle titled by a dealer under this subsection may not be
 operated on the public highways unless there is displayed on the used vehicle
 a dealer's license plate issued under the provisions of  27-14-
 601(a)(6)(B)(ii).
      (f)(1)(A)      For purposes of this section, the total consideration for a
 used motor vehicle s