Businesses that pay local sales tax on purchases exceeding $2,500 per transaction are eligible for a rebate of the additional local sales tax paid to suppliers. The Arkansas Local Tax Rebate Program is a highly valuable opportunity for businesses for seeking to recover excess local sales and use taxes paid on qualifying purchases. This program can yield substantial tax savings—particularly for those who regularly make large capital expenditures or engage in transactions that exceed local tax caps.

Whether you are a small business managing tight cash flow or a large enterprise with multiple Arkansas locations, the rebate provides a practical and efficient way to minimize tax costs and improve compliance. With proper planning and timely application, this program can become a consistent part of your tax strategy—supporting your organization’s financial goals while maximizing the value of your investments in Arkansas.

Benefits of the Program

The Arkansas Local Tax Rebate Program offers several strategic and financial advantages for qualifying taxpayers.

Financial Relief and Cost Recovery

One of the most direct benefits of the program is the opportunity to recover local sales and use taxes paid in excess of the statutory cap.

For businesses making large capital investments—such as equipment, vehicles, or construction materials—the rebate can return thousands of dollars per transaction. The program is especially beneficial for industries with high equipment or materials costs, such as construction, manufacturing, healthcare, and government contractors. These refunds can significantly enhance cash flow, reduce project costs, and free up resources for other operational needs.

For individuals making qualifying high-dollar purchases, the rebate provides a valuable offset against unexpected tax expenses.

Simplified Compliance

By participating in the rebate program and maintaining proper documentation, you can demonstrate proactive compliance with Arkansas tax laws. This reduces the risk of audits or disputes with taxing authorities and ensures that tax records align with the state’s expectations. The structured application process, clear eligibility rules, and standardized forms also make it easier to manage tax compliance, especially for businesses operating in multiple jurisdictions.

Encouragement for Capital Investment and Economic Development

The rebate program serves as an incentive for businesses to expand or relocate operations in Arkansas by reducing the effective tax burden on high-value purchases. This tax relief can be a deciding factor in site selection or capital expenditure planning. By making Arkansas a more cost-effective place to do business, the program supports local job creation, infrastructure growth, and broader economic development—especially in rural or underdeveloped areas of the state.

Eligibility Criteria

To qualify for the Arkansas local tax rebate, you must meet specific conditions.

• Qualifying Purchases. The rebate applies to purchases of tangible personal property or taxable services that exceed the local tax cap of $2,500 per transaction.
• Business Use. The purchase must be eligible for a business expense deduction or depreciation deduction for federal income tax purposes. This includes purchases made by governmental agencies, non-profit organizations, and other entities that may not file income tax returns.
• Documentation. Applicants must provide detailed invoices and proof of payment, such as canceled checks or credit card statements, to support their claim.

Application Process

The application process for the Arkansas local tax rebate is straightforward but requires attention to detail.

• Complete the Rebate Form. You must fill out Form ET-179A, the "Claim for Local Tax Rebate," and, if necessary, the supplemental schedule Form ET-179B.
• Provide Supporting Documentation. Attach legible photocopies of all invoices, showing the invoice date, number, seller information, items purchased, and the amount of local tax paid.
• Submit the Application. Applications can be submitted via mail to the Arkansas Department of Finance and Administration (DFA) at the address provided on the form. Alternatively, electronic submissions may be available through the DFA's online portal.
• Deadline. Claims must be submitted within one year from the date of purchase or payment of the tax, whichever is later.

Common Challenges and Tips

While the program is beneficial, you may encounter challenges such as incomplete documentation or missed deadlines. Follow these steps to reduce the likelihood of these issues.

• Double-Check Documentation. Ensure all required invoices and proof of payment are included with the application.
• Track Deadlines. Mark the one-year submission deadline on your calendar to avoid missing out on the rebate.
• Seek Assistance. Contact the DFA's Sales and Use Tax Section at (501) 682-7105 for guidance on completing the application.

We’re Here to Help

For more information, contact your Moss Adams professional.

Additional Resources

• State & Local Tax Practice