HB1319
To Provide An Exemption From State Sales Tax For Disabled Veterans, Spouses Of Disabled Veterans, And Surviving Spouses Of Disabled Veterans.
AI-Generated Summary
This bill proposes to amend Arkansas law to provide a state sales tax exemption for disabled veterans, their spouses, and unremarried surviving spouses of disabled veterans. The exemption applies to the gross receipts and gross proceeds from the sale of tangible personal property, specified digital products, digital codes, or services. To qualify, disabled veterans must obtain an identification card from the Department of Veterans Affairs, and surviving spouses must provide certification of their status. The exemption is limited to sales made at a physical location within the state and has an annual maximum claim of $5,000 per taxpayer. This exemption does not apply to local sales and use taxes or the compensating use tax. The bill also makes conforming amendments to various sections of Arkansas Code concerning local sales and use taxes to ensure they apply to transactions that would otherwise be exempt under the new state sales tax exemption. The Department of Veterans Affairs and the Department of Finance and Administration are tasked with creating rules and collaborating for the secure issuance of identification cards and administration of the exemption. Penalties are outlined for fraudulent claims, including a Class C misdemeanor for intentional fraud.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill would be disabled veterans, their spouses, and unremarried surviving spouses of disabled veterans. These individuals would receive a financial benefit through a reduction in their sales tax liability on eligible purchases, up to an annual limit. The Department of Veterans Affairs and the Department of Finance and Administration would also be beneficiaries in terms of their administrative roles in issuing identification cards and managing the exemption program. Sellers of tangible personal property, digital products, digital codes, and services would benefit from processing exempt transactions for eligible customers, potentially increasing sales.
Who Might Suffer?
The primary entities that could be negatively impacted by this bill are state and local governments due to a reduction in sales tax revenue. While the bill specifies the exemption applies only to state sales tax, it also makes conforming changes to sections related to local sales and use taxes. This suggests a potential for reduced revenue for municipalities and counties that rely on these taxes, particularly if these local taxes are structured to follow state exemptions. Sellers who process these exempt transactions would have additional administrative tasks associated with verifying identification and reporting serial numbers for exempt sales, which could incur minor costs or time investments.