1. (a) The collection and administration of a gross receipts tax collected for any town, city, or county by the Commissioner of Revenue shall be collected and administered in accordance with this part.

2. (b) Maximum tax limitation.

   1. (1)

      1. (A) All local taxes shall be collected only on the first two thousand five hundred dollars ($2,500) of gross receipts, gross proceeds, or sales price of a single:

3. (i) Motor vehicle;

   1. (ii) Aircraft;

      1. (iii) Watercraft;

         1. (iv) Modular home;
         2. (v) Manufactured home; or
         3. (vi) Mobile home.
      2. (B) The term “motor vehicle” means a self-propelled vehicle registered for highway use.

      3. (C)

         1. (i) The term “watercraft” means a:
4. (a) (a) Boat;

5. (b) (b) Canoe;

   1. (c) (c) Kayak;

      1. (d) (d) Sailboat;
6. (e) (e) Party barge;
7. (f) (f) Raft;
8. (g) (g) Jet ski;

9. (h) (h) Houseboat; or

   1. (i) (i) Amphibious vehicle.

      1. (ii) “Watercraft” does not include a tug boat or barge.

   2. (2)

      1. (A) Sellers should apply the two thousand five hundred-dollar cap on the sale of a single:

         1. (i) Motor vehicle;
         2. (ii) Aircraft;
         3. (iii) Watercraft;
         4. (iv) Modular home;
         5. (v) Manufactured home; or
         6. (vi) Mobile home.
      2. (B) The purchase of additional tangible personal property in conjunction with the above enumerated items are eligible for the cap if the property is installed, affixed, or otherwise becomes a part of the motor vehicle, aircraft, watercraft, modular home, manufactured home, or mobile home prior to purchase. Example: J.T. purchases a motorcycle. While at the dealer, J.T. picks out a windshield, saddle bags, pipes, and a helmet. If the windshield, saddle bags, and pipes are installed prior to the purchase, then those items are eligible for the cap. Tax should be calculated on the helmet separately.

   3. (3)

      1. (A) A rebate of local sales and use tax is available for certain qualifying purchases of tangible personal property or a taxable service.

      2. (B) See Arkansas Code § 26-52-523 and 26 CAR § 30-1225.

         1. (c) Determination of tax due.
   4. (1) Motor vehicles and trailers. The local sales tax levied by the city and county of the purchaser’s residence shall be due on the sale of a motor vehicle or trailer.

   5. (2) Other sales of tangible personal property and services. Sales of tangible personal property and taxable services are sourced in accordance with the sourcing rules provided in Arkansas Code §§ 26-52-521 and 26-52-522 and 26 CAR § 30-1207.

      1. (d) Direct pay permit holders.
   6. (1) A direct pay permit holder that makes taxable purchases of tangible personal property and services shall report and pay local sales or use tax on those purchases.
   7. (2) The local tax shall be calculated pursuant to the sourcing rules provided in Arkansas Code §§ 26-52-521 and 26-52-522 and 26 CAR § 30-1207.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules contained a footnote as follows: "Source: Ark. Code Ann. §§ 26-74-212; 26-74-220; 26-74-320; 26-74-407; 26-74-412; 26-74-608; 26-75-216; 26-75-222; 26-75-319"