AR HB1384

Heavy equipment rental businesses in Arkansas may collect a recovery fee of 1.25% of the rental charge from customers located in the state for rentals of less than one year or with undefined/unlimited contract terms.

Recovery fees are exempt from state and local sales and use taxes and may not be collected on rentals to the United States, Arkansas state government, or its political subdivisions and agencies.

Businesses collecting recovery fees must account for and hold them separately from other business receipts and use the fees solely to pay ad valorem taxes on their tangible personal property located in Arkansas.

By February 15 each year, businesses must remit any excess recovery fees (amounts exceeding ad valorem taxes actually paid) to the county where the business was assessed, with proportional distribution to multiple counties based on tax ratios.

Heavy equipment property remains subject to ad valorem taxes; the recovery fee does not exempt property from taxation and is effective beginning January 1, 2018.