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When ordering software, services, training, or documentation, please be aware that, unless you receive something tangible (books, CD's, something else you can touch), the product is not subject to sales tax in the state of Arkansas. This applies to any person or organization in Arkansas.
This normally comes up at two points.
- When ordering software, services, training, or documentation. When ordering, please assure that you put a zero in the Sales Tax box on the Purchase Requisition. The Finance Office is aware of this rule so that should not raise any questions.
- When you get an invoice. Many times the vendor will automatically add the sales tax. If they do, you need to contact them and tell them that the product is not taxable in the state of Arkansas. Some will understand that and remove it. Others will request a certificate that says Harding is exempt from sales tax. But non-profits in Arkansas (which includes churches and universities) are not exempt from sales tax unless the item purchased is for resale.
The guiding principle is that even if it is a lease, subscription or a rental, if it comes with a shipping label, then it is taxable.
If you encounter any issues where the vendor insists on charging sales tax, send them the text below. If that still doesn't solve it, you may have to get the Finance Office involved.
Harding University is liable for sales tax in every situation (except items for resale), subject to what Arkansas law defines as what is taxable in Arkansas. Software, related services and documentation that is downloaded or cloud-based and not in any tangible format is not taxable in Arkansas. It's not that Harding has a specific exemption for the software, such items are not taxable for anyone in Arkansas. GR25 of the Arkansas Gross Receipts Tax Rules documents the rule clearly. We do not have to provide any kind of documentation for the software to be tax-free. Specifically, software is only taxable if you purchase it on a CD or other tangible media. Downloaded software or online access to software is not taxable.
So based on that, please do not charge sales tax on our order. You are not required to remit it to the state of Arkansas, hence do not have a need to charge it.