Sebastian County tax election documents received by state officials

Making certain to avoid the risk of the state not collecting sales tax revenues in future months, Sebastian County Judge Steve Hotz has double checked to make certain all necessary paperwork has been received by the state.

On Aug. 8, Sebastian County voters approved the county’s 1% sales tax for another 10 years. The tax, which generated almost $34 million in 2022, was first approved by county voters in 1994. It has been renewed twice for a 10-year interval, the last during a special election May 14, 2013. The tax was set to sunset June 30, 2024, but with the election, it will now go until June 20, 2034.

In accordance with Arkansas tax law, prior to an election a city or county must file a report to the Arkansas Department of Finance and Administration (DFA) with proof of publication and the mayor or judge’s proclamation of election results within 10 days after the election is certified and no later than 90 days prior to the effective date of the tax.

The Aug. 8 election results approving the collection of the 1% county-wide sales tax for another 10 years have been certified and the proper reports have been filed so there will be no disruption in collecting the sales tax next July, Hotz told Talk Business & Politics.

“We double checked to make sure everything was correct. We heard what happened to Crawford County, and we didn’t want to be in the same boat,” Hotz said. “But, no, we’re good.”

DFA spokesman Scott Hardin confirmed that the Sebastian County paperwork has been received.

Collections from the tax are divided among the 11 municipalities in the county and the county itself based on a per capita percentage, according to Hotz. Of the $33.768 million collected from tax in 2022, 85.8% went to the towns and cities inside the county. The county received 14.2% in 2022 or approximately $4.8 million.

CRAWFORD COUNTY ISSUE
According to the DFA, there will be a three-month period – October through December – when the 1% county-wide sales tax typically collected in Crawford County will not be collected.

On May 12, 2015, Crawford County voters approved extension of a 1% sales and use tax and scheduled the tax to expire on Sept. 30, 2023, according to the DFA. On May 24, 2022, the tax was approved by the voters to be extended until May 30, 2031. However, there was an error in reporting that continuance to the state, and in July retailers were notified of a change in the amount of sales tax that should be charged for sales in the county

Crawford County Judge Chris Keith said he heard from a seller that they had been notified of the change and called the DFA on July 20 to inquire why. At that time, he was told Crawford County had not filed the correct report letting the state know that the sales tax had been continued.

On Aug. 1, the DFA notified Crawford County that all of the documentation required to be received by DFA under Arkansas law to continue collection of the tax on Oct. 1 had not been received, said Scott Hardin, DFA spokesman. By that time, Crawford County had rectified the issue and filed the correct paperwork, Keith said. But it was too late for the county to have a continual collection of the sales tax.

On Aug. 17, the DFA notified Crawford County that the necessary documentation had been received and businesses would be notified to resume collection of the 1% sales and use tax on Jan. 1, 2024. But that still leaves three months with no collection of that sales tax. The revenue this sales tax generates is distributed to the county and the nine municipalities in the county based on population, with the county getting roughly 43% of the total collection and the nine municipalities in the county getting the remaining 57%, Keith said.