Arkansas Form ET-1 is the sales and use tax return every registered seller files with the Department of Finance and Administration (DFA). It covers the 6.5% state Gross Receipts Tax, the 6.5% Compensating Use Tax, and the local city and county taxes you collected during the period.1Department of Finance and Administration. State Sales and Use Tax Rates The return and payment are due by the 20th of the month after the reporting period closes, and the DFA expects you to file electronically through the Arkansas Taxpayer Access Point (ATAP) at atap.arkansas.gov.2Department of Finance and Administration. Sales and Use Tax Forms
Who Has to File
If you sell, lease, or rent tangible personal property or provide taxable services in Arkansas, you need a sales tax permit and you file ET-1.3Arkansas.gov. Starting a New Business – An Educational Brochure for Arkansas Taxpayers Once you’re registered, filing is continuous. A zero-sales month still gets a return. Skipping periods because nothing happened is one of the fastest routes to penalties.
Out-of-state sellers with no physical presence in Arkansas have to collect and remit if their deliveries into the state exceeded $100,000 or 200 transactions in the current or previous calendar year. The same thresholds apply to marketplace facilitators.4Department of Finance and Administration. Remote Sellers If you sell through a platform that collects tax for you, confirm which transactions it handles so you don’t double-report on your own ET-1 or leave a gap.
What the Return Covers
ET-1 captures two taxes. The Gross Receipts Tax is Arkansas’s sales tax, applied to taxable in-state transactions at 6.5%. The Compensating Use Tax, also 6.5%, applies to tangible personal property you bought from an out-of-state vendor that didn’t charge Arkansas sales tax and then brought into the state to use or store. Both go on the same return.
Local city and county taxes ride on top. Arkansas uses destination-based sourcing for most sales, so the local rate follows where the buyer receives the item, not where your business sits.5Justia Law. Arkansas Code 26-52-521 – Sourcing of Sales – Definitions Ship from Little Rock to Fayetteville, and you charge the Fayetteville local rate. Wrong local rates are a common audit finding, so cross-check the DFA’s published rate tables every period.
One product-line note: as of January 1, 2026, food and food ingredients are no longer subject to any state-level sales tax. The final 0.125% rate was eliminated at the start of the year. If you sell groceries, your point-of-sale system needs to reflect that so you aren’t over-collecting.
How to Calculate What You Owe
Before you open the form, pull your full sales and purchase records for the period, including exemption certificates for any deduction you plan to claim. Then work through the math in order:
- Start with total gross receipts for the period.
- Subtract documented non-taxable sales (sales for resale, sales to government entities, and other statutory exemptions) to get net taxable sales.
- Multiply net taxable sales by 6.5% for the state Gross Receipts Tax.
- Apply the correct city and county rates to each sale based on sourcing, and report the local taxes separately.
- Multiply your taxable out-of-state purchases by 6.5% for the state Compensating Use Tax, and add any applicable local use tax.
- Subtract the vendor discount, any prepayments made during the period, and any credit carried from a prior return.
The result is your net tax due. If credits and prepayments exceed the liability, the overage carries forward.
The 2% Vendor Discount for On-Time Filers
Arkansas gives timely filers a vendor discount of 2% of the state tax collected, capped at $1,000 per month.6Department of Finance and Administration. Sales and Use Tax FAQs File or pay late and you lose it entirely. For a business remitting $50,000 in state tax a month, a one-day delay costs the full $1,000.
Filing and Payment
ET-1 and payment are due on the 20th of the month after the reporting period. A January return is due February 20. Arkansas generally assigns monthly filing to registered sellers.
File through ATAP. You can key in your figures or upload data and pay in the same session using ACH Debit, where the DFA pulls funds on the date you authorize, or ACH Credit, where you push the payment from your bank. The DFA does not mail blank ET-1 forms.2Department of Finance and Administration. Sales and Use Tax Forms
Mandatory EFT and Semi-Monthly Prepayments
If your average monthly tax liability is $20,000 or more, you must pay by electronic funds transfer. Mailing a check is not an option at that level.7Department of Finance and Administration. Who Must Pay by EFT
Businesses with average net sales of $200,000 or more per month prepay sales tax twice each month. Out-of-state sellers meeting the same threshold prepay 80% of their monthly state liability in two installments. Those prepayments credit against the full amount reported on the 20th.7Department of Finance and Administration. Who Must Pay by EFT
What Late Filing Costs
The DFA adds a 5% penalty on unpaid tax for the first month a return is late and another 5% for each additional month, up to a combined 35%.8Justia Law. Arkansas Code 26-18-208 – Penalty for Failure to File Timely Returns or Pay Taxes You can escape the penalty only by showing reasonable cause and no willful neglect, which is a high bar in practice.
Interest runs at 10% per year on any unpaid balance from the original due date until you pay.9Justia Law. Arkansas Code 26-18-508 – Interest on Deficiencies It accrues regardless of the reason for the delay. A return six months late on a $10,000 liability easily generates $3,500 in penalties plus roughly $500 in interest.
Records and the Audit Window
Keep every record supporting an ET-1 filing for six years unless the DFA tells you in writing that you can dispose of them sooner.10Code of Arkansas Rules. Record Keeping and Record Retention That means invoices, register tapes, exemption certificates, and the working papers behind each return. Claim an exempt sale but fail to produce the certificate at audit, and the DFA will disallow the deduction and assess tax plus interest.
The standard assessment window is three years from the later of the return’s due date or the date you filed. It stretches to six years if the DFA finds you understated tax by 25% or more. For a fraudulent return or a return never filed at all, there is no time limit.11Justia Law. Arkansas Code 26-18-306 – Time Limitations for Assessments, Collection, Refunds, and Prosecution Filing every period on time, even a zero return, is the simplest way to keep that clock running in your favor.