Amazon will collect tax on Arkansas transactions beginning March 1, 2017.

Governor Asa Hutchinson praised the ecommerce giant for its decision to voluntarily collect and remit tax: “This step by Amazon has been voluntary and reflects the new landscape in which retailers recognize the practicality and fairness of sales tax being treated equally between online sales and in person store sales.”

The governor’s statement also underscored that the tax on remote transactions is not a new tax, saying Amazon’s decision “shifts the responsibility of sales tax payment from the customer to the retailer at the time of checkout — providing further clarity and efficiency to the current and often misunderstood Arkansas law.” He was referring to consumer use tax, which taxpayers owe when sales tax isn’t collected by the retailer at the point of sale.

The Arkansas Department of Taxation and Finance explains that use tax is owed when an individual or business purchases items from a retailer outside of Arkansas that would be taxable if purchased from one in Arkansas (“including items from catalogues, TV advertisements, magazines, the Internet, etc.”), and both the following conditions are true:

The items are consumed, distributed, stored, or used in Arkansas

Arkansas sales tax (or an equivalent amount) was not paid to another state

Individual taxpayers in Arkansas are supposed to remit use tax monthly if the total tax due exceeds $100, and annually if it doesn’t. Yet use tax compliance is low and difficult for states to enforce, especially with respect to individuals.

The Arkansas Legislature has been working on a solution to the problem of untaxed remote sales and poor use tax compliance: House Bill 1388 would impose a use tax notification requirement on remote retailers, and Senate Bill 140 would impose a tax collection obligation on remote retailers making — in one calendar year — either 200 separate sales transactions of taxable goods or services, or more than $100,000 in gross revenue from sales. Read more about these bills here.

Earlier this week, the House rejected SB 140. But thanks to Amazon, the state will soon capture tax revenue from at least some remote sales.

With Amazon’s Arkansas announcement, there are only four states with sales tax where Amazon does not (or will not soon) collect: Hawaii, Idaho, Maine, and New Mexico. Which state will be next to share some happy news?

Tax automation software enables businesses of all sizes to facilitate sales and use tax compliance in multiple states. Learn how it works.