To Provide A Sales And Use Tax Exemption For Disabled Veterans.
Summary
HB1738 creates a new Arkansas sales and use tax exemption for disabled veterans and certain household members acting on their behalf. The bill defines a disabled veteran by reference to the existing property tax exemption in Arkansas Code § 26-3-306, and it extends the exemption to purchases of tangible personal property, specified digital products, digital codes, and services. To qualify, the veteran must provide the Department of Finance and Administration a U.S. Department of Veterans Affairs letter certifying disabled-veteran status.
The exemption is capped at $25,000 in qualifying sales per disabled veteran per year. The Department of Finance and Administration may require an oath-backed statement confirming the cap has not been exceeded, and any excess claimed above the limit is treated as a direct sales tax liability that can be collected with penalties and interest. The department must also issue exemption cards to eligible disabled veterans and authorized household members, and it must adopt rules to administer the program. Fraudulent claims are made a Class C misdemeanor, and the exemption becomes effective on the first day of the calendar quarter after the act takes effect.
Impact
The bill would amend Title 26 of the Arkansas Code by adding a new section to the gross receipts and compensating use tax laws, creating a targeted exemption for disabled veterans and certain authorized household members. It would reduce state and potentially local tax collections on qualifying purchases up to the annual cap, while also adding administrative duties for the Department of Finance and Administration, including verification, card issuance, rulemaking, and enforcement. It does not alter the underlying property tax exemption for disabled veterans, but instead uses that existing eligibility standard to determine who may claim the new sales and use tax benefit.
Sentiment
The bill appears broadly favorable and supportive of disabled veterans, as reflected by its many bipartisan cosponsors in both chambers. The caption and structure indicate a benefits-oriented measure intended to provide financial relief to veterans with service-connected disabilities. No committee testimony or recorded votes were provided, so there is no direct evidence of opposition in the available materials, but the inclusion of a tax cap, documentation requirements, and fraud penalties suggests an effort to balance the benefit with administrative oversight.
Contention
The main policy issues likely concern the fiscal cost of the exemption, the administrative burden on the Department of Finance and Administration, and how to prevent misuse. The bill limits the benefit to $25,000 per year and requires VA certification and exemption cards, which may reflect concern about verification and revenue loss. Another possible point of contention is the scope of eligible purchases, since the exemption covers not only goods but also digital products, digital codes, and services, and it extends to household members authorized to buy on the veteran’s behalf.