Can a utility collect sales tax on a franchise tax? RESPONSE: Yes. 26-52-301 et seq., 26-52-510, 26-52-103. They are part of the gross proceeds of a sale to which sales taxes are applicable. Double taxation.

STATE OF ARKANSAS OFFICE OF THE ATTORNEY GENERAL JUSTICE BUILDING, LITTLE ROCK 72201 STEVE CLARK . (501) 372-2007 ATTORNEY GENERAL . OPINION NO. 86-27 February 4, 1986 Senator Bill Walters Arkansas Senate P.O, Box 280 Greenwood, AR 72936 Dear Senator Walters: Your question concerning a utility's ability to collect a sales tax on a franchise tax is one frequently received by this office. While it does seem somewhat unfair to allow a utility to collect a “tax on a tax," such a procedure is consistent with Arkansas law. Under Ark. Stat. Ann. Section 84-1903 and 84-1903.1, the State has levied a 4% gross receipts, or sales, tax upon the “gross proceeds or gross receipts derived from all sales to any -person." "Gross receipts" is defined as ."the total amount of .consideration for the sale of tangible. personal property and tee services eae without any deduction therefrom on account of the cost of the properties sold, labor service performed, interest paid, losses or any expenses whatsoever." Ark. Stat. Ann. Section 84-1902. The municipal franchise taxes are a part of the gross : proceeds a utility receives from the sale of electricity. There is no specific sales tax exemption under any Arkansas statute for franchise taxes. Consequently, it is my opinion ‘that the law requires a utility to apply the sales tax to all Of its gross receipts, including franchise taxes. The foregoing © opinion, which Tf. hereby approve, was prepared ; by Deputy Attorney General Mary B. ‘Stalloup. “ginc rely, _Attor ley General SC:MBS:jr