Prop taxes, homestead credit, real estate purchase prices – all a great deal here in AR. But yeah, the good news pretty well ends there. Taxes in Ft. Smith & Fayetteville are 9.25%. In Fayetteville, food tax is 5.25% and non-food items bought in grocery stores are charged 9.25%. Except for wine made in Arkansas (and we’re not exactly known for our wine…), wine is only available at liquor stores, where tax is about 11% on wine & beer & 14.25% on liquor, if memory serves.

One other tax tidbit that I find peculiar is that property taxes here are charged one year in arrears, and everyone is responsible for “assessing” (declaring) their prop on which they owe tax with the assessor’s office. In practice, this means if you sell a car say in Jan 2009 and buy an SUV at the same time, you have to remember to assess the car and then pay taxes on it in 2010, when you no longer have it, but you also have to pay taxes on the SUV because you did have it the previous year. And these taxes are not pro-rated based on how long you owned or didn’t own the vehicles. Make sense? Welcome to Arkansas!

To further confuse things, the homestead exemption is a $350 credit towards your primary residence’s prop tax, and it too is charged a year in arrears. We have a house on which we get that credit, and then we bought a small condo also in AR. When the prop tax bill came for the condo, they had credited us the homestead exemption, so I paid that $350 anyway and wrote a note explaining that we weren’t entitled to the exemption as this was not our primary residence. They refunded my money, so I called, and they told me that because the man who owned this condo *last* year was entitled to it, we get it for this year on this property. Does this mean after we sell, the next buyer will have to pay that $350, even if it is their primary home, because we were not entitled to it the year before they bought it? The logic fails. The tax office was unable to give me an answer about that, and just said to call back if/when it becomes an issue.

Hate to say it, but there are reasons that Arkansas has a bit of a backwards reputation in the eyes of some. Myself included.

After I graduate from grad school at Stephen F. Austin University, I am looking to relocate back to Arkansas where I am from originally. Do you know of any jobs at a public firm in tax? Any help would be much appreciated. My email is ashleyandchuck at gmail dot com.

Thanks,

Chuck

http://www.arktimes.com/blogs/arkansasblog/2008/12/annals_of_corporate_welfare_1.aspx