Senate committee rejects bill to make motorboat sales tax collection mirror car rules

Senate Bill 394, introduced by Sen. Justin Boyd (District 27), would have required motorboat dealers and those titling motorboats in Arkansas to collect sales tax at the time of purchase or registration and would have treated used-boat transactions like used-car transactions for tax purposes.

Boyd told the Senate Revenue & Tax Committee the measure ‘‘creates parity with cars’’ and was intended to close a loophole used by ‘‘rogue social media sites’’ where individual sellers and intermediaries avoid sales tax collection. He said the bill would require sales tax ‘‘to be paid at the time the certificate of number and title is issued.’’

Members questioned whether the change amounted to a new tax. ‘‘This is not a new tax. This is just closing a loophole for essentially the bad actors,’’ Senator Petty said; Boyd responded that ‘‘some could argue that that's a new tax’’ because person‑to‑person boat sales would be taxed when registered. DFA analyst Paul Gehring explained that the statute uses the existing motorboat registration definition and that motorboats subject to registration would be covered.

Gehring described the fiscal mechanics and estimates: used‑boat taxation under the bill would generate the primary gain (DFA estimated the revenue gain for used boats at ‘‘approximately 9 and a half million’’), and the net effect for a full fiscal year was presented as roughly $7.8 million. He also noted that treating trade‑ins for new boats like cars would reduce revenue by about $1.7 million.

Committee members pressed on enforcement and whether individuals acting as intermediaries could be ‘‘dealers in disguise.’’ DFA said audit tools and dealer‑registration checks would be essential to prevent circumvention. Several senators asked how out‑of‑state purchases and motor removal (outboard vs. inboard) would be handled; DFA said the statutory registration definition governs.

After closing remarks from Sen. Boyd, the committee took a voice vote on a motion to act on the bill. The chair ruled the motion failed on the voice vote; the transcript records only the voice vote, not a roll‑call tally.

The committee moved to its next agenda item without passage of SB394.