Several Conway restaurants have still not updated their sales tax after the city lowered it from 2% to 1.75% April 1.
While some restaurants may not have changed their costs immediately, Conway City Hall and the Arkansas Department of Finance and Administration said any tax issues are solved swiftly, and restaurants usually abide by the correct tax.
Conway’s total base tax is 8.75%, which includes the state and city sales tax plus the Faulkner County tax.
The City of Conway implemented the Advertisement and Promotion tax in 2005, which assesses the sales of prepared food or lodging accommodations.
The A&P tax adds 2% to the 8.75%, making the total prepared food sales tax 10.75%.
It is up to local jurisdictions to define what “prepared food and beverages” constitutes.
However, some restaurants charge more than 10.75%.
“We try to get the word out as best we can,” Denise Hurd, an administrative assistant in the city clerk’s office, said.
Hurd said the City of Conway does not issue or require business licenses and said they “don’t have a database of every business in Conway.”
She said City Hall sent notices that the tax went down April 1 through social media and emails.
“As far as I know, it was fixed,” she said. “They just hadn’t gotten word.”
Andrew Smith, a senior manager at the Arkansas Department of Finance and Administration, said, “I don’t really see any really big mistakes that restaurants or any business really makes, to be honest.”
“Each city or municipality can enforce their own A&P tax,” Smith said. “So typically, you’ll see 2% is kind of a norm, but they can go up or down.”
Smith said the Arkansas Department of Finance and Administration notifies businesses quarterly “on any tax changes that occur.”
“We will go out and communicate with the taxpayer or the business and let them know about what their tax obligations are, whether it was an innocent mistake or if there was just some kind of fraudulent charge in general,” Smith said.
“Ultimately, the business is not allowed to keep any tax that they’re collecting on our behalf or under the state’s name per se. So they have to remit that, and then we distribute that out evenly,” he said.
Smith said if a claim is valid, the department would “communicate with that business to educate them on the proper taxation and then try to get them corrected going forward.”
However, he said, “typically, business don’t have that issue.”
“You have businesses that are maybe not located in the state of Arkansas that might [have a] more common error where they are not charging the correct — because we’re a destination-based sourcing state — they may not charge the right city or county,” Smith said.
Besides this issue, he said, “I don’t think there’s anything that’s really common across the board for restaurants or main retail businesses in Arkansas.”
Some Conway businesses have yet to receive the memo.
Taco Bell on Prince Street and THINK Coffee charged 11.24% tax on orders that were $1.69 and $7.74, respectively; Krispy Kreme charged 11.08% tax on a $16.07 order.
In response to a photo of the Taziki’s receipt, which showed an 11.30% tax, Smith said, “In cases like these, I will assign this complaint to be reviewed and if necessary a member of the Department will reach out to the business to educate them on proper taxation of prepared food.
“Thank you for your communication on this matter. If you or any other patrons of businesses for which you believe to be overcharged would like to get a refund of the overpaid taxes then you would be eligible to make that request with the business in question and provide them with your receipt and the rates which apply to your transaction. If the business refuses to provide the refund then please feel free to contact this office and Department staff would be happy to assist anyone in recovering their overpaid sales taxes.”