Little Rock Games wrapped up its Galactic Scoundrels Kickstarter project this past July with funding $10,000 over the company’s goal for its first card game. Questions about certain issues remained, however, and in September Little Rock Games inquired of the State of Arkansas Department of Finance and Taxation the answers to these:

  1. Are we required to collect sales tax on money obtained through crowdfunding?
  2. If so, at what point would sales tax be due, when the project funds or when the game ships?

In response, the Department last week issued a formal opinion [PDF] stating that, yes, sales tax is due, both on funds obtained by Little Rock Games and the 5 percent service fee collected by Kickstarter, and should have been collected at the time the project funded. According to the Department’s legal counsel, that decision was based on an understanding that Little Rock’s crowdfunding project represented a transaction in which the company was paid by backers for copies of the game.

What seems like clear guidance usable by other creators in Arkansas, however, becomes less so with further consideration. The answer to the first question “assumes all sales were made to buyers located within the State.” But as Little Rock explains in its query, the location of buyers (or their shipping destination) is not known to Kickstarter project creators at the time a project closes. On this problem, the opinion specifically declines to provide further guidance, referring instead to Arkansas Code Annotated § 26-52-521. According to that law, if a seller in good faith has neither the purchaser’s shipping destination, nor the purchaser’s billing address, nor any other physical address for the purchaser, then the location of the sale for purposes of determining whether state sales tax applies is considered the address from which the item was shipped.

What happens then if the seller doesn’t know yet at the time a project funds—as they may still be evaluating fulfillment services and other options—where will be the shipping point of origin?