Arkansas COVID-19 Tax Extensions - Individuals & Passthroughs Delayed; Corporations Not (Except for Franchise Tax)

So far Arkansas is taking a limited approach to tax deadline extensions compared with other states, with the relief focused on individuals and small businesses: - 2019 individual, passthrough, and fiduciary/estate income tax returns and payments extended to July 15. - 2019 corporate income tax returns not extended. - 2020 income tax estimated payments not extended (including estimated payments for individuals). - Sales tax or excise tax reporting and payment deadlines not extended. - Franchise tax late payment penalties and interest waived if filed and paid by July 15. - Property tax payment deadline of October 15 and personal property rendition due May 31 have not been extended. [More]

Is COVID-19 Sterilization a Taxable Service in Arkansas?

With the demand for COVID decontamination on the upswing, businesses providing COVID-19 cleaning or sterilization services in Arkansas should consider the sales taxability of such services. Arkansas taxes cleaning and janitorial services. Ark. Code Ann. § 26-52-301(3)(D)(i)(b); Gross Receipts Tax Rule GR-9.4. DFA's applied interpretation of cleaning is sometimes broader than ordinary janitorial services; for example providers of industrial cleanup services may be surprised to see DFA take the position that such services are taxable. [More]

Arkansas Economic Development Commission Redeploys $19 Million to Help Businesses Hurt by Coronavirus Outbreak

In a shift from offense to defense, the Arkansas Economic Development Commission (AEDC) is redeploying funds typically used for job creation projects to instead support existing Arkansas businesses that are being hurt by the business declines associated with the coronavirus outbreak. The state is offering bridge loans, generally of up to $250,000, to businesses. The funds come from two pools of money normally used for job creation economic development grants: the state Quick Action Closing Fund (QACF) and the federal Community Development Block Grant (CDBG) program. Businesses needing capital to sustain operations should consider working with AEDC. [More]

DFA Charitable Determinations Pose a Challenging Test for Nonprofits

Charitable nonprofits in Arkansas need to be aware of the stringent "otherwise performed by the government" test applied by Department of Finance and Administration (DFA) for the sales tax exemptions, as illustrated by recent DFA opinion letters. This test is more stringent than that applied by the IRS for 501(c)(3) status, and nonprofits may face sales tax exposure, especially on their fundraising sales including fundraising dinners or events. With property tax exemption rules and guidelines to be forthcoming soon, these rulings may also preview the direction DFA could take in the property tax charitable exemption context. [More]

DFA ALJ Denies Arm's Length Exception to Related-Party Interest Addback

The recent Administrative Decision of the Arkansas Department of Finance and Administration Office of Hearings and Appeals in dockets 20-109 and 20-110 (Dec. 9, 2019) highlights the challenge involved obtaining a refund on an amended return claiming an exception to the addback statute. Intercompany interest charges face substantial scrutiny, and taxpayers will need to be prepared to provide comprehensive documentation to claim an exception to add-back, and particularly if the intercompany interest is at a higher rate than the corporate group's third-party financing. [More]