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]

Mike Parker and Matt Boch to Speak at the ASCPA Federal Tax Institute in Little Rock on December 6

DDH attorneys Mike Parker and Matt Boch will be speaking on state tax topics at the 58th annual Federal Tax Institute, which is sponsored by the Arkansas Society of CPAs and the Arkansas Bar Association. The conference, which covers an array of federal and state tax topics, will be at the Doubletree Hotel in downtown Little Rock on December 5 and 6. [More]