Arkansas DFA legal opinion effectively adopts convenience of the employer test

With telework on the rise, the state taxation of remote employees has become a hot issue. The Arkansas Department of Finance and Administration has now published Revenue Legal Counsel Opinion no. 20200203 (Feb. 20, 2020), which adopts what is effectively a "convenience of the employer" test imposing income tax on remote, out-of-state employee income where the employee is working for an Arkansas-based office. This policy marks an apparent reversal of the position laid out in DFA's Individual Income Tax Regulation 1.26-52-202(c), which requires allocation of nonresident employment income based on where the work was performed. [More]

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]