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26 CAR § 130-116. Exempt organizations — Definitions and guidelines for claiming tax-exempt status — Arkansas Code § 26-51-303
26 CAR § 130-116. Exempt organizations — Definitions and guidelines for claiming tax-exempt status — Arkansas Code § 26-51-303.
(a) Definitions. As used in this section:
(1) "Association" means an entity operating under articles of association, a constitution, or other creating documents with a declaration or other evidence the organization was formed by adoption of the document by more than one (1) person and having bylaws;
(2) "Cooperative association" is a group of individuals formed to participate in a productive enterprise, the profits being shared in accordance with the capital or labor contributed by each;
(3) "Corporation" means an entity operating under articles of incorporation, being properly registered with Arkansas, and meeting the requirements of Arkansas Code § 26-51-303 for recognition of tax-exempt status;
(4) "Internal Revenue Service ruling letter" means an official notification by the Internal Revenue Service of acceptance of tax-exempt status of the organization;
(5) "Partnership" includes a syndicate, group, joint venture, or other unincorporated organization operating under the terms and conditions of a partnership agreement;
(6) "Trust" means an entity operating under a trust indenture or agreement; and (7) "Unrelated income" means any income earned from activities carried on by the organization that is not substantially related to its exempt purposes.
(b)(1) Nonprofit corporations, unincorporated groups or associations, and trusts shall be eligible to receive income tax-exempt status under Arkansas Code § 26-51-303 or § 26-51-309 upon submitting proper documentation and application to:
Department of Finance and Administration
Revenue Division, Corporation Income Tax Section
P.O. Box 919
Little Rock, Arkansas 72203-0919
(2) The following information must be submitted for a determination of state income tax-exempt status:
(A) Organizations with an Internal Revenue Service ruling letter:
(i) Copy of Internal Revenue Service ruling letter;
(ii) Copy of pages 1 and 2 of Internal Revenue Service form 1023 or 1024; and
(iii) Statement declaring Arkansas Code under which exempt; or
(B) Organizations without an Internal Revenue Service ruling letter:
(i) Arkansas form AR1023CT;
(ii) Copy of Articles of Incorporation, Articles of Association, Trust Indenture, or Trust Agreement; and
(iii) Copy of bylaws.
(c)(1) Acts 1993, No. 1147, known as the Nonprofit Corporation Act of 1993, adopted Section 664 of the Internal Revenue Code as in effect on January 1, 1993, for the purpose of computing the tax liability of charitable remainder trusts and their beneficiaries.
(2) See Arkansas Code § 26-51-309.
(d)(1) Any unrelated income of a nonprofit corporation operating in Arkansas as well as in other states shall be reported to the state in which it is earned.
(2) Any unrelated income attributable to Arkansas would be subject to Arkansas income tax.
(e)(1) Revocation of tax-exempt status shall be effective on the same date as the Internal Revenue Service revocation (if made) or upon notification to the taxpayer by the Revenue Division of the Department of Finance and Administration upon investigation and discovery of sufficient grounds for revocation.
(2) Sufficient grounds for revocation shall mean any investigation in which it is determined that the organization is not operating in the manner under which it originally obtained exempt status.