The following guidelines provide background information on the most common types of filings and the related exemptions in Arkansas.
In this state, organizations are generally required to register prior to soliciting for donations. The registration requirement has a religious exemption, which is not limited to IRS Form 990 Non-Filers, such as churches. However, organizations must apply to receive the exemption. The religious organization exemption is not automatic.
This state has a broad definition of what constitutes solicitation and does not specify what minimum activity level triggers registration requirements. The state does have an exemption from registration for organizations that do not receive more than $25,000 in contributions annually. The statute does not specify whether the $25,000 maximum applies to total contributions or only to Arkansas-sourced contributions.
In this state, organizations that are required to register have the option of registering through the Unified Registration Statement, which is a standardized charitable registration accepted in many states. Using the URS, rather than a state-specific registration form, has pros and cons. In Arkansas, the URS may be emailed in, but cannot be completed online, although future organizational documents and tax returns may be filed online.
A non-resident organization must consent to the Arkansas Secretary of State to act as its agent for service of process. Ark. Code Ann. Sec. 4-28-413.
This state requires organizations to include specific statements whenever the organization is requesting donations (also called “charitable solicitation”). Below is sample language to use with charitable solicitations in this state:
The solicitation is conducted by *NAME* on behalf of *ORG*. *NAME* receives [or, if applicable, does not receive] compensation for this solicitation. Upon request, *ORG* can provide the percentage of funds raised which is being paid to the solicitor, either directly or as reimbursement of costs, and what percentage will be ultimately retained by the charity.
Depending on the type and volume of activities an organization has in this state, the organization may also need to register as an out-of-state business (sometimes called a “foreign business”) with the secretary of state or another state agency. These foreign business registration requirements are separate from the charitable solicitation registration requirements. An attorney can assist the organization in determining whether its connections with this state are significant enough to trigger the foreign business registration requirement. Examples of activities that might trigger this requirement include having employees physically located in the state, conducting programs in the state, and having an office in the state.
Ark. Code § 4-33-1501 (2016)
In this state, most organizations that have received recognition of federal income tax exemption will likely qualify for exemption from the state income tax. [See Ark. Code Ann. § 26-51-303. ] However, to receive this exemption, organizations must apply. The exemption is not automatic. Note that, although an organization may be exempt, if it has unrelated business taxable income (“UBTI”) that is subject to federal taxation, that UBTI also may be subject to state income tax. [See Ark. Code Ann. § 26-51-304.]
It is also important to consider whether applying for sales and use tax and property tax exemptions would be appropriate for your organization. Arkansas does not have a blanket sales and use tax exemption for nonprofits, but some specific exemptions may be available. Contact the Arkansas Department of Finance and Administration for more information, including forms and information on available exemptions. Information regarding property tax exemption is often available from the local county website, such as this guide published by Sebastian County. An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.
Ark. Code § 26-51-205 (2017)
Guide for Organizations Doing Business in Arkansas: https://www.sos.arkansas.gov/uploads/DoingBusinessinAR.pdf
Online Application for Foreign Nonprofit Corporation Seeking Authorization to do Business in Arkansas: https://www.ark.org/sos/ofs/docs/index.php?selected_form=npf1
Mail-In Application for Foreign Nonprofit Corporation Seeking Authorization to do Business in Arkansas: https://www.sos.arkansas.gov/uploads/NPF-1.pdf
Charitable Registration Resources and Forms: https://www.sos.arkansas.gov/business-commercial-services-bcs/nonprofit- charitable-entities/charitable-entities
This resource contains general educational information related to legal concepts, but this information does not constitute legal advice. Anyone seeking legal advice is strongly encouraged to consult with a licensed attorney regarding any of the matters discussed herein. Although licensed attorneys work with NLI, NLI is not a law firm and does not undertake legal representation on behalf of any clients. Further, no licensed attorney working with or on behalf of NLI agrees to undertake legal representation on behalf of any client unless the terms of such representation are set forth in a separate, written representation agreement.