The Honorable Mark Riable State Representative 16611 Burlington Road Little Rock, Arkansas 72211
Dear Representative Riable:
This is in response to your request for an opinion concerning Act 5 of 1992 (2nd Ex. Sess.). The act amends the "Arkansas Gross Receipts Act of 1941" by adding a number of services to which the tax will now apply. Your questions refer to the portion of the act which levies the tax on the "services of providing cleaning or janitorial work. . . ." You have asked what my understanding of the new tax is, who it applies to and upon what base it is applied (gross receipts or amount of sale), and have posed two additional questions:
1. If my constituent is now providing services to a business which was brought into the state as a non-taxable or tax exempt business, would this tax still apply to work being done for that particular company?
2. If my constituent is providing services to a church or charitable institution which is a non-taxable entity, would this tax still apply?
In response to your general preliminary questions, it is my opinion that the new tax applies to anyone who provides the service of cleaning or janitorial work, unless the provision of this service is otherwise exempted by law. Additionally, it is my opinion that the tax will apply to the "gross receipts" or "gross proceeds" of the sale. These terms are defined at A.C.A. §26-52-103(a)(4) (Repl. 1992).
I assume from the wording of your first specific question that you are referring to a business which is exempt from property taxes (e.g., an "Act 9" bond project). It is my opinion that the sales tax will apply to janitorial services performed for businesses which are exempt from property taxes. The fact that the recipient of the services is exempt from property taxes has no bearing on the applicability of the sales tax. If, however, you are referring to an entity which is exempt from paying salestaxes under the "Arkansas Gross Receipts Act of 1941," as amended, it is my opinion that the tax will not be chargeable when cleaning or janitorial services are provided to such entities. These entities include the federal government, A.C.A. §26-52-401(5); the Boy Scouts of America and the Girl Scouts of America, A.C.A. § 26-52-401(7); the Boys Club of America, and the Girls Club of America (effective July 1, 1993), A.C.A. §26-52-401 (8); the Poet's Roundtable of Arkansas, A.C.A. §26-52-401(9); 4-H Clubs and FFA Clubs, the Arkansas 4-H Foundation, and the Arkansas Future Farmers of America Association, A.C.A. § 26-52-401(10); hospitals and sanitariums operated for charitable and nonprofit purposes, and nonprofit organizations whose sole purpose is to provide temporary housing to the family members of patients in a hospital or sanitarium. A.C.A. § 26-52-401 (21).
In response to your second specific question, it is my opinion generally that the providing of janitorial services to a church or charitable institution will be subject to the tax. Although the Arkansas Gross Receipts Act of 1941 exempts services providedby churches and charitable institutions from the tax (A.C.A. §26-52-401(1) and (2)), it does not exempt the provision of services to these entities unless they are an entity listed in the preceding paragraph.
The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elana C. Wills.
Sincerely,
WINSTON BRYANT Attorney General
WB:cyh