Court Opinion

ID: 3261670
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:32:31.962425+00
Date Added: 2024-06-11T08:40:24.625207
License: Public Domain

The Honorable Ralph (Buddy) Blair, Jr. State Representative 7450 Oxford Fort Smith, AR 72903
Dear Representative Blair:
This is in response to your request for an opinion regarding the Arkansas Gross Receipts Act of 1941 ("the Act") which is codified as A.C.A. 26-52-101 et seq. Your question pertains to a particular exemption from the tax, provided for under A.C.A.26-52-401.
It is stated in correspondence attached to your request that "providers [under the jurisdiction of the Area Agency on Aging of the Western District of Arkansas] have been paying sales tax on food purchased for distribution and consumption by elderly and needy Senior Citizens."  The question posed is whether these providers are obligated to pay the sales tax.
It is my opinion that the providers are, as a general matter, obligated to pay the sales tax.  Section 26-52-401(19) (Supp. 1989) exempts from the tax "[g]ross receipts or gross proceeds derived from the sale of foodstuffs sold to governmental agencies for free distribution to any public, penal, and eleemosynary agencies or for free distribution to the poor and needy."  Hence, the exemption is limited to "governmental agencies."  The area Agency on Aging providers do not, in my opinion, constitute "governmental agencies."  It must be recognized in this regard that tax exemptions must be strictly construed against the exemption.  Ragland v. Dumas, 292 Ark. 515, 519, 732 S.W.2d 119
(1987).
The Department of Finance and Administration rules and regulations for the enforcement and administration of the Act must also be considered in this regard.  It should be noted, specifically, that the regulations exclude private non-profit organizations from the definition of "governmental agencies" for purposes of the above exemption.  See Regulations GR 33 (January 1, 1987).  The regulation states in pertinent part:
  GR-33.  EXEMPTIONS FROM TAX-FOODSTUFFS SOLD TO GOVERNMENTAL AGENCIES:
  The gross receipts or gross proceeds derived from the sale of food to governmental agencies for free distribution to any public, penal or eleemosynary institution or for free distribution to poor and needy individuals are exempt from the tax.
For purposes of this regulation the following definitions shall apply:
   A.  The term `governmental agencies' shall mean any agency or department of the United States, the State of Arkansas, counties, cities or towns or school districts. `Governmental agencies' does not include a private non-profit organization funded wholly or in part by public monies. [Emphasis added.]
Providers of an Area Agency on Agency [Aging], as private non-profit organizations, would appear to be excluded from the exemption under the above language.
The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elisabeth A. Walker.