Opinion No. ( 1998 )

Mr. J. Randy Young, P.E. Executive Director Arkansas Soil and Water Conservation Commission 101 East Capitol, Suite 350 Little Rock, Arkansas 72201

Dear Mr. Young:

This is in response to your request for an opinion on whether donations of money, goods or services to a conservation district is a "charitable contribution" for federal and state tax purposes.

Specifically, you indicate that as the federal government reduces its role in some districts and protection of soil and water resources become more important, conservation districts must look to additional resources to meet their financial needs. You note that one way to meet this need has been through cash and merchandise contributions from local residents. The contributors, however, want to be sure that their contributions can be considered a "charitable contribution" for state and federal tax purposes. You indicate that the relevant Arkansas statutes governing conservation districts provide in pertinent part that:

(a) A soil and water conservation district organized under the provisions of this chapter shall constitute a governmental subdivision of this state, and a public body, corporate and politic, exercising public powers. The district and the directors thereof shall have the following powers, in addition to others granted in other sections of this chapter:

* * *

(7) To accept donations, gifts, and contributions in money, services, materials, or otherwise from the United States or any of its agencies, from this state or any of its agencies, or from any other source and to use or expend such moneys, services, materials, or other contributions in carrying on its operations, except that all forest tree seedlings shall be obtained, insofar as available, from the State Forestry Commission in cooperation with the United States Department of Agriculture; to accept appropriations from the state upon such terms and conditions as may be imposed by law to be used in the furtherance of the purposes of the district.

A.C.A. § 14-125-303(a) (Repl. 1998).

You also note that 26 U.S.C. § 170(c)(1) (a provision of the Internal Revenue Code), provides that:

(c) Charitable contribution defined. — For purposes of this section, the term `charitable contribution' means a contribution or gift to or for the use of —

(1) A State, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.

Your question under these provisions is whether donations of money, goods, or services to conservation districts are "charitable contributions" for purposes of federal and state tax law.

I must note in response to this question that only the appropriate officials at the Internal Revenue Service and the Arkansas Department of Finance and Administration can answer this question. My research has revealed no federal or state cases interpreting similar questions. Two previously issued Attorney General Opinions (copies enclosed), discuss similar questions, and defer to the appropriate state and federal officials. See, e.g., Ops. Att'y Gen. 92-185 (noting DFA's jurisdiction to issue letter rulings on such state law questions); and 91-060 (discussing federal law generally, and noting that such issues must be answered by the IRS, as any opinion of this office is not binding on such agency). I have also noted that the attendant facts surrounding each donation may lead to different results for different donations. Op. Att'y Gen. 91-060. Such questions can only be determined by the individual taxpayer with the help of his or her accountant, attorney, or other tax preparer, or ultimately, by the IRS.

Deputy Attorney General Elana C. Wills prepared the foregoing opinion, which I hereby approve.

Sincerely,

WINSTON BRYANT Attorney General

WB:ECW/cyh