A.R.S. tit. 43 ch. 12 — Arizona Revised Statutes Title 43 Chapter 12 — Tax Exempt Organizations

43-1201. Organizations exempt from tax (Caution: 1998 Prop. 105 applies) A. Except as otherwise provided in this chapter, the following organizations are exempt from the taxes imposed under this title: 1. Organizations that are exempt from federal income tax under section 501 of the internal revenue code. 2. Insurance companies that pay to this state a tax on premium income derived from sources within this state. B. Nonprofit medical marijuana dispensaries under title 36, chapter 28.1, are exempt from the taxes imposed under this title. 43-1202. Feeder organizations not exempt from tax; definition A. An organization that is operated for the primary purpose of carrying on a trade or business for profit is not exempt under any provision of this chapter on the ground that all of its profits are payable to one or more organizations exempt under this section from taxation. B. For the purposes of this section, "trade or business" has the same meaning prescribed in section 502 of the internal revenue code and regulations adopted pursuant to that section. 43-1212. Denial of exempt status due to prohibited transactions; restoration of exempt status A. An organization that is denied exemption from federal income tax for engaging in prohibited transactions as provided by section 503 of the internal revenue code is also denied exemption under section 43-1201. The denial applies to taxable years after the taxable year during which the organization is notified by the department or by the United States internal revenue service that it has engaged in a prohibited transaction, unless the organization entered into the prohibited transaction with the purpose of diverting corpus or income of the organization from its exempt purposes and the transaction involved a substantial part of the corpus or income of the organization. B. An organization that is denied an exemption pursuant to subsection A of this section with respect to any taxable year following the taxable year in which the notice was received may have its exempt status under section 43-1201 restored at the same time the organization's exempt status is restored for federal income tax purposes under section 503 of the internal revenue code. 43-1231. Taxation of unrelated business income Any organization, trust or church or a convention or association of churches that is exempt, except as provided in this section, from taxation under this title by reason of section 43-1201 is subject to the tax imposed under section 43-1111 on its unrelated business taxable income as defined in section 512 of the internal revenue code. 43-1241. Returns of unrelated business income Every organization, otherwise exempt under section 43-1201 but having unrelated business taxable income, shall: 1. File a return, verified by an executive officer under penalties of perjury in the form prescribed by the department on or before the fifteenth day of the fifth month after the close of the taxable year, reporting its income from such activities. 2. Pay a tax at the rates prescribed in section 43-1111 on its unrelated business taxable income as defined in section 43-1231. 43-1242. Information returns of tax-exempt organizations; definition A. Every organization that is exempt under section 43-1201, subsection B shall annually file a return with the department on a form prescribed by the department on or before the fifteenth day of the fifth month after the close of the taxable year. The return shall include: 1. The organization's gross receipts for the year. 2. The organization's expenses incurred within the year. 3. A balance sheet showing the organization's assets, liabilities and net worth as of the beginning and end of the year. 4. Such other information as the department may prescribe by rule. B. For the purposes of this section, "gross receipts" means the total amount the organization received from all sources during its annual tax year without subtracting any costs or expenses.