DFA ALJ Denies Arm's Length Exception to Related-Party Interest Addback

The recent Administrative Decision of the Arkansas Department of Finance and Administration Office of Hearings and Appeals in dockets 20-109 and 20-110 (Dec. 9, 2019) highlights the challenge involved obtaining a refund on an amended return claiming an exception to the addback statute. Intercompany interest charges face substantial scrutiny, and taxpayers will need to be prepared to provide comprehensive documentation to claim an exception to add-back, and particularly if the intercompany interest is at a higher rate than the corporate group's third-party financing. [More]

Charlie Collins Is the New Arkansas Commissioner of Revenue!

In a positive development for taxpayers, Arkansas Department of Finance and Administration Secretary Larry Walther announced today the appointment of Charlie Collins as the new Commissioner of Revenue. With his background in business and politics, he brings a fresh viewpoint to an important position, essentially the lead state tax administrator for Arkansas, that has historically been filled by individuals who "came up through the ranks" in the DFA Revenue Division. [More]

All Manufacturers Need to Be Claiming Reduced Sales & Use Tax Rates on Manufacturing Repair Parts and Services

Manufacturers—particularly smaller ones that do not have direct pay permits—need to make sure that they are claiming the benefit of the reduced sales and use tax rate on manufacturing repair parts and services. This is a significant benefit that refunds part of the state-level tax, as a phase-in before full exemption begins July 1, 2022. With a 12-month limitations period for making a claim, taxpayers need processes in place to assure that timely claims are being made. [More]

Arkansas Court of Appeals Upholds Charitable Exemption for Hospital Clinics

In a unanimous opinion, the Court of Appeals has upheld a charitable exemption from property tax for clinics and lots acquired by a charitable hospital. Hardesty v. North Arkansas Medical Services, Inc., 2019 Ark. App. 410 (Sept. 25, 2019). This straightforward opinion reaffirms existing case law about the requirements for charitable exemption for a hospital, which do not include a minimum percentage of charity care. With this decision, Arkansas seems set to avoid the kind of high-stakes property tax controversy that has surrounded hospitals in other states. [More]

Walmart "Dark Store" Case Should Be of Interest to All Arkansas Property Taxpayers

2017 property taxpayer fairness legislation was intended to level the playing field between taxpayers and county assessors, and courts are now grappling with how to apply these changes. The leading case appears to be Walmart's appeal of its 2018 Pulaski County assessments. The taxpayer received an adverse decision in county court, and that decision has now been appealed for de novo proceedings in circuit (trial) court. While the "dark store" issue is somewhat specific to retail, how the courts apply the equalized burdens of proof in practice is of importance to all taxpayers. [More]