Arkansas Supreme Court Confirms that a Corporation Needs a Lawyer for County Court Property Tax Appeals

The Arkansas Supreme Court's opinion in DeSoto Gathering Company LLC v. Hill, 2017 Ark. 326 (Nov. 30, 2017), confirms that business taxpayers must use legal representation to pursue property tax appeals before the county court. This should not be a surprise to taxpayers since the reasoning is similar to a 2015 Arkansas Court of Appeals decision.

A taxpayer who disagrees with a property tax assessment generally can first appeal to that county's board of equalization. If the taxpayer disagrees with the decision of the board, the next appeal is to the county court, and from there to the circuit court.

It is the appeal to the county court that has tripped up a number of business taxpayers. The county court proceedings are relatively informal and take place before a county judge, who is the principal administrative officer of a county. The more formal judicial proceedings begin in circuit court.

When the Arkansas Court of Appeals decision came out in Stephens Production Company v. Bennett, 2015 Ark. App. 617 (2015), its holding that a business needs a lawyer to file a county court property tax appeal took many surprise. Among those was the taxpayer in this present case (and its sister case, 2017 Ark. 324 (Nov. 30, 2017)). The taxpayer's county court tax appeal had been filed by a senior tax manager with the company. While the county court proceedings went ahead, the taxpayer's subsequent appeal to circuit court was dismissed for lack of subject jurisdiction, in light of the Stephens Production Company decision. The taxpayer appealed to the Arkansas Supreme Court.

The Arkansas Supreme Court upheld the dismissal in reasoning basically following Stephens Production but with much more detailed analysis. The gist is that corporations cannot engage in the unauthorized practice of law, and the county court is a court of law. In particular, the Supreme Court noted that a county court is a court of record under Arkansas Code Annotated sections 14-14-1001(a) and 16-10-104. As the unauthorized practice of law, the taxpayer's notice of appeal to county court was a nullity, the taxpayer failed to meet the jurisdictional deadline for appealing to county court, and thus there was no subject matter jurisdiction to hear the case.

There was a dissent from Justice Hart observing that tax appeal proceedings before a county judge, who is typically a non-lawyer politician, were more in the nature of a public forum than a judicial forum. Under that reasoning, the taxpayer's protest should not have constituted the unauthorized practice of law.

While at this point the decision in DeSoto should not be a surprise to Arkansas taxpayers, it is a confirming reminder that businesses must use attorneys to pursue property tax appeals to county court.

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