Arkansas Tax Reform Task Force Announces List of Sales Tax Exemptions to Study for Elimination (After Hearing from Policy Experts)

With the fiscal and special sessions concluded, the Tax Reform and Relief Legislative Task Force convened yesterday and today. Yesterday's program consisted of testimony on sales tax policy from the Tax Foundation, the Institute for Tax and Economic Policy, the Arkansas Bureau of Legislative Research (BLR), and the Department of Finance and Administration (DFA). The highlight of today's proceedings was an initial list of specific sales tax exemptions and other policies for further study. Potentially affected stakeholders should take note and consider how to respond. [More]

Flash Inventory? Thoughts on the FLIS Enterprises Withdrawals from Stock Analysis

While the Arkansas Supreme Court's recent decision in Walther v. FLIS Enterprises, Inc., 2018 Ark. 64 was mostly watched for its ruling that sovereign immunity is not jurisdictional, it went on the grapple with the substantive tax question: whether the tax base for gross receipts tax on a fast food franchisee's free meals given to employees is the cost of the ingredients or the menu price of the meals. The Supreme Court reversed the trial court and ruled in favor of the Department that the tax base is the menu price. [More]

Administrative Decision Reminds Taxpayers that You Can Call and Talk to DFA, but Don’t Rely on Oral Advice

By T.J. Lawhon

In a case before the Arkansas Department of Finance and Administration (“DFA”) Office of Hearings and Appeals, DFA issued an Administrative Decision in Docket No. 18-211 (Mar. 12, 2018) regarding a matter of reliance upon DFA’s communication with a taxpayer. The taxpayer protested an assessment of sales tax regarding the taxability of its business transactions. The taxpayer is a retail repair and installation business, including inspection and monitoring services. DFA contented that some of the taxpayer’s transactions were taxable, but many were exempt. Specifically, DFA determined that the taxpayer had failed to collect sales tax on the cleaning/calibration and labor performed on certain personal property. [More]

In a Relief to Taxpayers, Arkansas Supreme Court Says Sovereign Immunity Is Not Jurisdictional

Today's Arkansas Supreme Court opinion in Walther v. FLIS Enterprises, Inc., 2018 Ark. 64, coupled with the Department of Finance and Administration's own restraint, provides substantial comfort that the doors to Arkansas courts remain open for taxpayers seeking judicial relief. The court held that sovereign immunity is an affirmative defense to be raised, rather than a jurisdictional requirement that the court should raise on its own. Given that the Governor and DFA have indicated that they will not raise sovereign immunity, there is a high likelihood that tax cases can continue to proceed in state court. [More]

At Oral Argument, Justices Seem Reluctant to Find Sovereign Immunity a Jurisdictional Bar

Yesterday's oral argument in Walther v. Flis Enterprises, Inc., no. CV-17-240, should provide some comfort to taxpayers concerned about losing their right to litigate disputed tax claims where the tax in question has been paid to the state. At oral argument, counsel for the Arkansas Department of Finance and Administration explained that they had wanted to bring the issue to the court's attention but were not themselves advocating for it. Without DFA advocating for sovereign immunity, the justices seemed reluctant to apply it themselves sua sponte. [More]