Justia Tax Law Opinion Summaries

The Supreme Court reversed the order of the circuit court granting summary judgment to the Department of Finance and Administration (DFA) upholding DFA's amended and corrected notices of final assessment of Appellants' tax burden for the tax years 2015 through 2017, holding that DFA failed to provide sufficient evidence to meet its prima facie burden of proof for summary judgment.Appellants sued DFA in circuit court challenging the notices of final assessment. The circuit court granted summary judgment for DFA. On appeal, Appellants argued that the evidence presented was not prima facie proof of DFA's calculation of Appellants' net taxable income. The Supreme Court agreed and reversed, holding that a material dispute of fact existed regarding the amounts of Appellants' taxable income for 2015 through 2017, and therefore, summary judgment was improper. View "Gates v. Walther" on Justia Law

The Supreme Court reversed the judgment of the circuit court granting summary judgment in favor of Plaintiffs on their illegal-exaction claim related to Amendment 101 to the Arkansas Constitution, holding that the circuit court erred in its interpretation of Amendment 101.Plaintiffs brought this action against State Defendants raising claims related to tax revenue from both Amendment 91 and Amendment 101. The circuit court granted summary judgment in favor of State Defendants on the Amendment 91 illegal-exaction claim and in favor of Plaintiffs on their Amendment 101 claim. The Supreme Court reversed the circuit court's ruling pertaining to Amendment 101, holding that the circuit court erred in its interpretation of Amendment 101 to the Arkansas Constitution. View "Gibson v. Little Rock Downtown Neighborhood Ass'n" on Justia Law

The Supreme Court reversed the order of the circuit court affirming a decision of the Arkansas Department of Finance and Administration (DFA) concerning certain adjustments to Cenark Investment Group, LLC's taxable income and to its shareholders' accounts for tax years 2016-2018, holding that the circuit court misinterpreted Ark. Code Ann. 26-18-406.Specifically at issue was the circuit court's interpretation section 26-18-406, which provides that a lawsuit brought in circuit court to contest a DFA assessment "shall be tried de novo." On appeal, Cenark argued that the circuit court erred in affirming DFA's decision without holding a trial de novo pursuant to section 26-18-406. For the reasons set forth in A-1 Recovery Towing and Recovery, Inc. v. Walther, 2023 Ark.___ (CV-22-281), also decided today, the Supreme Court reversed and remanded this case for further proceedings. View "Cenark Investment Group, LLC v. Walther" on Justia Law

The Supreme Court reversed the order of the circuit court affirming the decision of the Arkansas Department of Finance and Administration (DFA) concerning its adjustments made to A-1 Recovery Towing & Recovery, Inc.'s taxable income and to its shareholders' accounts for tax years 2013-2017, holding that the circuit court failed to follow Ark. Code Ann. 26-18-406 when it affirmed DFA's decision sua sponte.Section 26-18-406 provides that a suit in circuit court to contest a DFA assessment "shall be tried de novo." On appeal, A-1 argued that the circuit court erroneously sua sponte entered its order affirming the DFA's decision because the order deprived A-1 of its right to a trial de novo under section 26-18-406. The Supreme Court agreed and reversed, holding that the circuit court deprived A-1 of its opportunity to meet proof with proof prior to affirming DFA's decision sua sponte. View "A-1 Recovery Towing & Recovery, Inc." on Justia Law

The Supreme Court affirmed an order of the circuit court finding in favor of Welspun Tubular, LLC in this challenge to a disallowed compensating-use-tax exemption, holding that the circuit court did not err.A "sales and use" tax audit of Welspun's books and records for the reporting periods May 1, 2009 through April 30, 2012 resulted in an assessment of compensating-use tax totaling $162,266 on Welspun's purchases of steel grit during the audit period. Welspun brought this suit, arguing that its grit purchases were tax exempt as the purchase of manufacturing equipment. The circuit court found for Welspun, concluding that the Arkansas Department of Finance and Administration erred in assessing tax on Welspun's purchases of grit. The Supreme Court affirmed, holding that the circuit court did not clearly err in finding that the grit was used to manufacture an article of commerce. View "Walther v. Welspun Tubular, LLC" on Justia Law

The Supreme Court affirmed the judgment of the circuit court finding that certain rent-to-own leases were subject to the special excise tax on short-term rentals of tangible personal property levied by Ark. Code Ann. 26-63-301(b), holding that the circuit court did not err.At issue was the assessment of short-term rental tax on transactions between Appellant, Rent-A-Center East, Inc., and its customers. The Arkansas Department of Finance (DFA) and Administration issued a notice of proposed assessment to Appellant for short-term rental tax, compensating-use tax, and interest. The proposed assessment was upheld. Appellant then filed a complaint seeking judicial relief from the tax assessment, alleging that DFA wrongly classified the rental-purchase-agreement transactions as "leases" or "rentals." The circuit court granted summary judgment for DFA. The Supreme Court affirmed, holding that the transactions at issue were taxable short-term leases and not nontaxable long-term leases. View "Rent-A-Center East, Inc. v. Walther" on Justia Law

The Supreme Court reversed the judgment of the circuit court affirming the Pulaski County Assessor's denial of the Little Rock Municipal Airport Commission's tax exemption for three land parcels, holding that because the Airport used the unleased properties exclusively for public purposes, they were exempt from taxation.After the Assessor denied the Airport's application for tax exemptions the Airport filed four amended complaints. The circuit court granted the Assessor's motion for summary judgment, concluding that the properties were not exempt from taxation. The Supreme Court reversed, holding (1) the Airport directly used the subject properties exclusively for public purposes when the properties were unleased; and (2) therefore, the properties exempt from taxation during the periods were they were unleased. View "City of Little Rock v. Ward" on Justia Law

The Supreme Court reversed in part the judgment of the circuit court denying the motion for summary judgment filed by Appellant Bear Chaney, in his official capacity as the Director of the Arkansas Assessment Coordination Division (AACD) of the State of Arkansas, holding the the circuit court erred as a matter of law in finding that Appellant was not entitled to sovereign immunity.Appellees appealed the county court's rulings denying their claims challenging the assessed values of their working interests as determined by the county assessor and added claims for injunctive relief against Chaney in his official capacity as the director of the AACD. Chaney moved for summary judgment, arguing that the claims against him were barred. The circuit court denied the motion. The Supreme Court reversed in part and dismissed in part, holding (1) the circuit court erred as a matter of law in finding that Chaney was not immune from suit; and (2) Chaney's argument that the circuit court lacked subject matter jurisdiction to award injunctive relief against him was outside the scope of this interlocutory appeal. View "Chaney v. Union Producing, LLC" on Justia Law

In this tax refund case centering on Arkansas's excise tax on tobacco products other than cigarettes the Supreme Court affirmed the judgment of the circuit court granting summary judgment for the Director of the Arkansas Department of Finance and Administration (DF&A) and dismissing Plaintiffs' claims for refund, holding that the circuit court did not err in denying Plaintiffs' motion for summary judgment and granting DF&A's cross-motion for summary judgment.Plaintiff, seven companies that alleged that they overpaid Other Tobacco Products (OTP) taxes from 2011 through 2013, filed suit under the Arkansas Tax Procedure Act, Ark. Code Ann. 27-18-406, seeking declaratory relief in the form of a judgment that they overpaid OTP taxes. The circuit court dismissed Plaintiffs' claims for refund. The Supreme Court affirmed, holding that Plaintiffs were not entitled to a full or partial refund of the $3,223,200 they paid in excise taxes to the state during the time period in question. View "Douglas Companies, Inc. v. Walther" on Justia Law

The Supreme Court affirmed the order of the circuit court granting summary judgment in favor of the director of the Arkansas Department of Finance and Administration (DFA) and dismissing American Honda Motor Company's challenge to the DFA's denial of its request for a corporate tax refund, holding that the circuit court correctly granted summary judgment in favor of DFA.American Honda filed an action for judicial relief under the Arkansas Tax Procedure Act, Ark. Code Ann. 26-18-101 et seq., challenging DFA's decision to deny its request for a corporate tax refund. The circuit court granted summary judgment in favor of DFA. The Supreme Court affirmed, holding (1) judicial review of DFA's statutory interpretation of the Tax Procedure Act is de novo; and (2) while the circuit court improperly gave great deference to DFA's interpretation of the Tax Procedure Act, the circuit court correctly granted summary judgment in favor of DFA. View "American Honda Motor Co. v. Walther" on Justia Law