Arkansas State Income Tax Protest Letter

WRITTEN PROTEST OF PROPOSED ASSESSMENT — ARKANSAS INDIVIDUAL / CORPORATE INCOME TAX

Before you use: File the Arkansas Tax Appeals Commission petition form by the deadline in the DFA notice. Submit this letter with that petition as a supporting statement; this letter alone is not the petition.

TABLE OF CONTENTS

1. Transmittal Header
2. Identification of Taxpayer and Assessment
3. Statement of Timeliness and Jurisdiction
4. Statement of Facts
5. Items Protested and Issues Presented
6. Legal Argument
7. Request for Hearing
8. Reservation of Rights
9. Relief Requested
10. Signature, Verification, and Power of Attorney
11. Certificate of Service
12. Arkansas Practice Notes
13. Sources and References

1. TRANSMITTAL HEADER

Date: [__/__/____]

Commission petition filing method: [____________]; proof of submission: [____________]

Arkansas Tax Appeals Commission
900 West Capitol Avenue, Suite 310
Little Rock, AR 72201

Re: Supporting Statement for Petition Protesting Proposed Assessment
Taxpayer: [TAXPAYER LEGAL NAME]
SSN / FEIN: [___-__-____ / __-_______]
Tax Type: Arkansas Individual / Corporate Income Tax
Tax Year(s) at Issue: [YYYY – YYYY]
Notice / Letter ID: [________________________________]
Date of Notice: [__/__/____]
Amount Proposed: $[________] tax + $[________] interest + $[________] penalty

2. IDENTIFICATION OF TAXPAYER AND ASSESSMENT

2.1. Taxpayer [TAXPAYER NAME] ("Taxpayer") timely filed the Arkansas income tax return(s) for the tax year(s) [YYYY] through [YYYY] with the Arkansas Department of Finance and Administration ("DFA" or "Department").

2.2. On [__/__/____], DFA issued to Taxpayer a Notice of Proposed Assessment ("Notice") under Ark. Code Ann. § 26-18-403 proposing the following adjustments (a true and correct copy is attached as Exhibit A):

2.3. Taxpayer hereby protests the Notice in full / in part, as detailed in Section 5 below.

3. STATEMENT OF TIMELINESS AND JURISDICTION

3.1. The Notice is dated [__/__/____]. Taxpayer files the accompanying petition with the Arkansas Tax Appeals Commission on [__/__/____], within the deadline specified in the Notice. Most petitions must be filed within ninety (90) days of the DFA action, but expedited matters have shorter deadlines. This letter supports the petition and does not establish timeliness by itself.

3.2. Taxpayer requests Commission review under Ark. Code Ann. § 26-18-1113 through the accompanying petition and reserves any later judicial remedies under § 26-18-406, subject to their separate conditions and deadlines.

3.3. Taxpayer ☐ has / ☐ has not paid the protested portion. Payment is not a prerequisite to Commission review; any later judicial route must be selected under § 26-18-406.

4. STATEMENT OF FACTS

4.1. Background. [Provide a concise narrative — entity formation, residency, nature of business, accounting method, tax year, return filed, refund/refund denial, audit history, examiner's name, dates of IDRs and responses.]

4.2. Audit chronology.

4.3. Documentary record. Taxpayer relies upon the records and exhibits attached hereto (Exhibits A through [__]), all of which were maintained in the ordinary course of business and have been preserved in accordance with Ark. Code Ann. § 26-18-506 (six-year retention).

5. ITEMS PROTESTED AND ISSUES PRESENTED

5.1. Issue 1 — [Concise statement, e.g., "Whether the gain on the sale of the Membership Interest is non-Arkansas-source income for a non-resident under Ark. Code Ann. § 26-51-202"].

5.2. Issue 2 — [Concise statement].

5.3. Issue 3 — [Concise statement].

5.4. Taxpayer does ☐ / does not ☐ concede any portion of the proposed assessment. Conceded amount: $[______].

6. LEGAL ARGUMENT

6.1. Standard of Review and Burden of Proof

Taxpayer submits the attached facts and records in support of the disputed items. Ark. Code Ann. § 26-18-313(c) applies a preponderance-of-the-evidence standard to factual disputes, whether the burden rests on Taxpayer or DFA. Taxpayer does not claim that merely presenting credible evidence shifts the burden to DFA.

6.2. Argument on Issue 1 — [Heading]

[Statement of applicable Arkansas Code provisions, regulations, and case law. Address: (a) text of statute, (b) DFA's interpretation as reflected in the Notice, (c) Taxpayer's competing interpretation, (d) supporting authorities, (e) factual application.]

6.3. Argument on Issue 2 — [Heading]

[As above.]

6.4. Argument on Issue 3 — [Heading]

[As above.]

6.5. Penalty Abatement — Reasonable Cause

To the extent any deficiency is sustained, Taxpayer requests abatement of all penalties for reasonable cause under Ark. Code Ann. § 26-18-208(d). Taxpayer acted in good faith, relied on [professional advice / prior DFA guidance / a substantial-authority position], and timely cooperated with the audit.

6.6. Interest

To the extent any deficiency is sustained, Taxpayer requests recomputation of statutory interest under Ark. Code Ann. § 26-18-508 from the corrected base.

7. REQUEST FOR HEARING

7.1. Taxpayer requests that the Commission consider the enclosed record and schedule a hearing under its procedures.

7.2. A Commission petition form accompanies this statement, together with the DFA notice and the exhibits Taxpayer asks the Commission to consider.

8. RESERVATION OF RIGHTS

8.1. Taxpayer reserves all rights under the Arkansas Taxpayer Bill of Rights (Ark. Code Ann. §§ 26-18-801 to 26-18-812), including the right to:

• a clear written explanation of all proposed adjustments;
• representation by an attorney, CPA, or enrolled agent;
• record an audit conference;
• a fair and impartial hearing;
• pursue judicial review under Ark. Code Ann. § 26-18-406; and
• recover reasonable litigation expenses under Ark. Code Ann. § 26-18-807, where applicable.

8.2. This letter is supporting material for the accompanying Commission petition and is not a separate DFA administrative protest.

8.3. Taxpayer reserves the right to amend the return(s) at issue and to claim refunds for any tax year on a basis consistent with the positions asserted herein.

9. RELIEF REQUESTED

WHEREFORE, Taxpayer respectfully requests that the Department:

• A. Withdraw the Notice of Proposed Assessment in full;
• B. Alternatively, reduce the proposed assessment to the conceded amount of $[______];
• C. Abate all penalties for reasonable cause;
• D. Recompute interest consistent with any reduction in tax;
• E. Offer an informal conference if available; and
• F. Grant such other and further relief as is just and proper.

10. SIGNATURE, VERIFICATION, AND POWER OF ATTORNEY

Respectfully submitted,

[________________________________]

[ATTORNEY OR REPRESENTATIVE NAME]

Arkansas Bar No. [######] (if attorney) / CPA License No. [______] / Enrolled Agent No. [______]

[FIRM NAME]

[STREET ADDRESS]

[CITY, STATE ZIP]

Telephone: [(___) ___-____]

Email: [___________________]

Counsel / Authorized Representative for Taxpayer

Verification. I, [TAXPAYER NAME], declare under penalty of perjury under the laws of the State of Arkansas that I have read the foregoing Protest, that the facts stated herein are true and correct to the best of my knowledge, information, and belief, and that I am authorized to file this Protest on behalf of the Taxpayer.

[________________________________]

[TAXPAYER NAME / TITLE]

Date: [__/__/____]

Power of Attorney. Form AR-POA (or equivalent) authorizing the signatory to represent Taxpayer before DFA is attached as Exhibit B.

11. CERTIFICATE OF SERVICE

I certify that on [__/__/____] I submitted this supporting statement, the Commission petition, a copy of the DFA notice, and all exhibits to the Arkansas Tax Appeals Commission by [METHOD]. Proof of submission: [____________].

[________________________________]

[REPRESENTATIVE NAME]

12. ARKANSAS PRACTICE NOTES

• Commission petition. For proposed assessments issued since January 1, 2023, § 26-18-404(e) makes DFA administrative relief unavailable. File the Commission petition by the deadline in the DFA notice, usually 90 days; some expedited matters have shorter periods. The Commission's official instructions accept its paper or online form or the petition form enclosed with the DFA notice.
• Effect of late filing. The Commission says it cannot extend its petition deadline and will reject late petitions. A missed petition deadline does not by itself eliminate every judicial route; review § 26-18-406 against the final assessment, payment history, and applicable dates.
• Judicial relief. Under § 26-18-406(a)(1), a taxpayer may sue within 180 days of the final assessment or decision without prepaying tax. Under § 26-18-406(a)(2), a taxpayer may instead pay the entire tax within one year of that assessment or decision and sue within one year of payment. Venue under § 26-18-406(c) is Pulaski County Circuit Court or the taxpayer's county of residence or principal place of business.
• Burden of proof. Tax exemptions and deductions are construed strictly against the taxpayer; assessments are presumed correct. Weiss v. Geigle, 2010 Ark. 150.
• Penalty abatement. The DFA Secretary has discretion under Ark. Code Ann. § 26-18-208(d) to waive penalties for reasonable cause. Document the basis (reliance on advice, illness, records destruction, first-time abatement analog) explicitly in the protest.
• Interest. Interest under Ark. Code Ann. § 26-18-508 runs from the original return due date and cannot be waived for reasonable cause; only erroneous-DFA-action interest abatement is available.
• Confidentiality. All DFA correspondence and the protest itself are confidential under Ark. Code Ann. § 26-18-303 and may not be disclosed except as authorized.
• Limitations period for assessment. Three (3) years from the later of the return due date or filing date under Ark. Code Ann. § 26-18-306, extended to six (6) years for substantial omission and unlimited for fraud or non-filing.

13. SOURCES AND REFERENCES

• Arkansas Tax Procedure Act, Ark. Code Ann. § 26-18-101 et seq. — https://arkleg.state.ar.us/
• Arkansas Independent Tax Appeals Commission Act, Ark. Code Ann. §§ 26-18-1101 to 26-18-1120 — https://ig.arkansas.gov/tax-appeals-commission/arkansas-independent-tax-appeals-commission-act/
• Arkansas Income Tax Act of 1929, Ark. Code Ann. § 26-51-101 et seq.
• Arkansas DFA — historical Office of Hearings and Appeals closure notice — https://www.dfa.arkansas.gov/office/revenue-legal-counsel/office-of-hearings-and-appeals/
• Arkansas DFA — Taxpayer Bill of Rights — https://dfa.arkansas.gov/revenue-policy-legal/taxpayer-bill-of-rights
• Arkansas Tax Appeals Commission — Rules of Procedure — https://ig.arkansas.gov/tax-appeals-commission/
• Arkansas DFA Income Tax Regulations — https://www.dfa.arkansas.gov/wp-content/uploads/it1997_4.pdf
• Pledger v. Easco Hand Tools, Inc., 304 Ark. 47 (1990)
• Weiss v. Geigle, 2010 Ark. 150
• 26 CAR § 100 et seq. (DFA regulations) — https://codeofarrules.arkansas.gov/

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. An attorney licensed in Arkansas, or a CPA / enrolled agent qualified to practice before DFA, must review and customize this document before use. Statutory deadlines, citations, and DFA / TAC procedures change frequently; verify all authority on the date of filing.