Arkansas State Income Tax Protest Letter

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

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 and Procedural Elections
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: [__/__/____]

Via Certified Mail, Return Receipt Requested (Tracking No. [____________])
and Email to [[email protected]]

Arkansas Department of Finance and Administration
Revenue Legal Counsel — Office of Hearings and Appeals (or successor unit)
Ledbetter Building, 1816 W. 7th Street, Room 2380
Little Rock, AR 72201

Re: Written Protest of 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 [__/__/____]. Pursuant to Ark. Code Ann. § 26-18-404, a taxpayer must file a written protest within sixty (60) days from the date of the Notice. This Protest is filed on [__/__/____], which is the [__]th day after the Notice and is therefore timely.

3.2. By filing this Protest, Taxpayer invokes the administrative review procedures of Ark. Code Ann. §§ 26-18-404 and 26-18-405 and reserves all rights to (a) further appeal to the Arkansas Tax Appeals Commission under Ark. Code Ann. § 26-18-1110, and (b) judicial relief in the Pulaski County Circuit Court (or the circuit court of the county of Taxpayer's residence or principal place of business) under Ark. Code Ann. § 26-18-406.

3.3. Taxpayer has not paid the protested portion of the proposed assessment. Taxpayer ☐ has / ☐ has not paid the undisputed portion under protest pursuant to Ark. Code Ann. § 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

The Department's proposed assessment is presumed correct, and Taxpayer bears the initial burden of producing evidence to overcome the proposal. Once Taxpayer comes forward with credible evidence, the burden shifts to the Department to substantiate its position. Pledger v. Easco Hand Tools, Inc., 304 Ark. 47 (1990); Ark. Code Ann. § 26-18-313(a).

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 AND PROCEDURAL ELECTIONS

7.1. Taxpayer requests an in-person hearing before a DFA hearing officer pursuant to Ark. Code Ann. § 26-18-405. Taxpayer's preferred location is [Little Rock / Taxpayer's regional office].

7.2. Taxpayer ☐ consents to / ☐ does not consent to a hearing by telephone or video conference.

7.3. Taxpayer ☐ requests / ☐ does not request that the hearing be conducted on the written record without oral testimony.

7.4. Taxpayer estimates that [__] witnesses will testify and that the hearing will require approximately [__] hours.

7.5. Taxpayer reserves the right to supplement this Protest with additional facts, exhibits, expert reports, and legal authority before and at the hearing.

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. Taxpayer reserves the right to elect direct petition to the Arkansas Tax Appeals Commission at any time prior to issuance of a final assessment, in which case this internal Protest shall be deemed withdrawn without prejudice.

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. Schedule an administrative hearing pursuant to Ark. Code Ann. § 26-18-405; 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 served a true and correct copy of the foregoing Written Protest, with all exhibits, upon the Arkansas Department of Finance and Administration, Office of Hearings and Appeals (or successor), by certified mail, return receipt requested (Tracking No. [____________]), and by courtesy email to the assigned auditor and supervisor.

[________________________________]

[REPRESENTATIVE NAME]

12. ARKANSAS PRACTICE NOTES

• Two-track appeal system. As of January 1, 2023, taxpayers may either (a) file a written protest with DFA within 60 days under Ark. Code Ann. § 26-18-404 and proceed through internal review, or (b) bypass internal review and file a petition with the Arkansas Tax Appeals Commission within 90 days of the DFA action under Ark. Code Ann. § 26-18-1110. The TAC is an independent commission housed within the Department of Inspector General; it is not part of DFA.
• Effect of late filing. A protest filed after the 60-day window is jurisdictionally barred at the administrative level, and the proposed assessment becomes a final assessment by operation of law under Ark. Code Ann. § 26-18-403(c). The taxpayer's only remaining remedy is a refund suit under Ark. Code Ann. § 26-18-507 after pay-and-protest.
• Pay-and-protest. Under Ark. Code Ann. § 26-18-406, a taxpayer may pay the assessed tax under protest and file suit for refund in circuit court within one year. This is the only judicial path if the administrative deadline has lapsed.
• Judicial review. Suit for judicial relief from a final assessment must be filed in Pulaski County Circuit Court or the circuit court of the county of Taxpayer's residence or principal place of business within 180 days of the final assessment. Ark. Code Ann. § 26-18-406(c).
• 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 — Office of Hearings and Appeals (transitional) — 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.