State Tax Appeal

Arkansas State Tax Appeal

Independent administrative review before the Arkansas Tax Appeals Commission, then judicial relief in circuit court tried de novo (Ark. Code §§ 26-18-1101 et seq., 26-18-406)

IMPORTANT — READ FIRST: How an Arkansas State Tax Dispute Is Appealed

A taxpayer who disputes a state tax administered by the Arkansas Department of Finance
and Administration (DFA) (individual and corporate income, sales and use, withholding,
and similar state taxes) has, since 2023, an independent tax tribunal to hear the
dispute before any tax is paid: the Arkansas Tax Appeals Commission, created by the
Independent Tax Appeals Commission Act, Act 586 of 2021 (Ark. Code § 26-18-1101 et
seq.). The Commission is an independent agency within the Department of Inspector
General and is separate from and independent of the DFA (§ 26-18-1105).

Which body hears the case (§ 26-18-1110(c)). The Commission hears a DFA action or
decision (proposed assessment, refund-claim denial, or other appealable action) issued
on or after January 1, 2023. A matter that arose from a DFA action issued before
January 1, 2023 is heard by the DFA Office of Hearings and Appeals instead.

The taxpayer's options after a proposed assessment or refund denial. DFA's notice of
proposed assessment (§ 26-18-403) states that a final assessment will be made unless the
taxpayer acts. The taxpayer may:

1. Petition the Tax Appeals Commission within 90 days (Ark. Code § 26-18-1113) — the
   modern, independent route; no tax need be paid first (§ 26-18-1110(a)(2)). Use
   PART A.

2. Protest administratively within the DFA under § 26-18-404 (hearing before the
   Office of Hearings and Appeals; the Secretary then issues a revised/final assessment
   under § 26-18-405); or

3. Go directly to circuit court for judicial relief under § 26-18-406 (see below).

After a Commission decision (or a final DFA assessment/decision), the taxpayer seeks
judicial relief in circuit court, tried de novo (Ark. Code §§ 26-18-1117, 26-18-406).
Use PART B.

Deadlines are jurisdictional. The 90-day petition deadline to the Commission
cannot be extended (§ 26-18-1110(a)(4)(B)(i)). The judicial-relief windows in
§ 26-18-406 (180 days to sue without prepayment, or pay-and-sue within one year) are also
strict.

Property tax (ad valorem) is different and does not go to the Tax Appeals
Commission — see the note at the end of this template.

PROCEDURAL ROADMAP (state taxes administered by the DFA)

PART A — PETITION TO THE ARKANSAS TAX APPEALS COMMISSION (ARK. CODE § 26-18-1113)

BEFORE THE ARKANSAS TAX APPEALS COMMISSION

A-1. Nature of the Petition

Petitioner [TAXPAYER LEGAL NAME] petitions the Arkansas Tax Appeals Commission under
Ark. Code § 26-18-1113 to contest the following action of the Arkansas Department of
Finance and Administration (DFA), and states:

• ☐ Proposed assessment dated [DATE OF DFA NOTICE] (Letter ID / Account ID
  [____]); or

• ☐ Refund-claim denial dated [DATE]; or

• ☐ Other appealable DFA action: [describe] dated [DATE].

This petition is filed within 90 days of the DFA action (Ark. Code § 26-18-1113(b)(1)).

A-2. Parties and Representative

A-3. The Action Being Contested

A-4. Statement of Facts

[State the operative facts in numbered paragraphs: the return(s) as filed, the audit or
review, and the specific adjustments giving rise to the proposed assessment or refund
denial. Attach the DFA notice and supporting documents as exhibits.]

1. [____]
2. [____]
3. [____]

A-5. Reasons for Opposing the Action; Items at Issue

Petitioner opposes the DFA action for the following reasons and identifies the particular
items at issue (Ark. Code § 26-18-1113(b)(1)(B)):

1. [Ground 1] — [e.g., the receipts are exempt from Arkansas sales/use tax under
   Ark. Code § [____]].

2. [Ground 2] — [e.g., income was improperly apportioned to Arkansas; a deduction or
   credit was wrongly disallowed].

3. [Ground 3] — [e.g., the assessment is time-barred; the penalty should be waived for
   reasonable cause; interest was miscomputed].

A-6. Relief Requested

Petitioner asks the Commission to cancel or reduce the proposed assessment (or allow
the refund or credit) and to abate the related penalty and interest, and to grant such
other relief as the Commission deems appropriate (Ark. Code § 26-18-1116(a)(1)(B)(ii)).

A-7. Signature

Dated: [__/__/____]

Signature: _______________________________

[NAME], ☐ Attorney for Taxpayer (AR Bar No. [____]) ☐ Taxpayer / Officer ☐ Authorized representative
[FIRM / ADDRESS / PHONE / EMAIL]

PART B — COMPLAINT FOR JUDICIAL RELIEF IN CIRCUIT COURT (ARK. CODE §§ 26-18-1117, 26-18-406)

IN THE CIRCUIT COURT OF [PULASKI COUNTY / COUNTY OF RESIDENCE OR PRINCIPAL PLACE OF BUSINESS], ARKANSAS

COMPLAINT FOR JUDICIAL RELIEF FROM STATE TAX ASSESSMENT / DECISION — Ark. Code §§ 26-18-1117, 26-18-406

B-1. Jurisdiction, Venue, and Timeliness

1. This action seeks judicial relief under Ark. Code §§ 26-18-1117 and 26-18-406 from
   ☐ the decision of the Arkansas Tax Appeals Commission dated [DATE] (attach as
   Exhibit A), ☐ the final assessment dated [DATE], or ☐ the final decision
   of the Secretary under § 26-18-405 dated [DATE].

2. Venue lies in this Court because ☐ it is the Pulaski County Circuit Court, or
   ☐ the Plaintiff resides / has its principal place of business in [COUNTY]
   (Ark. Code § 26-18-406(c)(1)).

3. This action is timely because it is filed:
   - ☐ within 180 days of the final assessment or decision (no prepayment required —
   § 26-18-406(a)(1)); or

• ☐ after payment in full within one year of the final assessment/decision, and
  within one year of that payment (§ 26-18-406(a)(2)); or

• ☐ within one year of the mailing of a refund-claim denial or a final
  Commission/Secretary decision, whichever is later (§ 26-18-406(b)(1)).

B-2. Payment Status

☐ Plaintiff has not paid the disputed tax and sues within 180 days as permitted by
§ 26-18-406(a)(1)(B). ☐ Plaintiff has paid the amount at issue and seeks a refund
with interest (§ 26-18-406(a)(2)-(3), (b)).

B-3. The Assessment / Decision and Amount in Dispute

B-4. Statement of Facts

[Set out a concise statement of the facts, identify the Commission decision or final
assessment being challenged, and attach it as an exhibit.]

1. [____]
2. [____]
3. [____]

B-5. Grounds — The Assessment / Decision Is Erroneous

The assessment or decision is erroneous and should be set aside. The Court reviews the
matter de novo, and no presumption of correctness or weight of authority attaches
to the final assessment or the decision of the Secretary or the Commission
(Ark. Code § 26-18-406(c)(3)):

1. [Ground 1] — [____]
2. [Ground 2] — [____]
3. [Ground 3] — [____]

B-6. Prayer for Relief

Plaintiff asks the Court to (a) set aside or modify the assessment or the Commission's
decision and determine the correct tax, if any; (b) order a refund or credit of any
tax, penalty, and interest erroneously assessed or paid, with interest; and (c) grant
such further relief as is just. Plaintiff reserves the right to appeal to the Arkansas
Supreme Court as in other cases (Ark. Code § 26-18-406(c)(2)).

B-7. Signature

Dated: [__/__/____]

Signature: _______________________________

[NAME], Counsel for Plaintiff (AR Bar No. [____])
[FIRM / ADDRESS / PHONE / EMAIL]

NOTE — AD VALOREM (PROPERTY) TAX (DIFFERENT PROCEDURE)

Locally assessed ad valorem (real and personal property) tax is not contested
through the Tax Appeals Commission. Instead:

• County equalization board. A property owner (or agent) applies to the secretary of
  the county equalization board — in person, by petition, or by letter — on or
  before the third Monday in August of the assessment year (Ark. Code § 26-27-317). The
  board may raise or lower the valuation. (Certain matters are excluded from the
  board's jurisdiction — e.g., tax-exempt-status determinations, agricultural/timberland
  and producing-mineral valuations, and Amendment 79 homestead-relief eligibility — which
  go directly to county court under Ark. Const. art. 7, § 28 and § 14-14-1105.)

• County court. An owner (or the assessor) who disagrees with the equalization board
  appeals to the county court by filing a petition by the second Monday in October
  (Ark. Code § 26-27-318(c)(1)).

• Circuit court. The county court's decision may be appealed to the circuit court,
  where the value is heard de novo.

(In Arkansas, assessed value is 20% of appraised (market) value — Ark. Code
§ 26-26-1122 — and Amendment 79 caps annual increases on the taxable value.)

SOURCES AND REFERENCES

• Ark. Code § 26-18-1101 et seq. — Independent Tax Appeals Commission Act (official
  text hosted by the Arkansas Department of Inspector General):
  https://ig.arkansas.gov/tax-appeals-commission/arkansas-independent-tax-appeals-commission-act/

• Ark. Code § 26-18-1113 (Pleadings — 90-day petition; answer; reply; assignment):
  https://law.justia.com/codes/arkansas/title-26/subtitle-2/chapter-18/subchapter-11/section-26-18-1113/

• Ark. Code § 26-18-1110 (Jurisdiction; no-prepayment; Jan. 1, 2023 dividing line):
  https://law.justia.com/codes/arkansas/title-26/subtitle-2/chapter-18/subchapter-11/section-26-18-1110/

• Ark. Code § 26-18-1116 (Decisions; 90-day decision; enforceable as circuit court
  order): https://law.justia.com/codes/arkansas/title-26/subtitle-2/chapter-18/subchapter-11/section-26-18-1116/

• Ark. Code § 26-18-1117 (Judicial relief; de novo; 30-day DFA window):
  https://law.justia.com/codes/arkansas/title-26/subtitle-2/chapter-18/subchapter-11/section-26-18-1117/

• Ark. Code § 26-18-406 (Judicial relief from a final assessment/decision — 180-day
  no-prepay suit; pay-and-sue; de novo; no presumption of correctness):
  https://law.justia.com/codes/arkansas/title-26/subtitle-2/chapter-18/subchapter-4/section-26-18-406/

• Ark. Code § 26-27-317 (property-tax equalization-board application — third Monday in
  August): https://codes.findlaw.com/ar/title-26-taxation/ar-code-sect-26-27-317/

• Arkansas Tax Appeals Commission — Rules of Procedure & petition form:
  https://ig.arkansas.gov/tax-appeals-commission/rules-of-procedure-of-the-arkansas-tax-appeals-commission/