Arkansas Tax & Incentives Update

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Charitable nonprofits in Arkansas need to be aware of the “otherwise performed by the government” test applied by Department of Finance and Administration (DFA) for sales tax exemption, as illustrated by recent DFA opinion letters.  This test is more stringent than that applied by the IRS for 501(c)(3) status, and nonprofits may face sales tax exposure, especially on their fundraising sales including fundraising dinners or events.  With property tax exemption rules and guidelines to be forthcoming soon,…
The recent Administrative Decision of the Arkansas Department of Finance and Administration Office of Hearings and Appeals in dockets 20-109 and 20-110 (Dec. 9, 2019) highlights the challenge involved obtaining a refund on an amended return claiming an exception to the addback statute.  Intercompany interest charges face substantial scrutiny.  Taxpayers need to be prepared to provide comprehensive documentation to claim the arm’s length exception to add-back, particularly if the intercompany interest is at a higher rate…
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In what should be a positive development for taxpayers, Arkansas Department of Finance and Administration Secretary Larry Walther announced today the appointment of Charlie Collins as the new Commissioner of Revenue.  With his background in business and politics, Commissioner Collins brings a fresh viewpoint to an important position—essentially the lead state tax administrator for Arkansas—that has historically been filled by individuals who “came up through the ranks” in the DFA Revenue Division. Recall that the…
In what should be a positive development for taxpayers, Arkansas Department of Finance and Administration Secretary Larry Walther announced today the appointment of Charlie Collins as the new Commissioner of Revenue.  With his background in business and politics, Commissioner Collins brings a fresh viewpoint to an important position—essentially the lead state tax administrator for Arkansas—that has historically been filled by individuals who “came up through the ranks” in the DFA Revenue Division. Recall that the…
The Arkansas State Chamber of Commerce is convening its second Arkansas Tax Conference on Tuesday, November 19, 2019, at the Statehouse Convention Center.  Register here!  This biennial conference, which is held in years following legislative sessions, is the only conference that truly focuses on the issues surrounding the Arkansas tax world.  It provides attendees with a chance to hear from and interact with leading tax administrators, policymakers, and practitioners.  And coming off of 2019’s Arkansas…
Manufacturers—particularly smaller ones that do not have direct pay permits—need to make sure that they are claiming the benefit of the reduced sales and use tax rate on manufacturing repair parts and services.  This is a significant benefit that refunds part of the state-level tax, as a phase-in before full exemption begins July 1, 2022.  With a 12-month limitations period for making a claim, taxpayers need processes in place to assure that timely claims are being…
In a unanimous opinion, the Court of Appeals has upheld a charitable exemption from property tax for clinics and lots acquired by a charitable hospital.  Hardesty v. North Arkansas Medical Services, Inc., 2019 Ark. App. 410 (Sept. 25, 2019).  This straightforward opinion reaffirms existing case law about the requirements for charitable exemption for a hospital, which do not include a minimum percentage of charity care.  With this opinion, Arkansas avoids the kind of high-stakes…
2017 property taxpayer fairness legislation was intended to level the playing field between taxpayers and county assessors, and courts are now grappling with how to apply these changes.  The leading case appears to be Walmart’s appeal of its 2018 Pulaski County assessments.  The taxpayer received an adverse decision in county court, and that decision has now been appealed for de novo proceedings in circuit (trial) court.  While the “dark store” issue is somewhat specific to…
This past Friday, September 6, brought a surprise to the Arkansas taxpayer community: Commissioner of Revenue Walter Anger’s resignation, effective as of the close of business that day.  Anger had been Deputy Director and Commissioner of Revenue for the Department of Finance and Administration since 2017.  His tenure as Commissioner capped a 29-year career with DFA. No successor to Commissioner Anger has yet been announced.  In the interim, Assistant Commissioner and Chief Counsel Paul Gehring has been named…