Arkansas Confirms Receipts from Sales of TPP Properly Subjected to Tax

The Arkansas Department of Finance and Administration Office of Hearings and Appeals (OHA) determined that the Department of Finance and Administration properly assessed tax on the sale of Tangible Personal Property by an Arkansas taxpayer. In coming to this decision, the OHA looked to the Department to justify findings as required by Arkansas code, which says, in part, that the burden of proving the tax law applies in a specific case falls to the Department.

The Department’s Representative argued that the tax was properly assessed, highlighting that the Arkansas code contains many credits and deductions, none of which apply in this case. The District Manager who supervised the auditor and audit supervisor performing the audit testified further that the items in question were considered tangible personal property and thus generally subject to Arkansas sales tax. The total proceeds were declared taxable, and interest was assessed in accordance with the applicable statute but no penalty was levied against the taxpayer.

Arkansas sales tax applies to “gross proceeds” or “gross receipts” from the sales of tangible personal property and specifically includes the value of any property exchanged for that sale, whether it is cash, property or a combination of the two. The taxpayer had presented a sample invoice which showed there was partial compensation applied, which must be included in gross receipts and would then be subject to tax. Though the taxpayer argued in this case, some sort of exemption should apply, the OHA found that the State Legislature would have included/ such an exemption in that tax code if it was intended and dismissed that argument.

(State of Arkansas Department of Finance and Administration Office of Hearing and Appeals, Administrative Decision, Docket Number 23-124 , Decision Date 11/8/2022)

Posted on January 11, 2023