Arkansas Trucking Association and Wayne Smith Trucking have sued
the Arkansas Department of Finance and Administration over the agency’s
attempt to collect back sales tax from truckers.
Ellen Brantley will hear the case, which was filed May 23 in Pulaski
County Circuit Court. No first court date has been set, and the
department has until June 24 to respond to the complaint. The case
will not likely go before a jury, Lane Kidd, president of the Arkansas
Trucking Association, said.
said the plaintiffs want the state to return the back sales tax
it has already collected.
this point what we seek is to get all the taxes paid under this
policy returned to the companies and the individuals who paid them,”
Kidd said. “Whether there are any damages that are sought over and
above that would be nice if received, but it has not yet been requested.”
far, Kidd’s organization and Wayne Smith Trucking are the only plaintiffs.
No owner-operators have joined the suit at this point, but the suit
does refer several times to “similarly situated carriers.” The Arkansas
Trucking Associations is paying all the legal fees in the case.
controversy erupted earlier this year when the International Registration
Plan, an interstate compact regulating trucking fees, ruled that
truckers who did not live in Oklahoma could no longer base plate
there. That forced hundreds, perhaps thousands of truckers to move
their plates to their home states.
at the Arkansas Department of Finance and Administration contended
the truckers would owe back taxes when the companies or individuals
moved their truck registrations back to Arkansas. The department
contended that those truckers who had base plated outside of Arkansas
did so illegally.
state sales tax could run as high as $6,000 on a new rig.
in the state acted quickly, introducing a bill to cap the sales
tax on trucks in Arkansas. The bill, HB1030, was signed into law
by Gov. Mike Huckabee March 21. Now called Act 551, the law limits
the state’s sales tax to the first $9,150 of the value of a tractor
and to the first $1,000 of the value of a trailer. Rep. Don House,
D-Walnut Ridge, one of the bill’s primary sponsors, said that would
make the tax on a trailer $51.25, and the maximum tax on a tractor
a provision in the bill that would have given returning truckers
amnesty from paying the tax for previous purchases was removed after
Attorney General Mike Beebe contended lawmakers could not, under
the state’s constitution, give Arkansas-based companies who register
their vehicles in other states a break on back taxes.
OOIDA and others contend that the Oklahoma registrations were legal
at the time truckers held them.
is really out on a pretty thin limb with this position of collecting
back sales taxes by nullifying past registrations issued by Oklahoma,”
position was bolstered earlier this year in a letter sent to Arkansas
officials Jan. 27 by Robert Pitcher of IRP Inc.
the letter, he said Arkansas truckers who previously base plated
in states such as Oklahoma had done so legally under the multi-state
agreement’s rules at the time.
letter is to inform you that the board has never taken a position
that motor carriers registered under Oklahoma law as in effect prior
to April 15, 2002, were not legally registered, or that registrations
issued to such carriers were invalid under the plan,” Pitcher wrote
in the letter.
that these companies are returning to register here after Oklahoma
has changed its rules, Arkansas, in order to collect back sales
tax, is essentially nullifying the registrations issued by Oklahoma,”
Kidd said. “That seems pretty disingenuous considering that Arkansas
accepted their proportionate registration fees those years and never
questions those registrations.”
Tim Leathers, a spokesman for the Department of Finance and Administration,
had a quick, two-word response regarding the allegations in the
suit: “They’re wrong.”
said the trucks that baseplated out of state “did not meet the requirements
for not being required to pay the tax and baseplate in Arkansas,”
he said. He confirmed that Arkansas did receive fees from Oklahoma
under the IRP during that time, but “no sales tax.”
of those fees in Oklahoma wound up in some pockets,” he said. “Generally,
we accepted whatever Oklahoma sent us.”
stressed that the state had taken steps to reduce the burden that
the back tax collections might place on truckers. The state has,
for example, arranged payment plans so truckers do not have to pay
the back taxes all at once. That, he said, allowed truckers to go
ahead and register their vehicles.
only went back three years,” he added. “The attorney general’s opinion
said that the statute might have gone beyond that because there’s
no filing (of the tax in previous years on those trucks).”
were local truckers who did not choose to try and avoid the tax
that were competing with these people,” he said. Those trucker have
“voiced in the local press, in interview and other places that it
was unfair for them to have been paying that tax when their competition
did not have to pay the tax.”
did not know how much in back taxes has been collected so far, but
he noted that during hearings earlier this year, the agency said
it expected to collect as much as $1.5 million from truckers and
don’t know if that’s a good figure, if it’s close or if they’ve
surpassed it yet,” Kidd said.
amount collected so far should come out during the trial. Meanwhile,
Kidd is optimistic.
we hear from our legal counsel is that the arguments are sound that
this is a real rogue policy that the state’s taken,” Kidd said.
“They feel confident that we’ll win.”
Mark H. Reddig, associate editor
Reddig can be reached at email@example.com.