Judge dismisses truckers' suit over back sales tax in Arkansas

| 1/23/2004

Arkansas Circuit Judge Ellen Brantley has dismissed a suit by Wayne Smith Trucking and the Arkansas Trucking Association against the Arkansas Department of Finance and Administration over the agency’s attempt to collect back sales tax from truckers, KPOM TV reported Jan. 23.

The ruling essentially ends the case, which was filed May 23 in Pulaski County Circuit Court. Because of the ruling, Arkansas truckers who returned their registrations back to the state will be obligated to pay back sales taxes of up to $6,000. Despite the court case, many truckers had already been making payments.

The controversy erupted earlier in 2003 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.

After the IRP ruling, Arkansas Department of Finance and Administration officials contended truckers would owe back taxes when the companies or individuals moved their truck registrations back to Arkansas. The department said those truckers who had base plated outside of Arkansas did so illegally.

Legislators reacted to the department’s action quickly, introducing a bill to cap the sales tax on Arkansas trucks. A bill, HB1030, was signed into law by Gov. Mike Huckabee March 21, 2003. 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 $469.

However, 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.

Lane Kidd, head of the Arkansas Trucking Association – along with OOIDA and others – contended the Oklahoma registrations were legal at the time truckers held them, and Arkansas had accepted reciprocal fees on that basis.

“Arkansas is really out on a pretty thin limb with this position of collecting back sales taxes by nullifying past registrations issued by Oklahoma,” Kidd said in July 2003.

Robert Pitcher of IRP Inc., the interstate compact that regulates the exchange of truckers’ registration fees among states, seemingly agreed with the plaintiff’s position in a letter he wrote to Arkansas officials in January 2003.

In 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.

The judge’s decision

In dismissing the court action this week, Judge Brantley ruled that truckers seeking relief must first file their claim with the state Department of Finance and Administration, The Associated Press reported. If the department denies the claim, then the case can come before the courts.

The judge acted on a request by the Department of Finance and Administration, the defendants in the case, who filed a motion for dismissal in late June.

Kidd said last year the state also contended the plaintiffs should have first requested a refund and been denied that refund before filing suit. In addition, he said, the state maintains the suit should be limited to the named plaintiffs and should not be expanded to a class action.