TO AMEND THE LAW CONCERNING THE ASSESSMENT AND COLLECTION OF TAXES BY THE SECRETARY OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION; AND TO PROHIBIT THE ASSESSMENT OF SALES AND USE TAX IN CERTAIN CIRCUMSTANCES.

2025 Regular Session Introduced by Ron Caldwell and 1 co-sponsor

HB 1716 protects taxpayers from re-assessing sales and use taxes on exempt items after successful appeals, ensuring stability unless laws change significantly.

Notification that HB1716 is now Act 498

Bill Overview

Bill Number: HB 1716
Title: To Amend the Law Concerning the Assessment and Collection of Taxes by the Secretary of the Department of Finance and Administration; and to Prohibit the Assessment of Sales and Use Tax in Certain Circumstances.
Status: Now Act 498
Introduced: March 10, 2025
Sponsors: Representative Cavenaugh and Senator Caldwell

Purpose and Intent

The primary purpose of HB 1716 is to amend existing laws regarding the assessment and collection of sales and use taxes in Arkansas. The bill aims to provide greater protection for taxpayers who have successfully appealed tax assessments or refund claim denials related to tangible personal property. Specifically, it seeks to prevent the Department of Finance and Administration (DFA) from re-assessing sales or use tax on items previously determined to be exempt.

Key Provisions

Prohibition on Re-assessment: The DFA is prohibited from issuing a sales or use tax assessment against a taxpayer if:

The taxpayer has previously appealed an assessment or refund claim denial.
The appeal resulted in a determination that the property in question is exempt from sales or use tax by:
The Office of Hearings and Appeals
The Tax Appeals Commission
A circuit court
The Arkansas Supreme Court

Conditions for Re-assessment: This prohibition does not apply if there is a material change in law, which may occur due to:

A new law enacted by the General Assembly
An amendment or repeal of an existing law
A newly promulgated or amended rule approved by the Legislative Council
A subsequent decision by the Arkansas Supreme Court

Scope of Application: The restriction applies only when the same taxpayer uses the tangible personal property in the same manner as previously determined to be exempt.

Impact

Taxpayer Impact: Taxpayers who have received a favorable determination regarding the exemption of tangible personal property will benefit from this bill, as they will not face additional assessments unless there has been a significant change in the law.

Fiscal Impact: The bill is projected to have no fiscal impact on the state budget.

Procedural Aspects

Implementation Timeline: Adequate time is provided for the implementation of this bill, ensuring that the DFA can adjust its processes accordingly.

Legislative Actions:

Passed by the House and Senate on April 2, 2025.
Correctly enrolled and transmitted to the Governor's Office on April 3, 2025.
Officially became Act 498 on April 8, 2025.

Conclusion

HB 1716 represents a significant change in how sales and use taxes are assessed in Arkansas, offering protections for taxpayers who have successfully appealed tax assessments. By clearly defining the conditions under which re-assessments can occur, the bill aims to provide stability and predictability for taxpayers regarding their tax obligations.

Bill