Judges: MARK PRYOR, Attorney General
Filed Date: 11/16/2001
Status: Precedential
Modified Date: 7/5/2016
The Honorable Jay Bradford State Representative P.O. Box 8367 Pine Bluff, AR 71611-8367
Dear Representative Bradford:
You have requested an Attorney General opinion concerning tax refunds. The following opinion is a response to your request.
You explain that the City of Pine Bluff passed an ordinance in 1969 that allows it to collect a five percent supplemental tax on alcoholic beverages sold/prepared at private clubs. The tax was collected on mixed drinks, beer, and wine. At some point after this tax had been enacted and collection had begun, many of the private clubs obtained beer and wine permits from the state, exempting them from collection of the tax on these alcoholic beverages. Recently, it was discovered by the new city collector that this tax might be being assessed inappropriately per long-standing standardized forms. The collector ceased collection of the tax on beer and wine sales. Some of the clubs that have state beer and wine permits and have paid this tax over the years on beer and wine sales now seek refunds.
In light of the above-described scenario, you have presented the following question:
(1) Is there a statute of limitations on such a refund?
(2) Are these establishments due a refund?
(3) What is the refund procedure for cities?
(4) One of these establishments states that he did not charge the customers this tax, but paid it on his gross sales. If this tax was built into the price of the beer to the customer, would this make a difference in whether a refund may or may not be due?
RESPONSE
Question 1 — Is there a statute of limitations on such a refund?
The supplemental tax to which you refer is authorized by A.C.A. §
An argument could be made that an action of this nature is not limited. The Arkansas Supreme Court has rendered a decision that would provide a basis for such an argument. In Acxiom Corp. v. Leathers,
It is unclear why the Acxiom court did not consider certain more general statutory limitations periods.
For example, previous case law might have provided a basis for a conclusion that the three-year limitations period of A.C.A. §
The following actions shall be commenced within three (3) years after the cause of action accrues:
(1) All actions founded upon any contract, obligation, or liability not under seal and not in writing[.]
* * *
(3) All actions founded on any contract or liability, expressed or implied[.]
A.C.A. §
In Carroll County v. Eureka Springs School Dist.,
These precedents provide a basis upon which to ground an argument that the three-year statute of limitations should apply to a common law action for refund of taxes mistakenly collected. Although the Acxiom case did not involve money paid as a result of a mistake of fact or law, it is nevertheless puzzling that the Acxiom court did not take note of the above-cited precedents and of the possibility that the action before it may have constituted a "liability or obligation not in writing," within the meaning of the three-year statute.
It is also puzzling that the Acxiom court made no reference to the "catch-all" limitations period that is set forth in A.C.A. §
All actions not included in
16-56-104 ,16-56-105 ,16-56-108 , and16-56-109 shall be commenced within five (5) years after the cause of action has accrued.
A.C.A. §
The Acxiom court specifically stated that "[n]either the parties' briefs or oral arguments, nor our own research, has led us to any other potentially applicable limitations provision." Acxiom,
For this reason, I conclude that the law on this issue is currently unclear. Plausible arguments could be made, in my opinion, for the following propositions: (1) that a common law action for refunds is not limited and can be initiated at any time; (2) that a common law action for refunds is subject to the three-year statute of limitations stated in A.C.A. §
Question 2 — Are these establishments due a refund?
It is my opinion that the answer to this question will depend on the facts of each taxpayer's case. It should be noted that any action for refunds based upon common law principles must overcome the common law "voluntariness doctrine." This doctrine, under certain circumstances, precludes the refund of taxes that were voluntarily paid. The Arkansas Supreme Court most recently reaffirmed its adherence to the voluntariness doctrine in Worth v. City of Rogers,
When taxes are paid to a government they are deposited into that government's general revenues and ordinarily are spent within that tax year. However, when the government is put on notice that it may be required to refund those taxes, it can make the appropriate allowances for a possible refund. See Hercules, Inc.
319 Ark. at 707 ,894 S.W.2d at 578 . If we were to allow refunds for taxes voluntarily paid in previous years, it would jeopardize current and future governmental operations because current and future funds might be necessary for the refund.
Worth v. City of Rogers,
The question of tax refunds is always very fact-intensive and will turn largely upon the evidence that is adduced in support of the claim for refunds, as well as the evidence presented in support of the applicability of the "voluntariness doctrine." Similarly, the question of responsibility for payment of refunds is also quite fact-oriented, and must involve a consideration of the circumstances surrounding the collection of the tax. For this reason, I cannot opine definitively as to whether any of the taxpayers about whom you have inquired would be entitled to a refund. Each taxpayer's case must be evaluated separately under its own facts.
Question 3 — What is the refund procedure for cities?
As indicated in response to Question 1, the statute that authorizes the supplemental tax in question does not authorize actions for refunds. Thus (as also indicated), any action for refunds must be based upon common law principles. Each taxpayer must consult his or her private counsel in deciding upon an approach to take in seeking refunds.
Question 4 — One of these establishments states that he did not chargethe customers this tax, but paid it on his gross sales. If this tax wasbuilt into the price of the beer to the customer, would this make adifference in whether a refund may or may not be due?
It is my opinion that this scenario would not change the principles that would be applied to this individual's case in determining whether he is entitled to a refund. That is, the court would consider and evaluate the evidence adduced in support of his claim for refunds, as well as the evidence surrounding the circumstances of the collection of the tax. The court would also consider and evaluate the applicability of the voluntariness doctrine, in light of the evidence presented.
Assistant Attorney General Suzanne Antley prepared the foregoing opinion, which
I hereby approve.
Sincerely,
MARK PRYOR Attorney General
MP:SA/cyh
Worth v. City of Rogers , 341 Ark. 12 ( 2000 )
Mertz v. Pappas , 320 Ark. 368 ( 1995 )
State Use Benefit of Garland Co. v. Jones , 198 Ark. 756 ( 1939 )
The Fidelity Cas. Co. N.Y. v. St., Columbia Cty. , 197 Ark. 1027 ( 1939 )
Board of Education of Ouachita County v. Morgan , 182 Ark. 1110 ( 1931 )