388 [360 BAKER REFRIGERATION SYSTEMS, INC and Wayne Baker v Richard A:WEISS, In His Official Capacity As Director of the Arkansas Department of Finance and Administration 04-598 201 S,W3d 892 Supreme Court of Arkansas Opinion dehvered January 27, 2005 APPEAL & ERROR — TAX CASES — STANDARD OF REVIEW — The supreme court reviews a trial court's decision in a tax case de novo, but will not disturb the tnal court's findings of fact unless they art clearly erroneous 2 STATUTES — CONSTRUCTION — DE NOVO REVIEW — The supreme court reviews issues of statutory construction de novo, as it is for the supreme court to decide what a statute means, in this respect, the supreme court is not bound by the decision of the tnal court, however, in the absence of a showing that the trial court erred in its interpretation of the law, that interpretation will be accepted as correct on appeal: 3 STATUTES — CONSTRUCTION — FIRST RULE — The first rule in considenng the meaning And effect of a statute is to construe it just as it reads, giving words their ordinary and usually accepted meaning in common language STATUTES — RULES OF STATUTORY CONSTRUCTION — AMBIGUOUS & UNAMBIGUOUS LANGUAGE — When the language of a statute is plain and unambiguous, there is no need to resort to rules of statutory construction, when the meamng is not clear, the supreme court looks to the language of the statute, the subject matter, the object to be accomplished, the purpose to be served, the remedy provided, the legislative history, and other appropnate means that shed hght on the subject 5. STATUTES — TAXATION — RULE OF CONSTRUCTION — An additional rule of statutory construction in the area of taxation cases is that when the supreme court is reviewing matters involving levying of taxes, any and all doubts and ambiguities must be resolved in favor of the taxpayer. b. TAXATION — FINAL ASSESSMENT FOLLOWING AUDIT — THREE MEANS OF CHALLENGING — Under Ark Code Ann 5 26-18-406
BAKER REFRIGERATION SYS , INC V WEISS ARK ] Cite as 360 Ark 388 (2005) 38Q (Supp 1999), a taxpayer has three means of challenging a final assessment following an audit (1) make pa y ment of the entire amount assessed within one year from the date of assessment and then file suit challenging the assessment within one year of the date payment is made, (2) make payment on any particular taxable period covered by the assessment within one year of the date of the assessment and then file suit challenging the assessment of that taxable period within one year from the date payment is made, or (3) post a bond in double the amount of the entire assessment within thirty days of the date of the notice and demand for payment and then file suit challenging the assessment within thirty days of the posting of the bond 7. STATUTES — PLAIN LANGUAGE OF ARK CODE ANN § 26-18-507 CLEAR — STATUTE APPLIES TO CASES WHERE TAXPAYER HAS ERRONEOUSLY OVERPAID TAXES — The plain language of Ark Code Ann 26-18-507 (Supp 2001), demonstrates that it applies to cases in which A taxpayer has erroneously overpaid taxes, subsection (a) states that a taxpayer shall be refunded the overpa y ment of tax determined by appellee "to be erroneously paid", to get such a refund, the taxpayer must file a claim specifying, among other things. the amount of the tax that the taxpayer claims was erroneously paid; the payments made by appellant were not done so "erroneously'', rather, they were made dehberately so that he could challenge DF&A's final assessment TAXATION — SECTION 26-18-507(a) INAPPLICABLE WI-1FP F PAYER PAYS AMOUNT ASSESSED DELIBERATELY IN ORDER TO CHALLENGE FINAL ASSESSMENT — PROCEDURES SET OUT IN ARK CODE ANN 26-18-406(a) THEN APPLICABLE — Although the legislature removed the language "error of fact, computation, or mistake of law," from section 26-18-507(a), the language pertaining to taxes that are erroneously paid" remained in both subsections (a) and (b) of that statute, thus, the plain language demonstrates that section 26-18-507 applies only to those cases where a taxpayer has erroneously or mistakenly overpaid taxes, and not where a taxpa y er pays the amount assessed deliberately in order to challenge a final assessment of additional taxes following an audit, the latter situation must be brought under the procedures set out in section 26-18-406(a) 9 TAxATION — A FCGUMFNT THAT ACT 1119 ADOPTED ALL FEDERAL TAX PP 01-17II lfl Fc • P rnmi DING CI MI I 1 -Nr.F c i TO ASSFSSFP TAX DFFI-
BAKER REFRIGERATION SYS , INC I', WEISS 390 Cite a5 3(a0 Ark 388 (2005) [360 CIENCIES REJECTED — APPELLANT S RELIANCE ON BARCLAY CASE MISPLACED: — Because the language of the statutes plainly and unambiguously demonstrate that a taxpayer who wishes to challenge a final assessment of tax deficiency must comply with the procedures and time constraints set out in section 26-18-406(a), the supreme court rejected appellant's argument that Act 1139 of 1997, through its tide, subtitle, and Section 10, adopted all federal tax procedures regarding challenges to assessed tax deficiencies, the title merely states in general language that the act is to amend state tax procedures for contesting assessments to conform to the similar federal procedural methods, this is not a situation like that in Barclay P: First Paris Holdmg Go:, 344 Ark: 711, 42 S,W:3d 4% (2001), where the supreme court affirmed the trial court's application of the definition of "affiliated group" found in federal tax law to determine whether appellee-corporations compnsed such an affiliated group, the state statute at issue in that case specifically instructed that the federal definition found in 26 U S C 5 1504(a) and (b) that was in effect at the time the statute was enacted was the definition to be used; in the present case, however, there is no specific adoption of or reference to a particular federal tax provision in Act 1139; thus; appellant's reliance on Barclay was misplaced: 10 STATUTES — TITLE OF ACT — USE IN CONSTRUING STATUTE, — The title of an act is not controlling in its construction, although it is considered in determining its meaning when such meaning is otherwise in doubt; the title may only be examined for the purpose of shedding hght on the intent of the legislature, where, however, the statute is unambiguous, the court will not resort to the title to determme legislative intent: 11: TAXATION — LANGUAGE OF SECTIONS 26-18-406 & 26-18-507 PLAIN & UNAMBIGUOUS — NO NEED To NEAKJ_H kik LEGISLATURE'S INTENT THROUGH TITLE Ot ACT — Because the court concluded that the language of sections 2o-18-406 and 26-18-507 was plain and unambiguous, there was no need to search for the legislature's intent through the title of the act 12, STATUTES — LEGISLATURE'S STATEMENT OF INTENT WILL NOT BE UsED TO CONTRADICT PLAIN LANGUAGE OF SUBSTANCE OF ACT — ONLY FEDERAL DIVISIBLE TAX THEORY WAS SPECIFICALLY ADOPTED BY LEGISLATURE IN ITS AMENDMENT TO 26-18-406(a), — The supreme court would not look to the legislature's statement of intent,
BAK.Ft_ REFRIGERATION SYS,: INC v. WEISS ARE: Cite as 160 Ark. 188 (20115) 191 found in Section 10 of Act 1139, in such a way as to contradict the plain language of the substance of that Act, which is what appellant was asking the court to do. the onl y specific reference in Section 10 to federal tax procedure is the divisible tax theory. which was specifically adopted by the legislature in its amendment to section 26-18-406(a): TAYLATIoN — INTENT CLEAR FROM PLAIN LANGUAGE OF STATUTES — ACT 1718 OF 2003 CLARIFIED EXISTING LAW — The supreme court concluded that section 26-18-507 was not designed for use by a taxpayer who wishes to challenge a final assessment of a tax deficiency following an audit. rather, it was designed to provide an avenue of rehef to those taxpayers who erroneously or mistakenly overpaid the amount of taxes due, the avenue for challenging a final assessment following an audit n by the procedures set out in section 26-18-406(a); if this were not clear enough from the plain language of those statutes, it was made abundantly clear with the passage of Act 1718 of 2003, which amended section 26-18-507 to specifically provide that it did not apply to taxes paid as a result of an audit or proposed assessment and that taxes paid as a result of an audit or proposed assessment may not be recovered unless 26-18-406 applies, the stated purpose in passing Act 1718 was to clanfy the procedure for appealing a tax assessment after payment, thus, even though this amendment was not in effect at the time that appellant filed its claim, the court could consider it because the legislature specifically intended Act 1718 to be a clarification of existing law, not a change in the law 14, TAXATION — PROCEDURES OF STATUTES DISTINCT & PARALLEL — NO SUPPORT FOR ASSERTION THAT LEGISLATURE INTENDED TO GIVE TAXPAYER TWO OPPORTUNITIES FOR ADMINISTRATIVE REVIEW OF SAME CLAIM — It was clear that the procedures established in sections 26-18-404, -405, and -406 were specifically for the purpose of providing a taxpayer with the means of challenging DF&A's assessment of additional taxes due, while the procedures set out in section 26-18-507 were to provide a taxpayer with the means to seek a refund for taxes erroneously overpaid to DF&A; these procedures are distinct and parallel, such that a taxpayer may only take advantage of one or the other, depending on the nature of the claim, no support was found, either in the statutes themselves or in Act 1139, for ppellant's assertion that the legisbmre intended tn give the came
BAKER. P.LI RIGERA I ION Sv s , INC WEISS
391 Cite as 360 Ark 388 (2005) [360 taxpayer two opportumties for administrative review of the same claim. 15: CONSTITUTIONAL LAW — SOVEREIGN IMMUNITY — WAIVED ONLY IN LIMITED CIRCUMSTANCES — The state's sovereign immunity, found in Article 5, 20, of the Arkansas Constitution, may be waived only in hmited circumstances, a tnal court acquires no jurisdiction where the suit is one against the state and there is no waiver of sovereign immunity. 16. JURISDICTION — SOVEREIGN IMMUNITY NOT WAIVED WHERE PROVISIONS OF STATUTE NOT COMPLIED WITH — TRIAL COURT ACQUIRED NO JURISDICTION OVER SUIT — The trial court's disrmssal of appellant's suit was affirmed because it was a challenge to a final assessment following an audit and it was not timely filed under section 26-18-406, by enacting section 26-18-406, the legislature has permitted suits against the state's DF&A, however, there must be full compliance with this type of statute before sovereign immunity is waived; the facts here showed that appellee issued its final assessment of tax deficiency on January 15, 19P9 9 appellant had until one year later to make payment on any taxable penods covered by the assessment, and then one year from the date of payment to file suit in circuit court; yet appellant did not make any payments until July 2002, over three years after the final assessment; accordingly, appellant did not comply with the provisions of section 26-18-406, and, consequently, the tnal court acquired no jurisdiction over this suit: 17. EVIDENCE — RULING ON NOT REVERSED WITHOUT DEMONSTRATION OF PREJUDICE — NO PREJUDICE SHOWN — Appellant argued that the tnal court erred in allowing DF&A's Assistant Commissioner to testify about the legislative intent in passing Act 1139 of 1997; appellant did not state how, if at all, it was prejudiced by admission of this testimony; the supreme court will not reverse a trial court's evidentiary ruling without a demonstration of prejudice, here, there could be no prejudice, beLause the court concluded that the meaning of the statutes as amended by Act 1139 was apparent from their plain language; any additional information that the witness might have offered on the issue would have been superfluous Appeal from Pope Circuit Court, First Division John S. Patterson, Judge, affirmed Jack, Lyon &Jones, P A , by- Eugene G Sayre, for appellants.
BAKER REFRIGERATION SYS INC WEISS ARK ] C ite as 160 Ark 1R 8 (2005) 393 David B. Alexander, for appellee. ONALD L, CoRBIN, Justice, Appellants Baker Refrigera-D tion Systems, Inc:, and Wayne Baker (collectively referred to as "Baker") appeal the order of the Pope County Circuit Court dismissing their complaint against Richard A. Weiss, Director of the Arkansas Department of Finance and Adnumstration ("DF&A"), on the ground that the suit was untimely filed_ This appeal and its companion case, Mac v. Weiss, Docket No. 04-461, raise an issue of first impression regarding the interpretation of Act 1139 of 1997: Our jurisdiction is thus pursuant to Ark. Sup. Ct. R 1-2(b)(1). We find no error and affirm: The record reflects that during the spring and summer of 1994, DF&A conducted a sales-tax audit on Baker for the period of January 1991 through July 1 QQ 4. On August 26, 1994, DF&A's auditor issued a proposed assessment of $1,120,788 42 in additional sales taxes Baker protested the audit, pursuant to Ark: Code Ann 5 26-18-404 (1987) A hearing was held before an administrative law judge (ALJ). pursuant to Ark, Code Ann: C 26-18-405 (Supp: 1995): On July 25, 1995, the ALT ruled in favor of DF&A. Thereafter, in August 1995, Baker formally requested DF&Ks Commissioner of Revenues to revise and abate the ALJ's decision, also pursuant to section 26-18-405: In a letter issued on December 24, 1995, the Commissioner granted Baker's request and ordered a re-audit. DHA's auditors issued a revised audit report on February 27, 199 7, this time finding unreported sales taxes in the amnunt of $3,596,875 Oh Baker again protested the proposed assessment and sought further revision from DF&A. In May 1997, Wayne Baker and his accounting representatives met with Assistant Revenue Commissioner John Theis and DF&A's legal counsel: As a result of the meeting, Theis personally reviewed Baker's case. Eventually, after a number of revisions, on January 15, 1999, DF&A issued its final assessment, which reduced Baker's sales-tax deficiency to $278,366.89. Baker did not appeal the final assessment under Ark_ Code Ann 5 26 -18 -4116(a) (Supp 1999) In fact, Baker took no action at all until July 17 and August 9, 2002, when it made payments to DF&A in the amounts of $3,868:81 and $20,000:00 and noted that these payments were to be applied to four particular taxable periods covered by the assessment, On August 30, 2002, Baker
BAKER REFRIGERATION SYS , INC WEISS 394 Cite as 360 Ark, 388 (2005) [360 filed with DE&A a verified claim for refund and claims foi abatement of sales taxes, pursuant to Ark Code Ann 5 26-18-507 (Supp: 2001), seeking to recover the foregoing amounts on the theory that they were overpayments: DF&A took no formal action on Baker's verified claim: Baker filed the present suit in circuit court on July 9, 2003, challenging both DF&A's final assessment and its failure to take any action on the verified claim for refund: The complaint also alleged that two of DF&A's employees, Auditor Ralph Mulder and Audit Supervisor John Martin, violated Baker's civil rights by allegedly assessing additional taxes to the corporation based on personal animus DF&A filed a motion to dismiss Baker's complaint, arguing that Baker's suit was, in reality, a challenge to the January 15, 1999, final assessment As such, it was required to comply with the time limitations in section 26-18-406(a)(1), which provided that a taxpayer could seek judicial relief by paying the tax due for any taxable period or periods within one year of the final assessment and then filing suit within one year of the date of the payment Alternatively, Baker could have posted a bond for double the amount of the entire assessment within thirty days of the issuance and service of the notice and demand for payment, and then filed suit within thirty days of the posting of the bond, pursuant to section 26-18-406(a)(2)(A). Because Baker did not follow either procedure in a timely manner, DF&A asserted that its sovereign immunity as a state agency was not waived and that the trial court therefore lacked jurisdiction to hear its claim DF&A argued that Baker's suit was not a proper claim for refund under section 26-18-507 as it contended that the remedies available under that section were only applicable to situations where a taxpayer has overpaid the amount of taxes due It contended further that because Baker had only paid a portion ot the amounts due under the final assessment, and had not timely challenged the amount of the final assessment, it had not paid any amount in excess of what was lawfully due DE&A also argued that Baker's civil-rights claims were time barred because they were not filed within three years of the time that the conduct by Mulder and Martin was alleged to have occurred. A hearing was held on the motion to dismiss on January 2, 2004: Thereafter, the trial court issued a letter to counsel granting DF&A's motion to dismiss, based on the court's finding that Baker
BAKER REFRIGERATION SYS,: INC, a': WEISS ARK } Cite af, 360 Ark 38 g (2005) 395 failed to file suit within the applicable time limitations: A formal order was entered on March 18, and a timely notice of appeal was filed by Baker on April 9: For reversal, Baker argues that the trial court erred in dismissing its suit, because Act 1139 of 1997 had amended sections 26-18-406 and 26-18-507 to allow a taxpa y er a third alternative means to challenge a final assessment of additional state taxes: It argues that this amendment allowed them to pursue their suit under the claim-for-refund method provided in section 26-18- 507: Baker also argues that the trial court erred in allowing Assistant Revenue Commissioner John Theis to testify as to the legislative intent of Act 1139: Baker does not, however, make any assignment of error regarding the trial court's dismissal of its civil-rights claims: [1, 2] We note at the outset that we review a trial court's decision in a tax case de novo, but we will not disturb the trial court's findings of fact unless they are clearly erroneous: Barclay v: First Pans Holding Co , 344 Ark 711,42 S,W,3d 496 (2001): Pledger v Troll Book Clubs, Inc , 316 Ark 195, 871 S,W,2d 389 (1994): We also review issues of statutory construction de novo, as it is for this court to decide what a statute means Gliegan & Ghegan, Mc: v. Barclay, 345 Ark 514, 49 S W_3d 652 (2001); Barclay, 344 Ark: 711, 42 S W 3d 496. In this respect, we are not bound by the decision of the trial court; however, in the absence of a showing that the trial court erred in its interpretation of the law, that interpretation will be accepted as correct on appeal Id [3-5] The main thrust of Baker's argument is that the trial court erred in interpreting sections 26-18-406 and 26-18-507, as amended by Act 1139 of 1997. The first rule in considering the meaning and effect of a statute is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language, Weiss v. McFadden, 353 Ark: 868, 120 S.W:3d 545 (2003), Mississippi River Transmission Corp v: Weiss, 347 Ark: 543, 65 S:W:3d 867 (2002): When the language of a statute is plain and unambiguous, there is no need to resort to rules of statutory construction: Id: When the meaning is not clear, we look to the language of the statute, the subject matter, the object to be accomplished, the purpose to be served, the remedy provided, the legislative history, and other appropriate means that shed light on the subject: Id, An additional rule of statutory construction in the Area of taxatmn cases is that when We Are reviewing rnAtters
BAKER._ Ru R1611-LAtION SYS INC WEISS
3% Cite as 360 Ark: 388 (2005) [360 involving the levying of taxes, any and all doubts and ambiguities must be resolved in favor of the taxpayer, Id; Barclay, 344 Ark. 711,42 S.W,3d 496, [6] At the time of Baker's suit, section 26-18-406, titled ..ludicial relief, - provided in pertinent part: (a) After the issuance and service on the taxpayer of the nonce and demand for payment of a deficiency in tax established by an audit determination that is not protested by the taxpayer under ;`, 26-18-403, or a final determination of the hearing officer or the director under F i 26-18-405,a taxpayer may seek judicial rehef from the final determination by either (1) Within one (1) year of the date of the final assessment, paying the entire amount of state tax due, for any taxable period or periods covered by the final assessment and filing suit to recover that amount within one (1) year of the date of the payment, The director may proceed with collection activities, including the filing of a certificate of indebtedness as authorized under 26-18-701, within thirty (30) days of the issuance of the final assessment for any assessed but unpaid state taxes, penalties, or interest owed by the taxpayer for other taxable periods covered by the final assessment, while the suit for refund is being pursued by the taxpayer for the other taxable periods covered by the final assessment, or (2)(A) Within thirty (30) days of the issuance and service on the taxpayer of the nonce and demand for payment, filing with the director a bond in double the amount of the tax deficiency due and by filing suit within thirty (30) days thereafter to stay the effect of the director's determination Under this section, a taxpayer has three means of challenging a final assessment following an audir (1) make payment of the entire amount assessed within one year from the date of assessment and then file suit challenging the assessment within one year of the date payment is made; (2) make payment on any particular taxable period covered by the assessment within one year of the date of the assessment and then file suit challenging the assessment of that taxable period within one year from the date payment is made, or (3) post a bond in double the amount of the entire assessment within thirty days of the date of the notice and demand for payment and then tile suit challenging the assessment within thirty days of the posting of the bond
BAKER REFRIGERATION SYS:, INC V: WEISS ARK ] Cite as 30 Ark 388 (2005) 397 Prior to the passage of Act 1139, section 26-18-406 did not allow a taxpayer to contest particular taxable periods, under a divisible tax theory, by paying only the taxes assessed on those periods and then filing suit to dispute those taxes, as was allowed under the federal tax law See Taber v Pledger, 302 Ark 484, 791 S W 2d 361, cert dewed, 498 U S 967 (1990). DF&A accerts that the Act's provision for a challenge to divisible tax periods was the only change made to the method for contesting an assessment of additional taxes following an audit. Baker argues that Act 1139 went a step further in that it provided a fourth alternative to challenge an assessment of tax deficiency, by allowing a taxpayer to file a verified claim for refund under section 26-18-507 To support this contention, Baker points to the language of the Act's title, subtitle, and Section 10, which provided: AN ACT TO AMEND THE ARKANSAS TAX PROCEDURE ACT TO CONFORM THE METHODS OF CONTESTING STATE TAX ASSESSMENTS AND FILING CLAIMS FOR REFUND TO THE SIMILAR TAX PROCEDURAL METHODS OF THE FEDERAL LAW FOR CONTESTING FEDERAL TAX ASSESSMENTS AND FILING CLAIMS FOR REFUND, AND FOR OTHER PURPOSES, Subtitle TO ALLOW A TAXPAYER THE ALTERNATIVE RIGHT TO CONTEST STATE TAX DISPUTES BY THE POSTING OF BOND METHOD OR THE CLAIM FOR REFUND METHOD WHERE THE DISPUTED TAXES HAVE BEEN FULLY PAID FOR AT LEAST ONE TAAABLE PERIOD Section 10 The General Assembly intends, by the passage of this amendment to the provisions of the Arkansas Tax Procedure Act, to clarify its intent that taxpayers involved in state tax disputes with the Arkansas Department of Finance and Administration shall have, as much as possthle, the opportunity to secure an objective review of their dispute by a court at law through (1) the posting of bond method. (2) the payment after assessment method: or (3) the claim for refund method, after the payment by the taxpayer of all -.tate taxes claimrd to bc dsic from the raxpayrr for at lea q one
BAKLI-L 110N SYS lfAL WLISS 398 Cite as 360 Ark 388 (2005) [360 complete taxable period involved in the audit period: It is also intended by the General Assembly that the courts of this state are to recognize the "divisible tax theory" applicable to the review of federal tax dispute by federal courts, as also being apphcable to the review of state tax disputes by the courts of this state: Baker asserts that Act 1139 adopted the federal tax law in this area, and that federal law at the time allowed a taxpayer to challenge an assessment of additional tax by filing a claim for refund within three years from the time that the tax return is filed or within two years from the time that the tax was paid, whichever period expires later, or if no return was filed by the taxpayer, within two years of the time that the tax was paid ' DF&A argues that the general language in Act 1139 concerning the conformation of state-law tax procedures to that of federal law cannot be used to contradict the plain language of section 26-18-507, which it asserts clearly provides for a claim for refund only where there is an erroneous overpayment of tax It asserts that the legislature never intended to allow taxpayers to use the claim for refund method to challenge an assessment of a tax deficiency following an audit, which is how Baker is attempting to use it, and that section 26-18-507 was never meant to be a back-door means of challenging a final assessment once the time limitations in section 26-18-406(a) have expired. We agree At the time of Baker's claim, section 26-18-507 provided in pertinent part (a) _4ny taxpayer who has paid any state tax to the State ofArkansas, in excess of the taxes laufully due, subject to the requirements of this chapter, shall be refunded the overpayment of the tax determined by the Director of the Department of Finance and Administration to be erroneously paid upon the filing of an amended return or a verified claim for refund: This subsection does not include actions based on Arkansas Constitution,Arucle 16, 5 13: (b) The claim shall specify (1) The name of the taxpayer, ' To support it claim,Baker offered a letter from the Department ofTreaairy, Internal Revenue Service stating that 26 U S C 5 6511(a) provided such a procedure
BAKER REFRIGERATION SYS INC: V: WEISS ARK ] Cite as 30 Ark 388 (2005) 399 (2) The time when and the period for which the tax was paid; (3) The nature and kind of tax paid; (4) The amount of the tax which the taxpayer claimed was erroneously paid; (5) The grounds upon which a refund is claimed, and (6) An y other information relative to the payment as may be prescribed by the director. [Emphasis added.] Subsection (e)(3) provided that a taxpayer could seek judicial relief under the provisions of section 26-18-406 from either a notice of a denial by the director of the claim for refund or the director's failure to issue a wntten decision, after that claim has been filed for six months: [7] The plain language of section 26-18-507 demonstrates that it applies to cases in which a taxpayer has erroneously overpaid taxes: Subsection (a) states that a taxpayer shall be refunded the overpayment of tax determined by DF&A's director "to be erro-neousl y paid[1" To get such a refund, the taxpayer must file a claim specifying. among other things, the amount of the tax that the taxpayer claims "was erroneously paid[1" See section 26-18- 507(b)(4): The payments made b y Baker were not done so "erroneously: - Rather, they were made deliberately so that Baker could challenge DF&A's final assessment. [8] The facts of this case are similar to those in Taber, 302 Ark. 484, 791 S.W.2d 361. There, the taxpayer. Taber, challenged DE&A's assessment of tax deficiency under both sections 26-18- 406 and 26-18-507. This court held that his claim under section 26-18-406 was barred because he had not complied with the procedure in effect at the time, which required the taxpayer to pay the entire amount assessed or post a bond in double the amount before the taxpayer could file suit: This court held that section 26-18-507 was not applicable because Taber's claim was not one for erroneous overpayment of tax_ This court explained: Taber filed for a refund, following the procedure outhned subsequent subsections of this statute, and it was denied: He reas-Tem his divisible tax argnment with respect to this section, contend-
BAILLHRLIRiULRAiIIJN SYS INL v Whiss
400 Cite a5 360 Ark: 388 (2005) [360 ing that each of the payments he made was an overpayment because no tax was due. We do not consider this section to apply in this case. It deals with a taxpayer's overpayment through "error of fact, computation, or mistake of law" Taber paid under protest rather than through error: We have no doubt that his remedies fell under 5 26-18-406, not 5 26-18-507, Id. at 488, 791 S W 2d at 363 Although Baker is correct in stating that since our decision in Taber, the legislature has removed the language error of fact, computation, or mistake of law," from section 26-18- 507(a), our holding is still controlling, as the language pertaining to taxes that are "erroneously paid" remains in both subsections (a) and (b) of that statute Thus, we conclude that the plain language demonstrates that section 26-18-507 applies only to those cases where a taxpayer has erroneously or mistakenly overpaid taxes, and not where a taxpayer pays the amount assessed deliberately in order to challenge a final assessment of additional taxes following an audit: The latter situation must be brought under the procedures set out in section 26-18-406(a) [9] Because the language of these statutes plainly and unambiguously demonstrate that a taxpayer who wishes to challenge a final assessment of tax deficiency must comply with the procedures and time constraints set out in section 26 -18-406(a), we must reject Baker's argument that Act 113 q , through its title, subtitle, and Section 10, adopted all federal tax procedures regarding challenges to assessed tax deficiencies In the first place, the title merely states in general language that the act is to amend state tax procedures for contesting assessments to conform to the similar federal procedural methods This is not a situation like that in Barclay, 344 Ark 711, 42 S W 3d 496, where this court affirmed the trial court's application of the definition of "affiliated group" found in federal tax law to determine whether appellee-corporations compnsed such an affiliated group. The state statute at issue in that case specifically instructed that the federal definition found in 26 U,S.C. 5 1504(a) and (b) that was in effect at the time the statute was enacted was the definition to be used: In the present case, however, there is no specific adoption of or reference to a particular federal tax provision in Act 1139. Thus, Baker's reliance on Barclay is misplaced: [10, 11] In the second place, this court has long held that the title of an act is not controlling in its construction, although it
BAKER REFRIGERATION SYS , INC, V: WEISS ARK ] rite is Ahn Ark ARS (2005) 401 is considered in determining its meaning when such meaning is otherwise in doubt: See, e:g:, Henderson v: Russell, 267 Ark. 140, 589 S.W.2d 565 (1979); Cook v, Southeast Ark: Transp. Co:, 211 Ark. 831, 202 S,W.2d 772 (1947); Matthews v: Byrd, 187 Ark: 458, 60 S:W:2d 909 (1933), The title may only be examined for the purpose of shedding light on the intent of the legislature: Hender-son, 267 Ark. 140, 589 S.W.2d 565, Where, however, the statute is unambiguous, we will not resort to the title to determine legislative intent: Id:, McDonald v: Bowen, 250 Ark: 1049, 468 S.W.2d 765 (1971): Because we have already concluded that the language of sections 26-18-406 and 26-18-507 is plain and unambiguous, there is no need to search for the legislature's intent through the title of the act: [12] Likewise, we will not look to the legislature's statement of intent, found in Section 10 of Act 1139, in such a way as to contradict the plain language of the substance of that act, which is what Baker is asking us to do: The only specific reference in Section 10 to federal tax procedure is the divisible tax theory, which, as set out above, was specifically adopted by the legislature in its amendment to section 26-18-406(a), [13] Based on the above and foregoing, we conclude that section 26-18-507 was not designed for use by a taxpayer like Baker who wishes to challenge a final assessment of a tax deficiency following an audit: Rather, it was designed to provide an avenue of relief to those taxpayers who erroneously or mistakenly overpaid the amount of taxes due: The avenue for challenging a final assessment following an audit is by the procedures set out in section 26-18-406(a): If this were not clear enough from the plain language of those statutes, it was made abundantly clear with the passage of Act 1718 of 2003, which amended section 26-18-507 to specifically provide: (f)(1) This section shall not apply to taxes paid as a result of an audit or proposed assessment (2) Taxes paid as a result of an audit or proposed assessment may not be recovered unless § 26-18-406 apphes: See Ark: Code Ann: § 26-18-507 (Supp. 2003): The stated purpose in passing Act 1718 was to clarify the procedure for appealing a tax assessment after payment Thus, even though this amendment was not
BAKLIt RLI fUGLRAIILIN SYS , IN& V, WEISS
402 Cite as 360 Ark 388 (2005) [3b0 in effect at the time that Baker filed its claim, we may consider it because the legislature specifically intended Act 1718 to be a clanfi-cation of existing law, not a change in the law. See Pledger v Baldor Int'l, Inc, 309 Ark, 30, 827 S.W.2d 646 (1992). Finally, we reject Baker's suggestion that by passing Act 1139, the legislature intended to allow a taxpayer to pursue both the administrative remedies provided in sections 26-18-406 and 26-18-507, In response to questions from this court during oral argument, Baker's counsel stated that Act 1139 allowed a taxpayer to challenge the initial assessment following an audit: go through all the administrative review procedures offered in sections 26-18- 404, -405, and -40u; and then, following the issuance of a final assessment, seek a second administrative review by filing a claim for refund under section 26-18-507, thus beginning the process all over again. Counsel averred that such was the procedure under federal tax law: We agree with DF&A that the procedures set out in section 20-18-406 and 26-18-507 are parallel administrative processes, one which allows a taxpayer to contest an assessment, and one which allows a taxpayer to obtain a refund of an erroneous overpayment of taxes. Here, there is no doubt that Baker was afforded the full panoply of administrative relief for contesting an assessment: Specifically, Baker protested the initial audit results, pursuant to section 26-18-404, and was given a hearing before an AU, pursuant to section 26-18-405: Following the AU's ruling in favor of DF&A, Baker formally requested the Commissioner of Revenues to revise and abate the ALTs decision, also pursuant to section 26-18-405 The Commissioner then ordered a re-audit, which ultimately resulted in a greater tax deficiency, Again, Baker protested the proposed assessment and sought further revision: Again, the department obliged Baker by having its Assistant Revenue Commissioner personally review Baker's case This review resulted in a final assessment which lowered considerably the amount of tax deficiency previously reported. The only part of this procedure that Baker did not avail itself of was the judicial review of the final assessment under section 26-18-406(a): [14] From our review of the foregoing tax statutes, it is abundantly clear that the procedures established in sections 26-18- 404, -405, and -406 are specifically for the purpose of providing a taxpayer with the means of challenging DF&A's assessment of additional taxes due, while the procedures set out in section 26-18-507 are for the purpose of providing a taxpayer with the
BAKER REFRIGERATION S ys , INC V, WEISS ARK] Cite a, Ahn Ark ARR (2005) 403 means to seek a refund for taxes erroneously overpaid to DF&A. These procedures are distinct and parallel, such that a taxpayer may only take advantage of one or the other, depending on the nature of the claim_ We find no support, either in the statutes themselves or in Act 1139, for Baker's assertion that the legislature intended to give, the same taxpayer two opportunities for administrative review of the same claim [15, 16] In sum, we affirm the trial court's dismissal of Baker's suit because it was a challenge to a final assessment following an audit and it was not timely filed under section 26-18-406. The state's sovereign immunity, found in Article 5, C 20, of the Arkansas Constitution, may be waived only in limited circumstances: State v. Staten, 325 Ark: 341, 942 S,W.2d 804 (1996) A trial court acquires no jurisdiction where the suit is one against the state and there is no waiver of sovereign immunity, Id. By enacting section 26 -18 -406, the legislature has permitted suits against the state's DF&A. However, there must be full compliance with this type of statute before sovereign immunity is waived Id. (citing Hercules, Mc, v: Pledger, 319 Ark_ 702, 894 S W 2d 576 (1995)). The facts of this case show that DF&A issued its final assessment of tax deficiency on January 15, 1999, Baker had until one year later to make payment on any taxable periods covered by the assessment, and then one year from the date of payment to file suit in circuit court: Baker did not make any payments until July 2002, over three years after the final assessment: Accordingly, Baker did not comply with the provisions of section 26 -18-406, and, consequently, the trial court acquired no jurisdiction over this suit [17] For his final point for reversal, Baker argues that the trial court erred in allowing DF&A's Assistant Commissioner John Theis to testify about the legislative intent in passing Act 113° ot 1997: Baker does not state how, if at all, it was prejudiced by the admission of this testimony. We will not reverse a trial court's evidentiary ruling without a demonstration of prejudice: See Union Pac: RR: Go. v. Barber, 356 Ark: 268, 149 S.W:3d 325 (2004) (citing Ark: R. Evid: 103(a) for the proposition that evidentiary error may not be predicated upon a ruling that admits evidence unless it affects a substantial right of the party): Here, there can be no prejudice, because we conclude that the meaning of the statutes
4u4 [360 as amended by Act 1139 is apparent from their plain language Any additional information that Theis may have offered on the issue would have been superfluous Affirmed
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