Receiving a notice about income taxes or tax debt from the Arkansas Department of Finance and Administration is not the end of the matter. You may file an Arkansas tax appeal by petition, submit documentation on business transactions and other records, and follow a defined process with deadlines and fees. This article explains how taxpayers and businesses can verify assessments, consult counsel, and protect their rights from the beginning through possible circuit court review.
A state or federal tax lien from the Internal Revenue Service (IRS) is the government’s legal claim against your real property, personal property, and financial assets when you fail to pay taxes, interest, or penalties. Once recorded with the county, the lien secures the debt. It appears as a public record, affecting your credit report, mortgage eligibility, and ability to sell or refinance real estate. We clarify how a lien affects credit, what a lien release or withdrawal means, and how to request either.
If you receive a letter or notice, act promptly. Options include paying in full, requesting a payment plan, negotiating an offer in compromise, or pursuing an appeal to resolve disputed amounts. Ignoring a lien can allow the government to contact other creditors or seek to seize property. This article provides step-by-step guidance on petitions, required documentation, the hearing process, and practical strategies to confirm balances, compare options used in other states, and safeguard owners.
Understanding Arkansas Tax Debt and Appeals
The Arkansas tax appeals system provides taxpayers a fair forum to resolve disputes with state tax authorities. Unlike jurisdictions that handle appeals internally, Arkansas established an independent commission to ensure an unbiased review of all state tax lien and assessment matters.
- Independent structure: The Tax Appeals Commission is part of the Arkansas Department of Inspector General, which ensures complete separation from the department that issued your original notice.
- Expert commissioners: As of 2025, the Commission consists of three members with substantial expertise in Arkansas tax law, including Commissioner Joseph A. Sanford and Commissioner D. Clay Sloan
- Fair resolution mission: The Commission's primary mission is to resolve disputes between taxpayers and the Department of Finance and Administration fairly and efficiently.
State Tax Lien and Other Tax Decisions You Can Appeal
The Tax Appeals Commission handles specific categories of state tax matters, all involving decisions made by the DFA concerning personal property taxes, income taxes, and other state obligations.
- Tax assessments: When the DFA proposes that you owe additional Arkansas income or other state taxes, you have the legal right to appeal this assessment.
- Refund claim denials: The DFA sometimes denies taxpayer requests for refunds, and you can appeal these denials to have the Commission review whether the refusal complies with the law.
- Business closure orders: If the DFA orders your business closed for tax-related reasons, you can challenge this serious enforcement action that directly threatens your commercial operations.
- Joint refund offsets: When the state takes part of a joint tax refund to pay one spouse's debt, the other spouse may file an injured spouse claim.
- Permit denials: Businesses required to obtain tax permits from the DFA can appeal if their applications are denied, which prevents them from operating legally in Arkansas.
- Jeopardy assessments: In urgent situations where the government believes immediate action is necessary, the DFA can issue jeopardy assessments with extremely short appeal deadlines.
Federal Tax Lien and Other Non-Appealable Matters
The Commission only handles tax matters for the state of Arkansas that are administered by the DFA, which excludes several important categories.
- Federal tax issues: These disputes fall under IRS jurisdiction and must be appealed through the United States Tax Court system, not state tribunals or commissions.
- Local government taxes: Property taxes assessed by county officials have separate appeal procedures through local government channels, not through the state Tax Appeals Commission.
- Hardship-only requests: The Commission must follow existing Arkansas tax law and cannot waive properly assessed taxes based solely on inability to pay or severe financial hardship.
The Three Ways to Resolve Arkansas Tax Disputes
Arkansas offers multiple approaches to resolving tax disputes, each with distinct characteristics.
Administrative Review with DFA
Before filing a formal appeal, you may contact the DFA directly to discuss your concerns and potentially resolve simple issues.
- Preserved appeal rights: Pursuing administrative review does not affect your formal appeal deadlines, so you can explore this option while ensuring timely petition filing if needed.
- Direct communication: You can call or write the DFA contact person listed on your notice to explain your position and provide clarifying documentation that supports your claim.
Formal Hearings Before the Commission
The Commission offers four distinct hearing formats to accommodate different circumstances and preferences.
- In-person hearings: Traditional face-to-face proceedings at the Commission's Little Rock offices work well for complex cases where document review and witness testimony are critically important.
- Videoconference hearings: Remote hearings using technology allow you to participate from any location while maintaining visual contact with the Commissioner and all other parties.
- Teleconference hearings: Phone-based hearings offer convenience for straightforward cases focused primarily on legal arguments rather than extensive document review requiring visual examination of records.
- Document-only review: The Commission decides your case based solely on written submissions without any hearing, which provides the fastest resolution for disputes with clear facts.
Settlement and Conciliation
Most Arkansas tax appeals are resolved through settlement negotiations rather than formal Commission decisions.
- Flexible payment arrangements: Settlement allows for creative solutions, including payment plan options that might not be available through formal proceedings against your financial assets or real property.
- Faster resolution timeline: Settled cases typically resolve much faster than those requiring formal Commission decisions, often concluding within weeks rather than months of initial filing.
Filing Your Arkansas Tax Appeal: Step-by-Step
Successfully appealing requires careful attention to deadlines, proper documentation, and established procedures.
Step 1: Understand Critical Deadlines
Most Arkansas tax appeals must be filed within 90 days from the date printed on the DFA notice.
- Strict enforcement: The Commission enforces this deadline without exception, and commissioners cannot extend it even for compelling reasons like illness, travel, or failure to receive notice.
- Postmark rule protection: If you mail your petition using the United States Postal Service, the petition is considered filed as of the postmark date shown on postal records.
- Expedited appeal deadlines: Jeopardy assessments must be appealed within five days of receiving the evaluation, while joint refund offsets may have deadlines as short as three days.
Step 2: Choose Your Filing Method
The Commission offers online and paper filing options to accommodate different technological capabilities.
- Online filing advantages: This method allows filing until midnight on the deadline date and provides instant confirmation of successful submission with reduced risk of missing required information.
- Paper filing options: You can mail or hand-deliver completed petition forms to the Arkansas Tax Appeals Commission, 900 West Capitol Avenue, Suite 310, Little Rock, AR 72201.
Step 3: Complete Required Information
Your petition must include specific information for the Commission to accept and process it properly.
- Essential taxpayer details: You must provide your complete name, address, contact information, and details about the DFA decision being appealed, with a clear explanation of disagreement.
- Tax type identification: You must identify the specific tax type, the period involved, and the dollar amount you actively contest in dispute.
- Required attachments: You must attach a copy of the DFA notice you are appealing and any supporting documentation establishing your position.
Step 4: Select Your Hearing Preference
Specify whether you want an in-person hearing, videoconference, teleconference, or document-only review when filing your petition.
Process Timeline
After filing your petition, the Commission assigns your case a docket number and designates which Commissioner will handle it.
- Case notification letter: You receive a letter within a few days containing your docket number, assigned commissioner information, and a password for accessing your case folder.
- DFA response period: The DFA has 60 days to file an answer to your petition, and they typically include supporting documentation with their response to your claims.
- Reply opportunity: After the DFA files its Answer, you have 30 days to file a Reply if you wish to respond to their arguments or clarify issues.
- Typical resolution timeline: Most Arkansas appeals are resolved within six weeks to a few months from filing, though complex cases may take longer to conclude.
Working with Representatives
Many taxpayers choose to work with professional representatives during the appeals process.
- Licensed professionals: Attorneys, CPAs, and enrolled agents can represent taxpayers before the Commission, bringing specialized knowledge of tax law and appeals procedures to your case.
- Flexible representation rules: Arkansas also allows anyone age 18 or older, including family members, regardless of professional licensing or professional license.
- Mandatory POA form: All representatives must file the Commission's specific Power of Attorney form before acting on your behalf in any official capacity.
Hearing Procedures and What to Expect
The Arkansas Tax Appeals Commission conducts hearings less formal than court proceedings but still follows structured procedures.
- Confidential proceedings: All Commission proceedings are confidential and closed to the public, protecting taxpayer privacy throughout the process involving sensitive financial information.
- Witness requirements: You can bring witnesses to your hearing if they have been disclosed before the hearing date and possess relevant testimony.
- Evidence acceptance: The Commission accepts various types of evidence with less strict evidentiary rules than formal court proceedings, including documents and testimony supporting your position.
- Published decisions: After deciding on your case, the Commission publishes the decision on its website as public record, with all taxpayer-identifying information redacted for complete privacy.
Learning from Real Cases
The Commission maintains a searchable database of decisions that helps taxpayers understand how tax law is applied in specific situations.
Income Tax Assessment Disputes
A taxpayer disputed an Arkansas income tax assessment after an audit flagged unreported business income. The Commission reviewed bank records, invoices, contracts, and reconciliations to determine liability. The matter was settled when the taxpayer produced additional records showing that several transactions were reported on other forms, reducing proposed adjustments and resolving remaining calculation differences.
Sales Tax Compliance Issues
An Arkansas retailer appealed a sales tax assessment, asserting certain transactions qualified for statutory exemptions. The Commission analyzed transaction details, reviewed the governing exemption statutes, and heard testimony about industry practices. Its decision clarified how the cited exemption applied to the taxpayer’s business model, offering practical guidance for similarly situated companies and future compliance reviews.
Refund Claim Denial Appeals
A taxpayer sought a refund, alleging overpayment caused by a preparer’s calculation errors, but the DFA denied the claim as untimely. The Commission reconstructed the timeline, interpreted Arkansas refund statutes, and evaluated any tolling provisions. It ultimately determined whether the filing met statutory deadlines, resolved entitlement to the refund, and clarified procedural requirements.
Joint Refund Offset Cases
A spouse filed an injured spouse claim after the state offset a joint refund to pay the other spouse’s debt. The Commission examined sources of income, withholding allocations, and Arkansas rules for dividing joint refunds. Its decision specified the non-debtor spouse’s recoverable portion and directed the release of amounts improperly captured by the offset.
How Tax Debt Affects Personal Property and Real Estate
Filing a petition with the TaxAppeals Commission is free, making the appeals process accessible regardless of your financial situation.
- No advance payment: Arkansas does not require taxpayers to pay disputed amounts or post bonds before appealing, unlike some other states that demand advance payment.
- Professional representation fees: If you hire a professional representative, you are responsible for their expenses, though you can represent yourself at no cost.
- Interest accrual continues: Interest continues to accrue on any amounts ultimately determined to be owed, even during the appeals process, while your case remains pending with commissioners.
Tips for a Successful Appeal
The Commission is independent from the DFA and does not have access to DFA records or other records maintained by state agencies.
- Complete documentation: You must submit all relevant documents to support your position, help commissioners understand your case thoroughly, and reach the correct legal decision.
- Clear explanations are required: Your petition must state why you disagree with the DFA and the specific items at issue, explaining your situation thoroughly.
- Strict deadline compliance: The Commission cannot extend the deadline for filing a petition under any circumstances, so pay careful attention to filing requirements and calculate dates accurately.
- Professional communication: Many cases are resolved through settlement with the DFA attorney assigned to your case, making respectful and professional communication essential for productive discussions.
After Your Case: Outcomes and Next Steps
Most appeals are resolved through settlement between the taxpayer and the DFA, resulting in voluntary dismissal by the Commission when parties reach an agreement.
- Commission decisions: If your case does not settle, the Commission issues a written decision that, under the law, has the same effect as a circuit court judgment.
- Further appeal rights: If you disagree with the Commission's decision, you generally have 20 days to appeal to the Arkansas circuit court, which involves more complex legal procedures.
- Document destruction policy: All documents submitted to the Commission are shredded within 90 days after the case is closed, so you must maintain your copies.
Frequently Asked Questions
How do I calculate my exact filing deadline from a DFA notice date?
Count 90 days from the date printed on the DFA notice, not from when you received it in the mail. If the 90th day falls on a weekend or state holiday, the deadline extends to the next business day. The United States Postal Service postmark date determines timeliness for mailed petitions, so keep your postal receipt as proof of timely filing.
Can I pursue a settlement with the DFA while my Commission case is pending?
Yes, you should file your appeal petition to preserve your rights while simultaneously trying to resolve issues directly with the DFA attorney assigned to your case. If you resolve through settlement negotiations, either party can request dismissal of the appeal from the Commission. Never risk missing the appeal deadline while waiting for informal discussions to conclude.
Should I choose in-person, video, phone, or document-only for my hearing?
When selecting a hearing, consider the complexity of your case, geographic location, comfort with technology, and the nature of your evidence. Cases with extensive document review often benefit from in-person or video hearings that allow visual examination. Straightforward legal arguments work well by phone, while document-only review is the fastest, eliminating the opportunity to explain positions directly.
What evidence carries the most weight with the Commission?
The Commission values contemporaneous documentation created during transactions in dispute, such as receipts, invoices, contracts, and business records maintained during the tax year. Clear calculations showing how you arrived at figures on tax returns are persuasive to commissioners reviewing your case. Expert testimony from CPAs supports complex technical positions, and credible witness testimony strengthens your arguments significantly.
If I lose, how and when do I appeal to the circuit court?
You typically have 20 days from the Commission's decision to file an appeal in the Arkansas circuit court with proper jurisdiction over your case. Circuit court appeals involve more complex procedures and usually require an attorney with litigation experience to navigate successfully through the judicial system. You must file a petition in the appropriate court and follow court rules for appeals, which differ significantly from Commission procedures.
Will interest and penalties continue to accrue during my appeal?
Interest continues to accrue on any amounts determined to be owed throughout the appeals process and while your case remains pending before commissioners. However, you are not required to pay disputed amounts before your appeal is resolved or while negotiations continue with DFA attorneys. If you ultimately owe the assessed tax debt, interest will accumulate from the original due date through the final payment to the state.
