Arkansas: Taxpayer Owes Use Tax 7 Years after Purchase of Used Trailer

The Arkansas Office of Hearings and Appeals recently upheld a use tax assessment imposed on a taxpayer for property brought into Arkansas seven years after being purchased.  Seven years after the taxpayer bought a used trailer, which was utilized out-of-state during that time, the owner moved the trailer to Arkansas and tried to register it. After determining that there was no evidence that sales or use tax had previously been paid, the Department of Finance and Administration assessed the taxpayer for use tax on the trailer based on the original purchase price. After paying the assessment, the taxpayer filed a protest.  Under Arkansas law, use tax generally applies to the entire sales price for the privilege of storing, using, distributing, or consuming tangible personal property and taxable services within the state.  The total consideration for a trailer is the actual sales price provided in the bill of sale, invoice, or financing agreement. For purchases of trailers, the consumer is responsible for payment of the accompanying use tax liability to the Department on or before the time of registration. Although the taxpayer argued that the assessment was overly high given that the trailer was over eight years old at the time of the assessment, the Department denied the protest. In sum, there was no evidence that tax had been previously paid to another state on the trailer purchase and the trailer had been brought into the state for use.  For more information on this decision (Docket 20-342), please contact Michael Andruchek at 214-840-2467.