006.05.06 Ark. Code R. 005-GR-89

Current through Register Vol. 49, No. 10, October, 2024

Rule 006.05.06-005-GR-89 - BUSINESS CLOSURE

A. BUSINESS CLOSURE AUTHORITY. The Department has the authority to close any business that fails to pay the gross receipts tax due for three (3) months in a twenty-four (24) month period and does not, within the time allowed, either (i) satisfy that liability through a lump sum payment or a payment plan, or (ii) request an administrative hearing.

B. NOTICE. Taxpayers are given a number of notices prior to business closure. The number of notices that the taxpayer receives will depend upon how many months the taxpayer has failed to pay, or file and pay.

1. The taxpayer receives a notice of proposed assessment for each month that the taxpayer fails to pay, or fails to file and pay. These notices are sent by U.S. Mail, first class, to the business address listed on the taxpayer's permit application, or a subsequent address provided by the taxpayer. If the taxpayer does not pay or file and pay, then a final notice is sent by mail to the taxpayer.

2. The notice of business closure is delivered to the taxpayer when the Department's records show that the taxpayer failed to pay (or file a report and pay) a third month's tax liability within a twenty-four (24) consecutive month period. The notice of business closure is also delivered when the taxpayer defaults on a business closure payment plan that includes more than three (3) months of delinquency on or after July 1, 2004. The notice of business closure notifies the taxpayer that three (3) or more months are delinquent and that if the taxpayer does not either (i) pay in full or enter into a payment plan accepted by the Department, or (ii) request a hearing within five (5) days of the day the notice is received, the business will be closed. The Department will attempt to personally deliver the notice of business closure to either the business owner (if a sole proprietor) or, in the case of a corporation or other non-individual owner to either the agent for service, the person who signed the sales tax permit application as a person authorized to act on behalf of the corporation, or a person who represented that the person was an officer or agent authorized to accept service for the corporation or entity. If service cannot be had by any of these methods, service is made by certified mail to the business address on the sales tax account.

C. OPTIONS TO AVOID BUSINESS CLOSURE. A taxpayer who does not wish to voluntarily close its business when served with a business closure order has two (2) options:

1. Satisfy the delinquent liability by paying the liability in full within five (5) business days of the date the business closure order is served or entering into an installment payment agreement that is approved by DFA; or

2. Request an administrative hearing within five (5) business days of the date the business closure order is served. The request must be in writing and must be received by DFA within five (5) business days of the date the business closure is served.

D. INSTALLMENT PAYMENT AGREEMENTS.

1. All agreements to pay the delinquent liability in installments shall be approved by the Sales and Use Tax Section of the Department.

2. All payment agreements shall provide for full payment of the total amount of tax, penalty, and interest owed for months subsequent to July 1, 2004.

3. No payment agreements will be approved until all delinquent returns are filed.

4. Any taxpayer who requests a payment agreement rather than an administrative hearing when given a notice of business closure and who subsequently fails to pay the liability as agreed will be given an additional notice of business closure upon default. The notice will notify the taxpayer that it is entitled to a hearing on the closure of the business.

5. Any taxpayer who is current on the terms of a business closure payment agreement but fails to pay (or file and pay) its tax liability for three (3) months that are not included in the payment agreement will be served with a business closure order. The notice will notify the taxpayer that it is entitled to a hearing on the closure of the business.

6. Any taxpayer who pays the payment agreement liability in full but subsequently fails to pay (or file and pay) its tax liability for three (3) months in a twenty-four (24) month period will again be subject to business closure.

E. ADMINISTRATIVE HEARINGS.

1. A business closure hearing must be held within fourteen (14) calendar days of the date the taxpayer protests and requests a hearing.

2. The only defenses available to a taxpayer at an administrative hearing on business closure are:

a. Written proof that the taxpayer filed all delinquent returns and paid the delinquent tax, penalty, and interest; or

b. That the taxpayer has entered into a payment agreement to satisfy the tax.

F. JUDICIAL RELIEF. A taxpayer who receives a decision from the Hearing Board that orders the closure of the business may appeal the administrative decision to close the business to the Pulaski County Circuit Court or the circuit court of the county in which the taxpayer resides or in which the business is located. The appeal must be filed within twenty (20) calendar days of the date of the administrative decision.

The taxpayer may appeal an unfavorable decision of the circuit court to the appropriate appellate court.

G. CLOSURE.

Representatives of the Sales and Use Tax Section, along with law enforcement personnel, will affix a business closure sign and close the business of a taxpayer upon the occurrence of any of the following:

1. Failure of a taxpayer served with a business closure order to pay the delinquent liability, enter into a payment agreement, or request an administrative hearing within five (5) business days of the service of the notice;

2. An administrative decision upholding business closure that is not appealed to the appellate court within twenty (20) calendar days of the decision; or

3. A decision of the appellate court upholding business closure.

006.05.06 Ark. Code R. 005-GR-89

Ark. Code Ann. § 26-18-1001 et seq.