Mac v. Weiss, 04-461.

• Decision Date: 27 January 2005
• Docket Number: No. 04-461.,04-461.
• Citation: 201 S.W.3d 897
• Parties: Q. MAC and Hoa T. Mac, Appellants, v. Richard A. WEISS, in his Official Capacity as Director of the Arkansas Department of Finance and Administration, Appellees.
• Court: Arkansas Supreme Court

201 S.W.3d 897

Q. MAC and Hoa T. Mac, Appellants, v. Richard A. WEISS, in his Official Capacity as Director of the Arkansas Department of Finance and Administration, Appellees.

No. 04-461.

Supreme Court of Arkansas.

January 27, 2005.

Jack, Lyon & Jones, by: Eugene G. Sayre, Little Rock, for appellant.

David B. Alexander and Ronna Layne Absure, of Ark. Dep't of Fin. and Admin., Little Rock, for appellee.

TOM GLAZE, Justice.

This is the companion case to Baker Refrigeration Systems, Inc. v. Weiss, No. 04-598, 360 Ark. 388, 201 S.W.3d 900 which is also handed down today. Although the facts of these two cases are somewhat different, the legal issues raised and argued in both cases are identical, and we affirm for the same reasons set out in Baker Refrigeration.

The appellants in the instant appeal are Co Mac and Hoa Mac, Vietnamese immigrants who own Chinese restaurants in Batesville, Jonesboro, and Trumann. All of their restaurants had received a Sales and Use Tax Permit from the Arkansas Department of Finance & Administration, and because the restaurants were making taxable sales of food, the Macs were responsible for collecting tax from their customers and remitting that tax to DF & A. In 1996 and 1997, DF & A audited the Macs' three restaurants for sales tax compliance for the time period that ran from February 1, 1991, through January 31, 1997; in addition, DF & A audited the Macs' individual income tax returns for tax years 1991 through 1995. DF & A determined that additional sales taxes and individual income taxes were due for each of the audited tax years, and issued assessments reflecting those determinations.

The Macs formally protested both the sales tax assessment and the individual income tax assessment. The two protests were consolidated, and an administrative law judge of DF & A's Board of Hearings and Appeals held a hearing on April 21, 1998, pursuant to Ark.Code Ann. § 26-18-405 (Repl.1997). On July 20, 1998, the administrative law judge issued two separate decisions: one affirming the sales tax audits of the three restaurants, and one sustaining the individual income tax audits. On August 7, 1998, the Macs requested that the administrative law judge's determinations be revised. On April 19, 1999, DF & A Deputy Director Timothy Leathers issued a letter ruling on the Macs' "requests for revision," upholding the sales tax assessment and reducing the individual income tax assessment. By letter dated May 27, 1999, DF & A issued final assessments to the Macs, informing them of the additional income taxes owed for tax years 1991, 1992, 1993, 1994, and 1995; on October 21, 1999, DF & A issued final assessments for the additional sales taxes owed for the three restaurants for the tax periods February 1, 1991, through January 31, 1997.

On January 10, 2001, the Macs fully paid the amount of the additional sales taxes assessed for the month of July 1994 for their three restaurants; in addition, they paid the additional individual income taxes assessed for tax year 1993. On June 28, 2002, the Macs filed a "Verified Claim for Refund and Claims for Abatement of Gross Receipts (Sales) Taxes" with regard to their three restaurants; on the same day, they also filed a "Verified Claim for Refund and Claims for Abatement of Arkansas Individual Income Taxes" for the years 1991 through 1995, with respect to the disputed assessments.

On May 19, 2003, the Macs filed a complaint in the Independence County Circuit Court, alleging that DF & A illegally and improperly assessed the additional sales tax and individual income tax assessments. The Macs further alleged that the actions of the auditors were arbitrary and capricious, and were in violation of the Macs' civil rights. DF & A filed a motion to dismiss the Macs' complaint o...