Opinion ID: 2358389
Heading Depth: 1
Heading Rank: 4

Heading: Front-End Loaded Method

Text: The issue of whether the circuit court erred in applying a front-end loaded method to taxes paid after filing of the lawsuit in 1999 was already raised by DF & A in McFadden II . In McFadden II , this court stated that the appeal concerned the refund mechanism fashioned by the trial court upon remand of Weiss I ( McFadden I ) as well as the issue of the constitutionality of Act 380 of 1991. McFadden II, 356 Ark. at 126, 148 S.W.3d 248. This court also stated: Both the appellee taxpayers and the DF & A proposed refund mechanisms as a remedy for taxes that had been illegally exacted from the appellees. The trial court opted for the appellees' methodology, which allows retirees to recover the full benefit of their after-tax contributions. The DF & A appeals this ruling, asserting that the trial court erred in (1) refusing to apply the voluntary-payment rule to any illegally-exacted taxes that were paid prior to the filing of the lawsuit in 1999, and (2) refusing to apply 26 U.S.C. § 72, which prorates recovery of after-tax contributions on federal tax returns. Id. Therefore, according to this court in McFadden II , DF & A was appealing the circuit court's decision on the refund method and alleged that the circuit court erred in adopting the appellee's methodology. The appellee's methodology, as noted in the opinion in McFadden II , was the front-end loaded method. After considering the arguments of the parties, this court held in McFadden II that with respect to the refund method, the trial court did not err in refusing to apply 26 U.S.C. § 72 to employment-related retirement plans. Further we held, Because the trial court erred in refusing to apply the voluntary-payment rule to illegally-exacted taxes paid in the years prior to 1999, we reverse and remand on this point with instructions to fashion a remedy consistent with this opinion. McFadden II, 356 Ark. at 131, 148 S.W.3d 248. As the circuit court correctly stated in its May 13, 2004, Order Upon Remand: The only issue remanded to this court was the application of the voluntary payment rule to illegally exacted taxes paid in years prior to 1999.