Court Opinion

ID: 7821238
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:55:26.287593+00
Date Added: 2024-06-11T16:30:44.640212
License: Public Domain

John F. Stroud, Justice, dissenting in part. I disagree with the view of the majority concerning the imposition of a 10% penalty on a tax deficiency. There is a substantial difference between negligence and a disagreement between a taxpayer and the taxing authority as to the application of an exemption statute. The fact that an honest question was involved here should be quite apparent from the divergent views of the trial court and this court as to the proper application of the exemption statute. I find no evidence of negligence in this case and agree that the Chancellor was correct in reversing the finding of the Revenue Department Hearing Board. In the absence of negligence, the penalty can still be assessed based on Great Lakes Chem. Corp. v. Wooten, 266 Ark. 511 (Sept. 24, 1979), where this court held that Ark. Stat. Ann. § 84-3113 (Repl. 1960) requires the imposition of either a 10% penalty for negligent non-payment of the tax without intent to evade the tax or a 50% penalty for fraudulent nonpayment with intent to evade the tax. I respectfully disagree with that decision which in essence holds that as a matter of law a tax deficiency under this statute must result from either negligence or fraud. Prior to authorizing the assessment of the 10% or 50% penalty, the statute provides a third alternative, which is the payment of interest at 1/2 of 1% per month “from the time the tax was due and payable until paid.” It is not an automatic assessment, but becomes due “upon notice and demand by the Commissioner.” I think Great Lakes Chem. Corp., supra, completely overlooks this third alternative — the payment of interest when no negligence or fraud is involved. The statute clearly requires a finding of negligence to impose the 10% penalty. After providing for the possible assessment of interest on a tax deficiency, § 84-3113 continues: If any part of such deficiency is found by the Commissioner to be due to negligence of the taxpayer without intent to evade the tax, there shall be added ten (10%) per cent of the total amount of the deficiency in the tax, together with interest as hereinabove provided. (Emphasis added.) The only reasonable construction that can be given to the language “any part of such deficiency” is that the 10% penalty need not apply to all of the deficiency. I think a reasonable construction of the statute as a whole indicates that the part of the deficiency not resulting from the negligence of the taxpayer need not necessarily result from wilful fraud. I submit it can as readily result from the absence of negligence and fraud. I would affirm that part of the decision of the trial court that abrogated the 10% penalty assessed against appellee. Hickman, J., joins in this dissent.