ALC-Claims Review/Litigation Reports Oversight
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Unknown speaker
0:00
You We're gonna call this meeting to order
first up is the adoption of the subcommittee rules that is exhibit B in your packet there's any questions I have a motion do I have a second I have a second all in favor any opposed motion carries rules are adopted all right moving to item C we have actually item C4 is the same presenters item C1 so So without objection, we're going to hear items C1 and C4 together.
If you would, state your name for the record, and you are recognized to present these reports.
Amber Schubert
Unverified
1:15
Yes, thank you, Chair. My name is Amber Schubert, and I am an Associate General Counsel with the University of Arkansas system. Thank you for noticing that these two are both cases involving the University of Arkansas system. The first three cases involve the University of Arkansas at Fayetteville, and they are all employment law cases. The first one concerns Plaintiff Mindy Egan's removal as chair of the Department of Sociology and Criminology.
The university has filed a motion to dismiss and denies all claims. One of her two claims has already been dismissed. The other is still
pending. Right, and members, we'll hear all these together
and then come back if there's any questions. Otherwise, we'll hear all of them and batch them all together. So if you want to present the others as
Amber Schubert
Unverified
2:07
well. Okay, thank you. The second one, again, is an employment lawsuit involving the University of Arkansas at Fayetteville.
The plaintiff is a former assistant coach for the University of Arkansas softball team. She alleges race and gender discrimination and retaliation. as well as discrimination under the Equal Pay Act. This one also has a motion to dismiss pending. The university denies all liability on that one. And similarly, the third one is Victor Wilson versus the Board of Trustees. Plaintiff in that case alleges race discrimination and retaliation under Title VII.
His allegations mostly concern his pay. The university has filed an answer in that case. A scheduling order has not been issued, but it will move forward to discovery and then i have the net field is c4 as well yes c4 is actually a case where a university of arkansas little rock employee filed a defamation action against a former student the student responded by filing a counterclaim against the professor in his official capacity for first amendment violations we have a motion to dismiss pending
in that case we only represent dr. goose spears in his official capacity on the counter claim against him all right members are there
any questions uh representative allen you are recognized for a question oh i'm sitting in his seat thank you for letting me
Representative Fred Allen
Unverified
3:41
just ask a question real quick the the claims that you have what what are the race of those three
Amber Schubert
Unverified
3:51
Well, Ms. Ingen's lawsuit is not about her race. It is about her sex or about the sex of some people that she was standing up for. So it's not about her race, and I'm not entirely sure what her race is. The third one, Victor Wilson, is the one that deals with a race claim, and he is an African-American male. Okay. Thank you. Thank you, Mr. Chair. Sorry, Representative Richardson.
All right. Any other questions? Seeing none. Oh, Senator Scott, you're recognized. Thank you, Mr. Chair. Is there any way you can provide
information? I understand if you can't
Senator Jamie Scott
Unverified
4:33
because some of this stuff is in the middle of litigation, but I'm concerned about the racial discrimination and the other things that I keep hearing in regards to the University of Arkansas Fayetteville so it seems to be a common something going on there um I am not the person actually
Amber Schubert
Unverified
4:55
handling those and I would be more than happy to get you
any information if can somebody contact me sure we'll reach out to you directly to provide information to
you thank you thank you all right seeing no other questions do I have a motion to review I have a motion in a second and this is for items c1 a through c and item c4 a any discussion all in favor any opposed motion carries those items are reviewed item c2
mr parker if you would we'll we'll hear all of items c2 a through f then if you'll recognize yourself for the record and and then you're recognized to begin uh let's
Dan Parker
Unverified
5:51
see am i live yes i'm dan parker i'm the chief legal counsel for the department of labor and licensing uh all let's see one two three four five six of these cases are pursuant to the
department's mandate to handle wage claims on behalf of wage claimants they're sometimes known as last paycheck cases if the amount in controversy is under $2,000 and the claimant makes less than $50,000 a year. So these are more the smaller cases that we handle. The very first one, James Hall, after considerable difficulty we did get good service on him. That was a $1,291 claim.
He has now been served, did not file an answer, and we've asked the court to enter a default judgment against him. The next one, Bill Kringbaum, we have good service on. We have a motion for default judgment pending before the court at this time. The next one, Carol Merriman. I had several conversations with Ms. Merriman that didn't result in being able to settle the case out. Since then, she has been extremely difficult to get service on. We don't have a service on her
yet, we are still trying. So that's the status of that lawsuit. Brandon Potter is in the same category. We are still trying to get service on Mr. Potter to proceed with the lawsuit. Amanda Schenkel, that claim was resolved and that has been dismissed. And then the final one, Ashley Walker Love also did not respond to the complaint and we have a motion for default judgment pending against her
numbers you've heard a presentation any
questions seeing none a motion to review
a motion a second any discussion on the motion all in favor any opposed
motion carries all right thank you all I heard I have to speak up folks all right let's see we are on item C 3
a if Public Service Commission
you would state your name for the record and you are recognized to present
Speaker 34
8:31
hello uh danny hofer for the psc chief of staff sorry i said that all
Speaker 39
8:43
out of order danny hofer chief of staff for the psc you're recognized proceed all right um so the report that we are here to give today is on um a lawsuit that is titled energy arkansas llc
versus Doyle Webb et al. It is currently pending with a petition for cert before the U.S. Supreme Court. This case dates back to a 2020 order by the Arkansas Public Service Commission denying Entergy Arkansas's request to recover from Arkansas ratepayers any portion of the $135 million in damages assessed by FERC for a dispute between Entergy Arkansas and other Entergy operating companies. At the heart of the Commission's order was the fact that the
135 million dollars in question had never gone to or benefited Arkansas ratepayers and therefore the Commission did not find it in the best interest of ratepayers that they be on the hook for recovery of those FERC assessed damages. Following the Commission's ruling, Entergy Arkansas brought an action against the Commission before the US District Court of the Eastern for the Eastern District of Arkansas where a bench trial found or ruled in favor of the Commission stating the FERC ordered refund is sorry the FERC ordered refund
is not a FERC approved file rate rather it was a refund to other energy operating companies for a misallocation of the opportunity sales in violation of the system agreement the district court agreed that retail customers who did not benefit from the opportunity sales should not be required to pay for losses associated with sales years after those sales occurred. The Eighth Circuit affirmed the district court decision. Entergy Arkansas requested rehearing with the Eighth Circuit en banc, which was denied. Entergy Arkansas then petitioned the U.S. Supreme Court for
cert, which is currently pending. The commission has responded to Entergy Arkansas's petition for cert, and Entergy Arkansas subsequently replied to the commission's response. We may You may receive an answer from the U.S. Supreme Court as soon as the end of this month. If we don't, we're looking at fall, perhaps September or October, before we have an answer on whether or not they grant cert. As far as the risk of liability, in the event that cert is granted, the immediate liability
to the state will come in the form of additional legal fees -- sorry -- additional legal fees which the commission will incur through its outside counsel. Both FERC work and U.S. Supreme Court work is very nuanced, so we would continue to use the same outside counsel that we have throughout this process. In the event that CERT is granted and SCOTUS ultimately were to reverse the lower court decision, Arkansas ratepayers would face the risk of $135 million being assessed and recovered from them
should Entergy Arkansas prevail in
this case. is that senator johnson thank you
Senator Mark Johnson
Unverified
11:45
mr chairman miss hofer uh i think i understand but i want to
clarify the uh request for cert which is at the will of the supreme court and not a right uh is from intergy correct and if they deny cert then the the state of arkansas wins in this one
Speaker 39
12:07
the commission wins. That is correct. The lower court
Senator Mark Johnson
Unverified
12:11
holding would stand. Okay. I just want, it can get a little confusing when you get in these appellate situations. I just want to clarify that. And there's 135 million in money that the ratepayers might or might not have to pay that's at stake. Is that correct? That is correct. Okay. And do you have a, and again, I'm not holding you to this, but an estimated cost of what the council for the appeal would be should the Supreme
Speaker 39
12:36
Court uh grant cert are you talking council specifically for the commission or council um outside council
not but are you talking about the the the council the the costs for our council council or the costs for the utilities council the the
Senator Mark Johnson
Unverified
12:52
state or the commission okay
Speaker 39
12:55
um i would roughly estimate that at this point around 1 million dollars has been spent and perhaps as much as another 1 million could be spent as much in legal fee in legal fees just on
behalf of the Commission that does not include anything that the utility spends but or the compensation for
Senator Mark Johnson
Unverified
13:20
the state employee lawyers yourself the Attorney general or anyone else that would be representing the Arkansas Public Service Commission so nothing no all of our in-house salaries
Speaker 39
13:31
I mean that that doesn't change depending on what we understand that but obviously in-house people would be
Senator Mark Johnson
Unverified
13:37
spending time on it yes we have in-house staff that would also
work on it in addition to outside counsel okay all right you've answered my questions thank
you Miss Hofer thank you mr. chairman for allowing me to ask all right thank you any other questions seeing none do I have a motion to review of a motion of a second and we've got a second any discussion on the motion all in favor aye any opposed motion carries
thank you all right moving on to item d1a
if you would state your names for the record and then you're recognized present this litigation
Speaker 55
14:38
settlement thank you mr. chair members of the committee I'm Laura shoe and I'm chief legal counsel
Speaker 57
14:48
for the Department of Health it's your button there Reginald Rogers deputy general counsel
Speaker 55
14:55
Arkansas Department of health you may begin thank you members of the committee as you know I've been
at the Department of Health since October of 2018 mr. Rogers has served the department as deputy general counsel since 1998 27 years at the Department of Health before you were born or any of the other
Speaker 60
15:15
members of this committee so we're gonna
Speaker 55
15:18
go ahead and let deputy counsel reggie rogers handle the presentation
Speaker 60
15:23
today thank you very much and for taking your time we have before you a
Speaker 61
15:29
proposed settlement of a race discrimination case involving a former employee
dr michelle smith who is head of our office of health disparities elimination as the office is now called. This proposed settlement was worked out with her counsel, Austin Porter, and we believe that it is a reasonable settlement, although we, of course, disagree that there was discrimination that occurred. This is a race discrimination case and also allegations of retaliation against the Department of Health. As you may see in the packet, the proposed settlement is
$40,000 as attorney's fees to Mr. Porter, who is a very able attorney and is familiar to those in the employment law community, and $55,000 to Dr. Michelle Smith. Now, this is, they're responsible for paying their own taxes. Now, this case arose, Dr. Smith was head of what's now the Office of Health Disparities elimination and there was some concerns through an internal audit and also another couple of audits
about procurement and contract issues and so her duties were reassigned away from responsibility for those areas. Dr. Smith believes that was done for retaliatory reasons. We disagree. She eventually, she stayed on until August of 2022. She was reassigned in February of 2022, but she alleges constructive discharge.
Of course, we disagree with that. Many of the witnesses that we would need, or several of them, are no longer with the Department of Health. We had some, of course, there's always risk with a jury trial. This was set for a jury trial. in February, and so we, the settlement was worked out. Also, another issue is that last year, around April of 2024, the United States Supreme Court issued a unanimous opinion,
which I believe was the Muldrow versus City of St. Louis case, an Eighth Circuit case, which is our federal circuit that we're in, that indicated that you no longer simply, You no longer had to show significant harm in an employment discrimination case. In other words, in the Eighth Circuit, the thought was that you had to show a reduction in pay or something like that. Well, the United States Supreme Court said you only had to show some harm in a job transfer situation or job reassignment situation.
So that significant change led us to see that we didn't want to take the risk of pursuing a jury trial. And we were ably aided in this by the Attorney General's Office throughout this litigation.
Thank you. All right. You've heard a presentation of the report. Senator Payton, you are recognized. Thank
Senator John Payton
Unverified
18:55
you. Thank you, Mr. Chair. Ms. Hsu, what is it about this case that would justify piercing sovereign immunity?
Would the state not be protected by sovereign immunity in this case? Senator, if it
Speaker 67
19:14
would be wrong, can I answer that? Well,
Senator John Payton
Unverified
19:17
and let me just maybe clarify why I'm asking.
when we deal with something like this any settlement or any award would be punitive and we can't punish the bad actor we're only punishing the taxpayers so the reason we have
sovereign immunity is to avoid punishing taxpayers on punitive things so what about this settlement or
this case would pierce the sovereign immunity shield. If
Speaker 70
19:54
a little bit at a time, and I still don't know a lot. But Title VII abrogates state sovereign immunity. So a Title VII race or sex discrimination case allows an individual to sue in federal court and receive damages.
Senator John Payton
Unverified
20:12
Thank you. That was my question, and
you answered it well. Thank you. All right. Senator Tucker, you're recognized per question.
Senator Clarke Tucker
Unverified
20:21
Thank you. Thank you, Mr. Chair. So just over to your far left. So just to
follow up on that, there's nothing punitive about this. It's compensatory damages because
Speaker 70
20:32
sovereign immunity was pierced by Title VII, correct? That's correct. This is a settlement, so there's no punitive aspect to it. This is
Speaker 60
20:41
damages that, of course, for whatever she wants to use it for.
Yes. But it's not punitive. What
Senator Clarke Tucker
Unverified
20:48
was the length of time that she is alleging that she was
Speaker 70
20:57
underpaid relative to her white counterparts? Well, she says
Speaker 61
21:01
that there's disparity of pay throughout, but particularly after she made some allegations of pay disparity and also some other issues.
Senator Clarke Tucker
Unverified
21:11
Okay. But throughout her entire 10-year tenure?
Speaker 70
21:15
Well, I don't believe she says throughout her time. I think the aspect that I saw was in the past several years. Okay. And what was the level
Speaker 61
21:27
of pay disparity that she was alleging? Well, she wanted to be, she was a GS-12, and she wanted to move up to GS-13. She was one of our highest paid employees, and I know she was right at around $100,000. I know certain 93,000, but as of August of 2022, she may have reached 100,000.
Okay. And what would the disparity have been if she were a GS-13? That was one that we were looking at. There were efforts to try to move her to a GS-13, but due to the pay ranges, I'm not sure what the difference would have been. Okay. All
Senator John Payton
Unverified
22:10
right. Thank you. Thank you, Mr. Chair. All right. Senator Payton, back to you. Thank you again, Mr. Chair.
I must have misunderstood something in your first statement.
I thought you said damages were not proven or alleged or something along those lines
Speaker 61
22:28
in this case. No, she alleged that she was damaged. She alleged and pled in her complaint for compensatory damages, and she also had an allegation of punitive damages. The settlement is a global settlement of $55,000 to the plaintiff.
Okay, thank you. Thank you, Mr. Chair. But she did request damages
in her complaint. Thank you. Seeing no other questions, do I have a motion to review this report? I've
got a motion. I have a second. I've got a second. Any discussion on the motion? Senator Tucker.
Senator Clarke Tucker
Unverified
23:12
If I can just maybe help Senator Payton, and this may not be a response, but in virtually every settlement of a civil lawsuit, well, first the plaintiff makes allegations,
and then if there is a settlement in the settlement agreement, the defendant denies liability, but they say we're paying this amount in order to avoid a risk of trial or an adverse judgment at trial. So, I mean,
Speaker 60
23:37
I think, does that help clarify? Yeah, okay. All right. Thank you. that's all i'm sure well and and of course the settlement
says there's no admission of uh discrimination or like we're in discussion of a motion oh i'm sorry sorry um all right any other discussion by committee members seeing none all in favor any opposed hearing no opposed motion carries
the the report is reviewed all right we have one other item
here we actually have two items on a supplemental agenda so i will i need a motion to suspend the rules to take up these two litigation
reports i've got a motion i've got a second any discussion all in favor say aye any opposed motion carries all right
item a one a i is these are both looks like dfa Thank you, Mr. Chair, members of the committee.
Brad Young
Unverified
25:05
Alicia Austin-Smith, Chief Counsel for Revenue at DFA.
Speaker 95
25:08
Good morning. My name is Brad Young, Managing Attorney for
DFA. All right. You are recognized to begin your
Speaker 96
25:14
presentation. Thank you. We appreciate it. We will take these up one at a time. The first one is Synarc v. Hudson. This is litigation in Pulaski County Circuit Court. The parties have reached a settlement which is contingent upon your approval, so that's why we're here today. The litigation arose from an audit of several businesses. Those cases were ultimately consolidated. The taxpayers filed a protest with our internal Office of Hearings and Appeals at the time,
and the income tax assessments were sustained. The taxpayers then appealed that decision to Pulaski County Circuit Court. During the litigation, the taxpayers provided additional documentation that the department needed. That tends to happen a lot, where the department audits, and then later down the road, the department gets the documentation that they needed maybe all along. So in this one, the actual audit amount was about $137,000 in tax originally, and we would agree to adjust that down based on the documentation we received to $92,000 in tax,
and the interest would be adjusted down accordingly. So if the settlement is approved, the taxpayers would pay that within 30 days and dismiss the lawsuit. And we are happy to answer any questions. So, just so
we're clear, do we have to approve this for this to be done? Yes, that is correct. This is not a review item. This is an approval item. That is correct. And what happens in the instance if we don't approve it? We would all proceed to hearing. You'd proceed to hearing on the $137,000.
That is correct, plus interest. Plus interest.
Senator John Payton
Unverified
26:47
All right. Senator Payton, you're recognized for a question. Thank you, Mr. Chair. So, in reading this, during the taxpayers' arguments, they stated repeatedly that the auditor made a decision solely on bank deposits, and that's repeated in several paragraphs. And then in paragraph 25, they say, from the beginning of the audit, the F&A failed to take into account the bank, the books, and records of the plaintiff, even though the
records were made available to the auditor at all times including visits to the plaintiff's offices can you just I mean regardless of how this turns out can you just speak to why they were under the impression that the auditor's
Speaker 95
27:35
methods were deficient certainly we disagree with that characterization of the facts as we understand what happened the auditor spent I mean a good deal of time probably a month or so at the taxpayer's business location going through
whatever documents the taxpayer provided for her to look through we took a number of depositions in this case there's been discovery I think were we to proceed to trial the facts would show that the auditor did much more than what's alleged in the complaint along those lines fortunately as far as the settlement goes we spent two or three days with the taxpayer's expert with the taxpayer's attorneys and the taxpayer and were able to work through a lot of these issues where there were
documents that for whatever reason the auditor we contend the auditor was not shown before but we were able to by going through that process get those answers and were able to be comfortable with the reduction in the audit that was requested by the taxpayer at least in the amount that's in the settlement. Well
Senator John Payton
Unverified
28:43
that's kind of what piqued my interest because you made a statement that it had been adjusted down
based on evidence that had been submitted after the fact. I don't know if that's receipts or paperwork or what but it seemed to maybe lend a little merit to the fact that
they were arguing that their record had not been acknowledged before the fact. So what you're saying is that their allegations there were unfounded that the auditor did look and accept receipts and records and things like that we disagree
Speaker 95
29:19
with their allegation i will say that we can only look at the documents that the taxpayer provides to us during the audit and so after the litigation there were additional documents and explanations that were not provided
to the auditor during the audit. Thank you.
Thank you, Mr. Chair. All right. Seeing no other questions, do I have a motion to review this report? So moved. You got
a motion? Do I have a second? Aye. You got a second? Any discussion on the motion? All in favor, aye. Aye. Any opposed?
Motion carries. You are recognized to present the
Brad Young
Unverified
29:57
next one. Thank you, Mr. Chair. This is also a litigation in Pulaski County Circuit Court. This is also a settlement that we are seeking approval of.
Speaker 96
30:04
This litigation arose from the department's denial of a used vehicle trade-in credit. The individual who purchased a car and claimed the credit was not the same individual that had sold a vehicle and so was not entitled to the credit. So they received an assessment from the department. The taxpayer appealed that decision to the Tax Appeals Commission, which reversed the assessment, and the department appealed that to circuit court. The parties have reached a settlement where the taxpayer would pay back the credit that they had claimed, the full amount of the tax, which is $2,600, and the department would waive the corresponding interest.
If the settlement's approved, the taxpayer would pay that within 30 days, and the parties, in this case, because the department appealed, would submit a proposed order to the circuit court. We are seeking approval, and we're happy to answer any questions. So this is just for
the $2,600, not the interest that... The department would waive the interest
Speaker 106
30:58
as part of the settlement. Senator Payton, you're recognized. Thank
you, Mr. Chair. And this is the one
Senator John Payton
Unverified
31:06
I have a problem with. I don't know if you're aware of it, but I had brought a similar situation up about a year and a half ago.
I'm aware. But we have taxpayers who, for the lack of one or two extra forms transferring the ownership of the vehicle to the correct entity, are being assessed and then the tax appeals commission is ruling in favor of the taxpayer because truly this is the same taxpayer uh the finding of facts on page 17 in our packet by the arkansas tax appeals commission shows that this is a wrecker for a business
that the vehicle that was sold was the wrecker that the business was currently using the vehicle purchased was another wrecker newer model to replace the the first one and that justifiably so this taxpayer should have gotten credit for the sale of their used equipment as they replaced it and all they would have had to have done was transfer the title to the to the business or
vice versa and they would have gotten the the credit without question the tax appeals commission made the right decision it was a $2,600 tax and then we appeal it to circuit court where a taxpayer is now on the hook for hiring a lawyer, an attorney to fight your appeal in circuit court. Now you have taxpayer funded attorneys and you can fight this stuff all day
long without it costing you a nickel. But a taxpayer that's being assessed $2,600 or in the other case I brought to you, it was less than $1,800. They've got to decide whether to settle with you or hire an attorney to fight it in circuit court which in the first case they were being threatened with the supreme court even if circuit court agreed with the appeals commission we set up a tax appeals commission what does it take to get dfna to accept the ruling of the tax appeals commission
instead of appealing it to circuit
court on these men in school cases. If I
Speaker 106
33:41
may. I believe the law has been changed now
Speaker 96
33:44
so that a matter that is under $10,000 on a sales tax case, the department would not be allowed to appeal.
Senator John Payton
Unverified
33:52
So in this settlement, why don't you just settle it without making the taxpayer pay the $2,600? It was obviously a trade of wreckers in his business.
Speaker 111
34:03
So the department is, we are tasked with reading the law and enforcing the law
Speaker 96
34:08
as it stands. We don't look at the facts of a particular case or what the taxpayer's intent may have been. This particular trade-in credit is only available for the same consumer. I can't personally claim credit if my father and I owned a car together. It has to be the exact same consumer. I
Senator John Payton
Unverified
34:26
understand your argument. Is it not also the Tax Appeals Commission's job to look at the law and interpret the law?
So y'all have reached a disagreement on that interpretation. What does it take for DF&A to submit to the ruling of the Tax Appeals Commission? The department believes that
Speaker 98
34:47
it is partly our duty to make sure that all taxpayers are treated the
Speaker 96
34:52
same. So the decisions of the Tax Appeals Commission, and the majority of them are, especially now, that the individual has to be the same consumer. Whether we're talking a trust or the individual who set up the trust or, you know, a dad and a daughter or a business owner and an individual,
those decisions now actually follow the law and say that that individual has to be the same consumer to be entitled to the credit. Right. So
Senator John Payton
Unverified
35:19
you don't think the tax appeals commission ruled according to the law and they don't think that you ruled according to the law. That's the disagreement between those two entities. But we set up the tax appeals commission to look over DFNA's shoulder and to make those decisions. What's it take to get you to submit to their decision instead of going to circuit court?
I understand we passed law to set a $10,000 limit because just what we pay on attorney fees and what our taxpayers are expected to pay in this appeals process, that gives DF&A the ability to bully people around. And you shouldn't be bullying people by making them go out and hire attorneys to defend a $2,000 or $3,000 suit. So, Mr. Chair, my question is, what can we do, what motion can I make to reduce this settlement?
Hold on a second. Senator Payton, while we're checking on that, I've got somebody else in the queue. I'm going to go on to them. We'll come back to you.
Representative Matt Brown
Unverified
36:57
Representative Brown. Thank you, Mr. Chair. I had a constituent with a similar concern. I haven't read all of this, but would this have been a spouse situation where the vehicle that was sold was in one spouse's name and they
got another vehicle and they put that in the other spouse's name. And my constituents' complaint was,
why didn't DF&A, when they were in the process of doing that, point that out to the constituent when they were making that transfer there in the office? Why didn't they bring that to their attention to avoid this situation? this situation had occurred maybe two or three years ago and now all of a sudden they're being hit with this interest in penalties and and I'd like to ask that question also of
Speaker 121
37:48
course thank you representative so as to your first question yes it is the same law that we're talking about in this case it was a business versus
Speaker 96
37:56
an individual and you're discussing a spouse
versus a spouse but it involves the same law and the tax appeals commission on that decisions on that point are no those individuals would not be entitled to claim the credit if they own the car separately so as to your second question our revenue office employees should not be in the business of giving individuals legal advice as to how to to claim a certain transaction they should just be intaking and processing
Representative Matt Brown
Unverified
38:23
their paperwork well just as um aside i think in years past husbands and wives did so much stuff and they were treated like one in the same and it probably
never occurred to this individual that you know his concern was that there wasn't anything in his wife's name so he thought he put the new car in her name this time and you know just you know dumb mistake or inadvertent mistake shouldn't say dumb that's my constituent but you know just one of those things mistakes people make and I think it's unfortunate that now now he's got to pay that money back plus interest and penalties and we understand you're not happy we understand thank
you so you're saying the law has now changed to where if this situation was to happen today this case would not be in front of us
Speaker 96
39:22
that is correct the department would not
have appealed to circuit court so you're enforcing something or you're you're making the choice as a department to pursue an appeal to circuit court where you could have accepted the decision
of the current decision that's on the table? This appeal was
Brad Young
Unverified
39:41
filed years ago. So it's an act of litigation before the Pulaski County Circuit Court.
Okay. Senator Tucker, you're recognized. Thank you, Mr. Chair. When did that law change?
Senator Clarke Tucker
Unverified
39:54
That would have been... during that
Brad Young
Unverified
39:58
yes during the 2024 fiscal session I believe it was a member amendment okay
Senator Clarke Tucker
Unverified
40:05
so if this were to happen now after that law change then the
department would not have been able to appeal the decision to circuit court that is correct okay thank you representative gas
Representative Jimmy Gazaway
Unverified
40:24
away thank you mr. chair I'm not sure anyone here will have an answer to this but if someone happen to know, I'd be interested to know, how much the taxpayer had to pay an attorney to handle the appeal to circuit court? Anybody know? I don't think we have any information about that.
I'm guessing the taxpayer is not here? Not that I'm aware. Okay. Well, I mean, so to Senator Payton's point, I mean, you guys could have accepted the tax commission's ruling. You didn't. You appealed it to circuit court, which caused the taxpayer to have to go out and hire a lawyer all over $2,600. My guess is that they had to pay their lawyer more than they owed in tax. If they came to me, I'd probably charge them more than the tax it was owed. And I just wonder if they, I just wonder if they paid more to their lawyer than they were going to have to pay you guys, in which case I would say you should have never appealed it and they shouldn't have to
pay you anything. But that's just kind of what- If
Speaker 108
41:17
I may, Representative, we, I know I can speak for the two people sitting
Speaker 96
41:22
at this table for sure this brings us great distress the way the law is written in that we have to actually sue the taxpayer um in order to appeal or get corrected a decision of the tax appeals commission we that is that would not be our preference to have to file suit against the taxpayer you know it it makes sense because in getting that decision corrected and getting the law corrected moving forward you know under the tax appeals commission
their their precedent it's going to affect that taxpayer's assessment so they have to be a party to the lawsuit but certainly that that brings us distress so is it your position that you
Representative Jimmy Gazaway
Unverified
41:58
had to sue the taxpayer that is the way the law is written you had no choice in the matter but to sue the tax if we wanted this decision
Speaker 121
42:05
corrected moving forward okay all right fair enough Right Senator Tucker
And then we're going to Senator Payton Thank
Senator Clarke Tucker
Unverified
42:26
you, Mr. Chair I just think it's important to say on the record That Batesville native Gage Wood just threw the third No-hitter in the history of the College World Series On behalf of the Arkansas Razorbacks And it just finished If I seem distracted when I was asking a question that was the reason why with my apologies but arkansas native arkansas razorbacks no hitter
in the omaha so that's just i think that needs to be said for the record
so thank you thank you thank you for that senator payton thank you mr
Senator John Payton
Unverified
42:57
chair and thank you senator tucker i had
it recording so since this meeting got scheduled on top of the razorback game or vice versa i had it recording, but I will admit I watched the first four innings before we came in here. Colleagues, I'm going to speak to y'all, committee members, for just a minute. When this first came to my attention, it was a different case. It was one of my constituents. I spoke to DF&A. Their whole motive at that point was to make a point, to prove a point,
to set a precedent they threatened my constituent with going all the way to the supreme court in order to set that precedent obviously this is the second time that i'm aware of that the claim the tax appeals commission has ruled contrary to dfna's opinion on this and i think the tax appeals commission has taken an honest look as to whether or not both transactions involve the same taxpayer obviously if you read the the finding of facts in your packet you'll see that the tax
appeals commission found that it's this it was the same taxpayer he was using the truck the wrecker in his business as a wrecker company he was replacing the wrecker in the other situation that i dealt with it was a it was a family trust the vehicle was in the name of the trust the replacement vehicle was not put in the name of the trust the only thing that would have had to have been done to to obtain the tax credit would be to transfer it tax-free from the trust to the
owner of the trust and then they could have traded it in and put it in their in their name without without with the full tax credit there are so i'm in the car business and no we don't need our df agents at the local office to give legal advice but when somebody makes an honest transaction and they've sold a vehicle and they're buying another vehicle they should get that tax credit when the tax appeals commission takes a hard look at it i think dfna should honor their decision
because of the first transaction i was aware of we introduced legislation in the 24 fiscal session that fixed it and and y'all and we all passed it i believe this is an effort by dfna continually to try to set the precedence they want to convince the tax appeals commission that they're wrong and to set a precedence in the contrary so i recommend i move that we do
not approve this item. And I move that we give a stern recommendation to DFNA that they settle this case for a dollar or less. And that'd be my motion. You've heard a motion. Do we
have a second on the motion? I've got a second on the motion. Is there any discussion on the motion?
Representative Frances Cavenaugh
Unverified
46:31
Representative Kavanaugh. Okay, so here's my question. We don't approve this, which I don't have any trouble if we don't approve it, but then DF&A then can still go ahead and appeal it, and the taxpayer has to go ahead and hire an attorney to fight it? So they're out more money again? So that's part of my discussion is, are we accomplishing anything by doing that? That's what I'm asking.
Well, I think that's kind of the position that we're in right now is if we review this, then the settlement is reviewed, it's approved in essence, and the taxpayer has to pay $2,600 in agreement with the settlement that they've agreed to. If we do not approve or do not review this, then it's in DFA's hands. Even though we're making a recommendation, we cannot force them in this body to move forward. You know, I would hope that they would withdraw the appeal entirely,
and it would fall in line with the motion and the recommendation that it be a dollar or less. If they remove the appeal, then it would be less than a dollar, and that would be preferable, i would think by everybody in this room but i think that's that's the position we're in as far as the motion that's on the table any
Senator Dan Sullivan
Unverified
48:03
other discussion on the motion senator sullivan if the question is are we setting a precedent yeah we're setting a precedent as the senator mentioned that we don't want dfna to do this anymore and that's the precedent we set and
that's a precedent I'd support any other discussion seeing none all in favor say
aye any opposed nay motion carries the report is not reviewed thank
you and Seeing no other business, we are adjourned.
Agenda
A. Call to Order
B. Adoption of Subcommittee Rules
C. Litigation Reports
D. Litigation Settlement
E. Adjournment
SUPPLEMENTAL AGENDA
Documents
Speakers
Senator Jim Dotson Chair
Unverified
Amber Schubert
Unverified
Representative Fred Allen
Unverified
Senator Jamie Scott
Unverified
Dan Parker
Unverified
Speaker 34
Speaker 39
Senator Mark Johnson
Unverified
Speaker 55
Speaker 57
Speaker 60
Speaker 61
Senator John Payton
Unverified
Speaker 67
Speaker 70
Senator Clarke Tucker
Unverified
Brad Young
Unverified
Speaker 95
Speaker 96
Speaker 106
Speaker 111
Speaker 98
Representative Matt Brown
Unverified
Speaker 121
Representative Jimmy Gazaway
Unverified
Speaker 108
Representative Frances Cavenaugh
Unverified
Senator Dan Sullivan
Unverified