ALC-Claims Review/Litigation Reports Oversight
Video
Transcript
16 documents
Machine transcript
May contain errors. Verify important quotations against the official video.
About transcript accuracy
- Source
- SliQ live captions
- Model
- SliQ live ASR
- Processing date
- October 2, 2026
We're gonna call this meeting to order. First up is the adoption of the subcommittee rules. That is exhibit B in your packet. If there's any questions, I have a motion. Do I have a second? I have a second, all in favor. And he posed, motion carries, rules are adopted. All right, moving to item C, uh, we have. Actually, item C4 is the same
presenter as item C1, so without objection, we're gonna hear item C1 and C4 together. You would State your name for the record, and you are recognized to present these reports. Yes, thank you, Chair. Uh, my name's Amber Schubert,
Amber Schubert
Unverified
1:20
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 1st 3 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. Uh, one of her two claims has already been dismissed. The other is still pending. Right? And Members We'll, we'll hear
all these together and then come back and
if there's any questions, otherwise, we'll hear all of them and batch them all together. So if you wanna present the others as well. OK,
Amber Schubert
Unverified
2:12
thank you. Uh, 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, um, as well as discrimination under the Equal Pay Act. Uh, this one also has a motion to dismiss pending. The university denies all.
Uh, 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. The scheduling order has not been issued, um, but it will move forward to discovery. Uh, and then I have the And you'll do C4 as well, yeah. C4 is actually a case where, um,
a University of Arkansas at Little Rock employee filed a defamation action against a former student. The student responded by filing a counterclaim against the professor, um, in his official capacity for First Amendment violations. We have a motion to dismiss pending in that case. Uh, we only represent Doctor Goose Spears in his official capacity on the counterclaim. Right. Members, are there any questions? Uh
Representative. Allan, you are recognized for a question. Oh, I'm sitting in his seat. Thank you for letting me
Representative Fred Allen
Unverified
3:46
just ask a question real quick. The, the claims that you have, what, what are the race of those three? Well, um, Miss
Amber Schubert
Unverified
3:59
Egan's lawsuit is about, it's not about her race. It is about her sex, um, or about the sex of some people that she was, uh, standing up for, so it's not about her race, and I'm not
entirely sure what her race is. Um, the third one, Victor Wilson is the one that deals with a race claim, and he is
an African American male. OK. Thank you. Thank you, Mr. Chair. Sorry, Representative Richardson. Um, all right. Any other questions? Seeing none oh, senator. Scott, you're recognized. Thank you, Mr.
Chair. Um. Is there any way you
Senator Jamie Scott
Unverified
4:38
can provide information? I understand if you
can't 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 University of Arkansas Fayetteville. So it seems to be a common something going on there. I am not the person actually handling those, and I would be more than happy to get you any information if? Sure, we'll
Amber Schubert
Unverified
4:58
reach out to you directly to provide information to you. Thank you. Right? So other questions. Do I have a motion to review?
Of emotion. In a second,
and this is for items C1A through C, and item C4. A. Any discussion? On favor? Any opposed? Motion carries, those items are reviewed. Item C2. Uh, Mr. Parker. If you would, we'll, we'll hear all of items C2A through F.
And then if you'll recognize yourself for the record and And then you're recognized
Dan Parker
Unverified
5:56
to begin. That Uh, let's see, in my life, yes, I'm Dan Parker. I'm the chief legal counsel for the Department of Labor and Licensing, uh, all, let's say, 123456 of these cases are pursuant to the department's mandate to handle wage claims on behalf of wage claimants or sometimes known as last paycheck cases, uh, if the amount in
controversy is under $2000 and the claimant makes less than $50,000 a year. So these are more the smaller cases that we handle. Um, 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. Uh, the next one, Bill Kringbaum. We have good service
on, we have a motion for default judgment pending before the court at this time. Uh, the next one, Carol Merriman, uh, I had several conversations with Miss Merriman. Uh, that didn't result in being able to settle the case out, uh, 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. Uh, Brandon Potter, uh, is in
the same category. We're 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 uh the complaint and we have a motion for default judgment pending against her. And you've heard a A presentation.
Any questions? Signan. A motion to review.
Emotion, a second. Any discussion on the motion? All in favor.
Any opposed? Motion carries. All righty. Thank you all. Yes. I have to speak up, folks. All right, um. Let's see, we are on item C3A. If
Public Service commission. You would state your name for the record, and you are recognized to
Speaker 34
8:36
present. Hello, Danny Hofer for the PSC Chief of Staff. Sorry, I said that all out of order.
Speaker 39
8:48
Danny Hofer, chief of staff for the PSA. You're recognized to proceed. 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 at all.
Um, it is currently pending with a petition for cert before the US Supreme Court. This case dates back to a 2020 order by the Arkansas Public Service Commission, denyingy 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 energy operating companies. At the heart of the commission's order was the fact that the $135 million in question had never
gone to or benefited Arkansas ratepayers and therefore, The commission did not find it in the best interests of ratepayers, uh, that they be on the hook for recovery of those er assess 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 8th Circuit affirmed the district court decision. Entergy Arkansas requested a hearing with the 8th Circuit en banc, which was denied. Uh, energy or consultant then petitioned the US Supreme Court
for cert, which is currently pending. Uh, the commission has responded to Entery Arkansas's petition for cert and Entergy Arkansas subsequently replied to the commission's response. We may receive an answer, uh, from the US Supreme Court as soon as the end of this month, uh, 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, uh, 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 with which the commission will incur through its outside council, uh, both FERC work and US 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 start is granted and SCOTU ultimately were to reverse the lower court decision. Arkansas ratepayers
would face the risk of $135 million being assessed and recovered from them should Energy Arkansas prevail in this case. That Senator Johnson.
See for a question you're right. Thank you, Mr. Chairman.
Senator Mark Johnson
Unverified
11:50
Ms. 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 Egy.
Correct. And if they deny cert, then the, the state of Arkansas wins in this one, the the commission wins. That is holding
Senator Mark Johnson
Unverified
12:16
little confusing when you get in these appellate situations. I just want to clarify that and it'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. OK. And do you have a, and again, I'm not holding you to this, but an estimated cost of what the Counsel for the appeal would be
should the Supreme Court grant sir.
Speaker 39
12:41
Are you talking council specifically for the commission or council, um council, but are you talking about the the the council. The the costs for our consult council or the costs for the utilities council. The
Senator Mark Johnson
Unverified
12:57
state or the commission.
Speaker 39
13:00
OK, um. I would roughly estimate that at this point, um, Around $1 million has been spent
and perhaps as much as another 1 million could be spent as much in legal fees in legal fees just on behalf of the commission. That does not include, um, anything that the utility spends, but, um Compensation for the
Senator Mark Johnson
Unverified
13:25
state employee lawyers yourself, the, uh, attorney General or anyone else that would be representing the Arkansas Public Service Commission. So nothing, no, all, all of our in-house
Speaker 39
13:36
salaries, I mean, that, that doesn't change depending on what we work on
Senator Mark Johnson
Unverified
13:42
that, but obviously in-house people would be spending time on it. Yes, we have in-house staff that
Speaker 39
13:47
would also work on it in addition to outside council. You've answered my questions.
Senator Mark Johnson
Unverified
13:50
Thank you, Ms. Hofer. Thank you, Mr. Chairman, for allowing me to ask. All right. Thank you. Any
questions Seeing none. Do I have a motion to review? Of emotion In a second. And we got a 2nd. Any discussion on the motion? All in favor, I 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 to present this litigation settlement. Thank you, Mr. Chair, members of the committee. I'm Laura Chu, and I'm chief legal counsel for the Department of Health.
Speaker 57
14:47
Real Rogers hit your button there. Right. Reginald Rogers, deputy general counsel, Arkansas
Speaker 55
15:00
Department of Health. You may begin. Thank you, uh, members of the committee, um, as you know, um, I've been at the Department of Health, uh, since, uh, October of 2018, Mr. Rogers has served, uh, the department as deputy general counsel since, uh, uh, 19. 9827 years at the Department of
Health before you were born or any
Speaker 55
15:23
So we're we're gonna go ahead and let Deputy counsel Reggie Rogers handled
Speaker 60
15:28
the presentation today. Thank you very much and, uh, for taking your time. Um, we have before you
Speaker 61
15:34
a proposed settlement of a race discrimination case involving a former employee, uh, Doctor Michelle Smith, who is head of our office of Health Disparities elimination as officer. is now called This proposed settlement was
worked out with her counsel, uh, Austin Porter, and, uh, we believe that it is, uh, 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 um proposed settlement is uh $40,000 as attorneys' fees to Mr. Porter, who is a very able attorney and
is familiar to those in employment law uh community, uh, and 55,000 to um Doctor Michelle Smith. Now this is uh they're responsible for paying their own taxes. Now this case arose, um, Doctor Smith, uh, was head of what's now the Office of Health disparities elimination, and there was some concerns, uh, through an internal audit and also another couple of audits
about, uh, procurement and contract issues, and so her duties were reassigned, uh, away from responsibility for those areas, uh. Doctor Smith believe, believes that was done for retaliatory reasons. We disagree. She eventually, uh, she stayed on until August of 20. 22 Uh, she was reassigned in February of 2022. Um, but she alleges constructive discharge,
of course, we disagree with that. Uh, many of the witnesses that we would need or several of them are no longer with the Department of Health. Uh, we had some, of course, there's always risk with a jury trial. This was set for a jury trial, uh, in February, and so we, uh, the settlement was worked out. Also another issue is that uh last year around April of 2024, the United States Supreme Court. Issued a unanimous opinion,
which I believe was the Moro versus City of Saint Louis case, and 8th Circuit case, which is our federal circuit that we're in that indicated that you no longer simply, uh, you no longer had to show significant harm in unemployment discrimination case. In other words, the in 8th circuit, the thought was that you had to show a reduction in pay or something like that. Well, the the United States Supreme Court said you only had to show some
harm, uh, in, in a job transfer situation or job reassignment situation, so that's significant change, uh, led us to see that we uh didn't want to take the risk of pursuing a, a jury trial and we were ably uh, aided in this by the Attorney General's office throughout this litigation. Thank you. Right. For the
presentation of the report, uh, Senator Payton, you are recognized.
Senator John Payton
Unverified
18:58
Thank you. Thank you, Mr. Chair. Ms. Xu, uh, What is it about this case? That would justify piercing sovereign immunity. Can you Would we not, would the state not be
protected? By sovereign immunity in this case, Senator, if it would be wrong, I can I answer that? Well, and let
Speaker 67
19:19
me just. Maybe clarify why I'm asking. When we deal with
Senator John Payton
Unverified
19:22
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, would pierce the sovereign immunity shield if you don't mind, I've been
doing this a little bit of time of plumbing off a little bit,
Speaker 70
20:04
Title 7, abrogates state sovereign immunity. So a Title 7 race or sex discrimination case. Allows an individual to sue in federal court and receive damages. Thank you. That, that was my question, and you answered it well. Thank
Senator John Payton
Unverified
20:18
you. Right. Senator Tucker, you're recognized her question.
Thank you. Thank you, Mr. Chair. So just over to your far left. Uh,
Senator Clarke Tucker
Unverified
20:26
so, just to follow up on that. There, there's nothing punitive about this. It's compensatory damages because
Speaker 70
20:35
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, uh, damages that of
Speaker 60
20:46
course for whatever she wants to use it for, but it's not punitive. What was the length of time that she is alleging
Senator Clarke Tucker
Unverified
20:53
that she was underpaid relative to her white counterparts. Well. She says that there's disparity of pay. Throughout
Speaker 61
21:08
Uh, but particularly after she made some allegations of pay disparity and also some other issues, uh, but throughout her entire 1010 year, 10 year I
Senator Clarke Tucker
Unverified
21:16
don't, I don't believe she says throughout her time, I
Speaker 70
21:19
think she, uh, the aspect that I saw was in the past several years. And what was the level of pay disparity that she was alleging? Well, she wanted to be, she was
Speaker 61
21:32
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. OK. And what would the disparity have been if she were a GS-13? That was one that we were looking at. They 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. OK. All right, thank you. Thank you, Mr. Chair.
Senator John Payton
Unverified
22:14
All right, uh, Senator Peyton. Back to you. Thank you again, Mr. Chair. I must have
misunderstood something in your, in your first statement. I thought you said damages were not. Proven or alleged or something along those lines in this case. No, she alleged that
Speaker 61
22:33
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 uh global settlement of 55,000 to the plaintiff. OK, thank you. Thank you, Mr. She did request damages in her complaint. Thank you. Seeing no other questions,
uh, do I have a motion to review this report? I've got motion. I have a second. You
got a second. Any discussion on the motion. Senator Tucker. If I can just maybe help.
Senator Clarke Tucker
Unverified
23:17
Um, Senator Payton, and this may not be a response, but And 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 risk of trial or an adverse judgment at trial. So, I mean, the, I think, does that help clarify Yeah. OK. All right. Thank you. That, that's
Speaker 60
23:42
all I and, and of course the settlement says there's no admission of, uh, discrimination or liability in
discussion of emotion. I'm sorry. Um, all right. Any other discussion by Many members Seeing no all in favor? Any opposed? Hearing no opposed, the motion carries. The report
is reviewed. Right. Um, we have. One other.
Item here, we actually have 2 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, I. A1 AI.
Is These are both looks like DFA. Thank you, Mr. Chair. Members of the committee, Ali Austin Smith,
Brad Young
Unverified
25:08
Chief counsel for revenue at DFA. Good morning. My name is Brad Young, managing attorney
Speaker 95
25:13
for DFA. You are recognized to begin your presentation. Thank you.
We appreciate it. We'll take these up one at
Speaker 96
25:19
a time. The first one is Synarc versus
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 that taxpayers provided additional documentation that the department needed, that, that
tends to happen a lot where the department audits and then, you know, later down the road, the department gets the documentation that they, they needed maybe all along. So, in this one, the, um, 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're happy to answer any questions.
So just. So we're clear, do we have to approve this for this to be done? This is, this is not a review. This is an approval item. 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 plus interest. All right, uh, Senator Peyton, you're recognized for a question. Thank you, Mr. Chair.
Senator John Payton
Unverified
26:54
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 FNA 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 methods were. Deficient Certainly, we we disagree
Speaker 95
27:40
with that characterization of the facts, um, as we understand what happened, the auditor spent. I mean, a good deal of time, probably a month or so at the taxpayers' business location, going through whatever
documents, um, the taxpayer provided for her to look through, um, 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. Um, fortunately, as far as the settlement goes, we spent 2 or 3 days, um, with the taxpayers' expert with the taxpayers' attorneys and the taxpayer, and we're able to work through a lot
of these issues where there were documents that for whatever reason, the auditor, we can tend the auditor was not shown before, but we were able to By going through that process, get those answers, and we're 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, that's kind of what piqued my interest
Senator John Payton
Unverified
28:48
because you made a statement that it had been adjusted down based on Evidence had been submitted after the
fact. I don't know if that's receipts or paperwork or
what, but it seemed to, uh, Maybe lend a little merit to the fact that they were arguing that, that, uh, their records had not been acknowledged before the fact, so. So what you're saying is that their allegations there were unfounded. The the auditor did look. And except Receipts and records and things like that. We disagree with their allegation. I will say that we can only look at the documents.
Speaker 95
29:29
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. Alright. Seeing no other
questions, do I have a motion to review this report? So moved. You got a motion, you have a second. You
got a second in the discussion on the motion? All in favor, right? Any opposed? Motion carries. You're a recognized to present
Brad Young
Unverified
29:59
the 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. This
Speaker 96
30:10
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 the vehicle and so it 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 $2600 and the department would waive the corresponding interest. If the settlements approved, the taxpayer would pay that within 30 days and that the parties in this case would 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 2600, not the interest that
Speaker 106
31:02
The department would waive the interest as part of this.
OK. Uh Senator Peyton, you're recognized. Thank you, Mr.
Senator John Payton
Unverified
31:11
Chair, and this is the one 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. 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 record that the business was currently using the vehicle
purchased was another wrecker, newer model to replace the, the first one. And the 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 that done was transfer the title to the, to the business or vice versa and, and they would have gotten the, the credit without question.
The Tax Appeals commission made the right decision. It was a $2600. 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 $2600 or in the other case I brought to you, it was less than $1800. 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
of school cases. If I may, I, I believe the law
Speaker 106
33:46
has been changed now, so that a matter that
Speaker 96
33:49
is under $10,000 on a sales tax case would not, the department would not be allowed to appeal. So in this settlement, why don't you
Senator John Payton
Unverified
33:57
just settle it without making the taxpayer pay the 2600. It was obviously A trade of, of records in his business.
Speaker 111
34:08
So the department is, we are tasked with reading the law and enforcing the law as it,
Speaker 96
34:13
as it stands. We don't look at the, at the facts of a particular case or, or what the taxpayer's intent may have been. This particular trade-in credit is only available for the same consumer. I, I can't, I personally can't if my father and I owned a car together. It has to be the exact same consumer. I understand your argument. Is is it not
Senator John Payton
Unverified
34:31
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 DFNA to submit to the ruling of the Tax Appeals Commission. The department believes that it is partly our duty to make
Speaker 98
34:52
sure that all taxpayers are treated the same. So the, the decisions of the Tax
Speaker 96
34:57
Appeals Commission, and, and the majority of them are, especially now that the individual has to be the same consumer, whether we're talking a a trust or the individual who set up the trust, or, you know,
a, 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 and you don't think
Senator John Payton
Unverified
35:24
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 $10,000 limit, because just what we pay on attorney fees. And what are Taxpayers are expected to pay in the, in this appeals process, that gives DFNA the ability to bully people around. And you shouldn't be bullying people by making them go out and hire attorneys to defend the 20
or $3000 suit. So, Mr. Chair, my question is, what, what can we do? What motion can I make to, uh, Reduce This settlement, uh,
Senator Payton, well, we're checking on that, I've got somebody else in the queue. I'm gonna go on to them and we'll come
Representative Matt Brown
Unverified
37:04
back to you, uh, Representative Brown. Thank you, Mr. Chair. Um, I had a constituent with a similar concern it almost, I mean, I haven't read all of this, but um, would this have been a a spouse a situation with where the vehicle was that was sold was in one spouse's name and they. They, they got another vehicle and they put that in the other
spouse's name, um, and, and my constituents complaint was, why didn't DFNA 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. They, the situation had occurred maybe 2 or 3 years ago, and now all of a sudden they're being hit with this interest and penalties and, and I'd like to ask that question also. Of course. Thank you, Representative. So as to your first question, yes, it
Speaker 121
37:53
is the same law that we're talking about. In this case, it was a
business versus an individual in you're discussing
Speaker 96
38:01
a spouse versus a spouse, but it, 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 process intaking and processing their paperwork. Well, just as, um, aside, I
Representative Matt Brown
Unverified
38:30
think in years past, husbands and wives did so much stuff and they were treated like one and the same, and, uh, it probably never occurred to this individual that, um, you know, his concern was that there wasn't anything in his wife's name, so he thought he'd put the new car in her name this time and uh you know, just, you know, dumb mistake or inadvertent mistake, I shouldn't say dumb, that's my constituent, but. Um, you know, just one of those things, mistakes people make, and, um,
I think it's unfortunate that now, now he's got to pay that money back plus interest and penalties and we understand he's 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. That is correct. The department would not have appealed to circuit court. So you're enforcing something.
Or you, you're making the choice as a department to pursue an appeal to circuit court. Where you could have accepted the decision of the The current decision that's on the table. This appeal was filed years
Brad Young
Unverified
39:46
ago. So, it, it's an active litigation before the Pulaski County Circuit Court. Uh Senator Tucker.
You're recognized. Thank, thank you, Mr. Chair. When did that law change? That would have been
Brad Young
Unverified
40:05
During the, yes, during the 2024 fiscal session. I believe it was a member amendment. OK. So if this Uh, were
Senator Clarke Tucker
Unverified
40:10
to happen now after that law changed, then the department. Would not have been able to appeal the decision to circuit court. That is correct. OK. Thank you. Representative Gazaway. Thank you, Mr. Chair. I'm not sure anyone here will have an answer to this,
Representative Jimmy Gazaway
Unverified
40:29
but if someone happened to know, I'd be interested to know.
How much the taxpayer had to pay an attorney to appeal or to handle the appeal to circuit court. Anybody know don't think we have any information about that.
Speaker 128
40:44
I'm guessing the taxpayer is not here. Not that I'm aware.
Representative Jimmy Gazaway
Unverified
40:50
OK, well, I mean, to, 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 $2600. My guess is that they had to pay their lawyer more than they owed in tax.
They came to me, I'd probably charged them more than the tax that was owed. And I just wonder if they, I just wonder if they paid more to their lawyer than they're gonna 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
Speaker 108
41:22
of what we I know I can speak for the two people sitting at this table for
Speaker 96
41:27
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 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, they're, they're President 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 had to sue the taxpayer? That is the
Representative Jimmy Gazaway
Unverified
42:03
way the law is written, you had no choice in the matter but to
Speaker 121
42:08
sue the taxpayer corrected moving forward. OK. Alright, fair enough. Right, uh,
Senator Tucker And then we're going to Senator Payton. Thank you, Mr.
Senator Clarke Tucker
Unverified
42:31
Mr. Chair. I just think it's important to say on the record that Batesville native gauge Wood just through the 3rd no-hitter in the history of the College World Series on
behalf of the Arkansas Razorbacks and it just finished, uh, if I seem distracted when I was asking a question, that was the reason why would 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, Mr. Chair. Right, thank you, thank you for that. Senator
Payton. Thank you, Mr. Chair and thank you, Sandra Tucker. I had it recording so that uh
Senator John Payton
Unverified
43:10
since this meeting got scheduled on top of the Razorback game or vice versa. I had it recording, uh, but I will admit I watched the 1st 4 innings before we came in here, uh. Colleagues, I'm, I'm gonna 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 DFNA. 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 2nd 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 is taking 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 tax. taxpayer. He was using the truck, the wrecker in his business as a record company, he was replacing the wrecker. Uh, 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 putting 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 there, in their name without. Without with the full tax credit. There are I'm in the car business. And no, we don't need our DFNA 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 precedents. They want
to Convinced the tax appeals commission. That they're wrong. And to set a precedents 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 $1 or less. And that'd be my motion.
And I've, you've heard a motion. Do we have a 2nd on the motion. I've got a second on
Representative Frances Cavenaugh
Unverified
46:38
the motion. Is there any discussion on the motion? Representative Kavanaugh. OK, 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 DNA then can still go ahead and. Appeal it and the taxpayer has to go ahead and hire an attorney
to fight it. And so they're out more money again. So that's part of my discussion is, is, are we accomplishing anything by doing that. That's what I'm asking. So, Well, I think That's kind of the
position that we're in right now is if, if we review this, then the settlement is reviewed, it's approved, in essence, and the taxpayer has to
pay $2600 in agreement with the settlement they've agreed to. If we do not approve or do 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 to move forward, uh, you know, I, I would hope that they would withdraw. The appeal entirely and it would fall in line with the motion and the recommendation that it would be $1 or less. If they remove the appeal, then it would be less than $1 and that would be preferable. I
would think by everybody in this room, but uh I think that's that's the position we're in as far as the motion that's on the table. Any other discussion on the motion? Senator Sullivan,
Senator Dan Sullivan
Unverified
48:08
if the question is, are we setting a precedent? Yeah. We're setting a precedent as the senator mentioned that we don't want, want uh DFA to do this anymore. And that's the precedent we set and that's the precedent I'd support. Any other discussion?
Singan All in favor say aye. Any opposed? Nay. Motion carries The report is. Not reviewed Thank you
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 57
Speaker 55
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 128
Speaker 108
Representative Frances Cavenaugh
Unverified
Senator Dan Sullivan
Unverified