The Honorable John Dawson State Representative P.O. Box 336 Camden, AR 71701
Dear Representative Dawson:
This is in response to your request for an opinion concerning the penalty that is assessed for delinquent taxes. Your specific question in this regard is restated as follows:
Should the penalty imposed by a collector for failure of a taxpayer to pay taxes on time be calculated based on the total amount of taxes due, including any previous penalties for late assessment, or should the previous penalties be excluded form the calculation?
It is my opinion that the delinquency penalty should be calculated based upon the amount of taxes due, excluding any late assessment penalties. This conclusion follows from an interpretation of several pertinent Arkansas Code provisions, in the absence of case law on point.
Arkansas Code of 1987 Annotated 26-26-1406(b) imposes "[a] penalty of ten percent (10%) of the taxpayer's total tangible property taxes" if the October 10 deadline is not met. Section26-36-202(b), which applies to real and personal property taxes, states that "it shall be the duty of the county clerk to add a penalty of ten percent (10%) upon all taxes returned delinquent. . . ." Section 26-36-206, which authorizes the collector's distraint of goods to satisfy delinquent taxes, should also be considered wherein it imposes ". . . a penalty of twenty-five percent (25%) [on the taxes due upon the personal property. . . .]" A.C.A. 26-36-206(a).
These provisions all appear to base the delinquency calculation upon the unpaid taxes which, in my opinion, do not generally include any late assessment penalties for purposes of your inquiry. A contrary conclusion would in essence result in a penalty assessed on a penalty. I believe that legislative intent would have to be more clearly expressed in favor of this method of calculation.
The language of subsection (b) of 26-26-1406, when read together with subsection (a) of that section, also supports this conclusion. These subsections read as follows:
(a) A penalty of ten percent (10%) of the taxpayer's total tangible personal property taxes shall be imposed on any taxpayer who fails or refuses to assess his tangible personal property on or before April 10 of each year.
(b) A penalty of ten percent (10%) of the taxpayer's total tangible personal property taxes shall be assessed if the taxpayer fails or refuses to pay tangible personal property taxes on or before October 10 next following the assessment of the property for taxes.
It is thus apparent that both the penalty for late assessment and the delinquent payment are based upon the taxpayer's total taxes. There is no indication in subsection (b) that this calculation should also include the penalty imposed under subsection (a).
The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elisabeth A. Walker.