STATE OF ARKANSAS DEPARTMENT OF FINANCE & ADMINISTRATION OFFICE OF HEARINGS & APPEALS ADMINISTRATIVE DECISION

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1 STATE OF ARKANSAS DEPARTMENT OF FINANCE & ADMINISTRATION OFFICE OF HEARINGS & APPEALS ADMINISTRATIVE DECISION IN THE MATTER OF GROSS RECEIPTS TAX REFUND DENIAL DOCKET NOS.: TODD EVANS, ADMINISTRATIVE LAW JUDGE APPEARANCES This case is before the Office of Hearings and Appeals upon a written protest dated November 30, 2015, signed by ( Taxpayer s Representative ) on behalf of, Attorney at Law, the Taxpayer. The Taxpayer protested three refund denials issued by the Department of Finance and Administration ( Department ). A hearing was held in Little Rock, Arkansas, on March 29, 2016 at 1:00 p.m. The Department was represented by David Parker, Attorney at Law, Office of Revenue Legal Counsel ( Department s Representative ). Present for the Department were Barbara Montgomery, Taxpayer Service Representative, and Eileen Henderson, Manager Tax Credits. The Taxpayer s Representative appeared at the hearing and represented the Taxpayer. Also present for the Taxpayer was the Taxpayer, 1, and (Owner) of ( LLC ). After the administrative hearing, a post hearing 1 The Taxpayer and were both represented by the Taxpayer s Representative regarding different refund claims involving the same legal issue. Both hearings occurred on March 29, 2016, and the Taxpayer and consented to allowing each other to attend their respective hearings. 1

2 briefing schedule was made to discuss whether the transfer of a vehicle in exchange for debt forgiveness qualifies as a sale for purposes of Arkansas Gross Receipts Tax Rule GR That briefing was completed on May 2, ISSUE Whether the refund denials should be sustained? Yes. FINDINGS OF FACT/CONTENTIONS OF THE PARTIES The following transactions are summarized from the exhibits to the Taxpayer s Answers to Information Request based on the dealership purchase invoices and the bills of sale signed by the Taxpayer and the LLC: 1. On November 22, 2013, Taxpayer purchased a from for. The Taxpayer paid to the State of Arkansas in sales taxes at registration. On January 3, 2014, Taxpayer requested a refund of based on its sale of a to LLC on December 16, 2013 for. 2. On December 16, 2013, Taxpayer purchased a from for. Taxpayer paid to the State of Arkansas in sales taxes at registration. On January 3, 2014, Taxpayer requested a refund of based on its sale of a to LLC on November 24, 2013 for. 3. On December 30, 2013, Taxpayer purchased a from for. Taxpayer paid to the State of Arkansas in sales taxes at registration. On April 23, 2014, Taxpayer requested a refund of based on its sale of a to LLC on December 31, 2013 for. At the administrative hearing, the Department s Representative stipulated that the vehicle descriptions, purchase and sale amounts, and purchase and sale dates 2

3 presented in the Taxpayer s Answers to Information request are factually accurate. Two threshold issues will require a decision before the additional arguments can be addressed: (1) whether the prohibition against self-serving testimony enunciated in Leathers v. A & B Dirt Movers, Inc., 311 Ark. 320, 844 S.W.2d 314 (1992) applies in this matter and (2) whether the exchange of a vehicle for debt forgiveness qualifies as a sale for purposes of the motor vehicle trade-in credit. If either of these determinations are made against the Taxpayer, he cannot prevail even if the remaining factual determinations are made in his favor. Regarding the remaining arguments presented by the Department, it is uncertain whether the Department s Representative presented one or two legal arguments against the Taxpayer s refund claim. Initially, the Department s Representative explained: the transaction between the dealership and the Taxpayer were proper... and the sale to [LLC] was not a legit sale because no consideration was given for it. Later in the hearing, however, the Department s Representative stated that the Taxpayer was: 100 percent an agent of [LLC]. Further explaining his argument, the Department s Representative stated: He [Taxpayer] can t then sell it to [LLC] and call it a new sale. At the end of the day, it was bought by [LLC] and paid for by [LLC]. He [Taxpayer] registered it and that s fine because he is the one that walked in with the money.... That is not two sales happening... It is not an arm s length transaction by any means. 2 2 Throughout the hearing, the Department s Representative would refer to the Taxpayer as an agent that bought vehicles for LLC but later asserted that the Department was not arguing that the Taxpayer was an agent. If necessary, out of an abundance of caution, this decision will address the agency argument as well in case the Department s statements that agency was not at issue were misunderstood. 3

4 The Department s additional legal arguments appear to be two-fold. The Department s first argument is that the Taxpayer purchased the motor vehicles on behalf of LLC as its agent; LLC was the true owner of the motor vehicles from the beginning; and, consequently, the vehicles could not be resold to LLC by the Taxpayer. The Department s second argument is that the Taxpayer does not qualify for the refund because no consideration was exchanged for the sale of the vehicles between the Taxpayer and LLC, resulting in entitlement to a motor vehicle tax credit of only $0.00. It appears that the second argument is closely associated with the issue of agency as well, since, if the amounts are not loans or gifts, the Taxpayer must have functioned in some type of representative capacity on behalf of the LLC which prompted the provision of the necessary funds to complete the initial vehicle purchases. Addressing the Department s remaining arguments, the Taxpayer s Representative argued that: (1) no documentation is required for a loan to occur and he can otherwise prove a loan occurred through testimony of witnesses; (2) a lien is not required for a motor vehicle loan it is just not a perfected security interest; (3) a principal and agent have a fiduciary relationship and, if an agent decides to sell or keep a motor vehicle bought on behalf of a principal, it would violate the fiduciary relationship and demonstrate that an agent-principal relationship did not exist; (4) the Taxpayer fully complied with the statutory requirements of the motor vehicle tax credit; (5) consideration for a sale can include loan forgiveness; and (6) even if the vehicles were all bought by LLC at 4

5 the dealership using the Taxpayer as its agent, the transactions would still qualify for the trade-in credit. 3 After a summation of the relevant testimony and the law governing burdens of proof in tax proceedings, the relevant threshold issues and additional legal arguments shall be addressed in turn. Ms. Henderson testified that: (1) she has worked with Tax Credits since 2011 and approves the motor vehicle tax credit refund claims; (2) the transactions at issue were considered suspicious because of previous transactions that her employees knew of involving the LLC and other taxpayers, where the LLC provided the funds to purchase vehicles that it soon purchased from the taxpayers; (3) nothing on the face of the refund claims appeared suspicious; (4) bank statements (requested from the Taxpayer) during her department s review of the refund claims demonstrated that the LLC (the purchaser that the Taxpayer sold its motor vehicles to) had provided the money that the Taxpayer used to purchase the relevant motor vehicles; (5) upon discovery, she requested advice from Revenue Legal Counsel at to whether the transactions qualified for the motor vehicle sales tax credit; (6) Revenue Legal Counsel advised her that they did not qualify for that credit because sales to the LLC were not valid since the LLC funded the initial purchase of the vehicles and, thus, paid no additional consideration for the purchase of vehicles from the Taxpayer; (7) the Department believes that the purchases from the dealership were valid sales; (8) the relevant statutes do not define a valid sale and only requires a bill of sale signed by 3 Though not at issue, this statement is incorrect based on the record since, currently, no evidence is presented that LLC sold any of the cars acquired by the Taxpayer within the necessary forty-five (45) day time frame. 5

6 parties and a registration; (9) a person could buy a vehicle and not be required to title the vehicle in their name; (10) the Taxpayer fully complied with all requests for information from the Department; (11) consideration for a transaction can come in the form of debt forgiveness but she was not aware that debt forgiveness was involved in these transactions; (12) she did not ask the Taxpayer for additional information to explain why the LLC deposited the purchase funds into the Taxpayer s account before his purchase; (13) absent the funding issue, the refund claims were otherwise complete and valid and would have been granted; (14) if Taxpayer had provided proof that the first deposit was a loan and the later sale was exchanged for a forgiveness of the loan, the claim would have been approvable as having valid consideration; (15) she likely would have approved the motor vehicle tax credit if she knew about the loan since the confusion would be resolved; (16) no loan documents were ever submitted by the Taxpayer and no lien was recorded on the titles; and (17) sometimes motor vehicle lender do not take out a lien on the title. Ms. Montgomery testified that: (1) she is a desk auditor that reviews tradein tax credits claimed at revenue offices; (2) she had not involvement with the refund claims at issue; (3) typically, a motor vehicle loan would have a copy of a financing contract in the file and the lien would be recorded on the title at registration; (4) sometimes individuals that loaned money to a customer to buy a motor vehicle will record that information on the back of the title; (5) she has had no involvement in the claims where LLC is involved; and (6) just because loan paperwork is not in the file does not mean that a loan was not used to buy the motor vehicle. 6

7 The Taxpayer s Representative stated the following: (1) he was both the Taxpayer s and the LLC s attorney; (2) he has had access to the LLC s business records but a particular loan is only documented by the cash flows between the Taxpayer s and the LLC s bank records; (3) when he supervised certain transactions for the LLC, he ensured that additional documentation was provided in the files regarding those transactions; 4 (4) the LLC gives customers a revolving line of credit to buy motor vehicles and does not loan money on any particular car; and (5) the forgiveness of a loan is not documented beyond the bills of sale provided from the LLC to the Taxpayer. testified that: (1) the Taxpayer s Representative is ; (2) everything in Taxpayer s Exhibit 1 was accurate; (3) he learned about the LLC from the Taxpayer s Representative; (4) he is not sure when he first met the LLC s owner; (5) he viewed the transaction as an opportunity to make some money; (6) he would find and buy vehicles that he knew the LLC was interested in purchasing and used money loaned by the LLC; (7) the LLC had a standing offer to buy certain types of motor vehicles; (8) he did not have to sell the purchased motor vehicles to the LLC even though the LLC loaned him the purchase money; (9) after negotiating a potential purchase price with dealerships, he would contact the Taxpayer s Representative to make sure that the LLC would purchase a vehicle from him before completing a transaction with dealerships; (10) the LLC did not require a promissory note or lien on vehicles that it financed for him; (11) the LLC s purchase price was calculated using the actual purchase price plus estimated fees, taxes, and costs (including registration fees and one month of 4 None of the transactions that he supervised and produced additional documentation appear to be relevant to this proceeding. 7

8 insurance at an estimated cost of $150) and a designated profit amount (typically $750); (12) he would sometimes request additional profit on a sale to recoup unanticipated costs in prior transactions; (13) he could not force the LLC to pay the higher price but hoped they would; (14) he would negotiate motor vehicle prices as low as possible with dealerships in case he had to keep the motor vehicle himself; (15) the Taxpayer s Representative advised him that sales transactions with the LLC were legal so he was not suspicious; (16) if he is successful in the hearing, he is under no legal obligation to give the LLC the refund proceeds (since the LLC already purchased the vehicle at a certain price) but likely will since he did not anticipate receiving more profit than he told the LLC would be received on the transaction; (17) the LLC does not buy any vehicles any more due to market problems; (18) he did not try to sell motor vehicles financed by the LLC to third parties but almost kept one of the vehicles for himself; (19) he properly reported all vehicle profits and income on his Arkansas income tax return; (20) if he decides to keep a car, he will have to pay the money back to the LLC in payments negotiated with the LLC or refinance the loan at another bank; and (21) after the LLC s purchase, the vehicles are delivered pursuant to the delivery instructions of the Taxpayer s Representative. testified that: (1) he is the sole owner and only employee of the LLC and also has an ownership interest in in the area; (2) the LLC is engaged in wholesaling a variety of goods and services in the ; (3) the LLC purchases motor vehicle from different sources across the country, including dealerships, wholesalers, individuals, and the internet; (4) the LLC prefers to buy vehicles through 8

9 individuals because purchasing directly from dealerships is too time consuming (taking an entire day for a single purchase) and buying online is usually more expensive because those individuals expect a higher profit; (5) the LLC only loans money to individuals that buy certain types of vehicles that the LLC is interested in acquiring and offers to pay a $500 to $750 profit above the original purchase price and estimated fees and cost (including $150 for a month of insurance) to encourage those individuals to resell the vehicles to the LLC; (6) the LLC is concerned about who receives a line of credit but uses word of mouth rather than background checks and credit checks; (7) the secondary market prices affect what type of motor vehicles that the LLC will buy and how much it is willing to pay; (8) the LLC does not know exactly how much it will pay for a particular car before being contacted by the sellers and reviewing their original purchase price; 5 (9) the LLC requests a copy of a seller s purchase order from the dealership to calculate what it is willing to pay but does not always receive it; (10) at least once, the LLC loaned money to someone that bought a vehicle, did not resell it to the LLC, and paid the LLC back for the loan; (11) at least once, the LLC advanced money to someone ( ) that disappeared and did not try to recover that money due to the financial costs of pursuing that individual; (12) if someone ran off with $100,000 (rather than ), the LLC would pursue that person based on copies of checks, etc. given for the loan and the verbal agreement; (13) the LLC does not have liens or promissory notes on its vehicle loans because it is too time consuming and sometimes causes title delays; 5 noted that sometimes unusual fees will occur (such as storage or atypical dealer fees) that will also be included in the LLC s acceptable purchase price but typically it is the original sales price, estimated amounts for the usual fees and costs, and a profit margin of $500 to $750. 9

10 (14) the LLC understands that it is risky not to obtain the loan documentation and title liens but expects the increased speed of the transactions and subsequent profits will outweigh the risks and costs; (15) the LLC does not view the Taxpayer as an agent or employee; (16) if the LLC hired someone to buy a motor vehicle for the LLC, it would only pay that person the actual cost of the transaction and not estimated costs and fees; (17) the LLC pays for the motor vehicles by waiving the purchase amounts from the balance owed by the Taxpayer on his line of credit with the LLC; (18) sometimes after selling a vehicle, people will still owe the LLC money due to other draws related to a different motor vehicle purchase; (19) the LLC does not expect to receive any portion of the tax refund from this proceeding; (20) no one can be forced to sell the LLC a car that it finances, but it hopes it will be able to purchase the car; and (21) the LLC has no one on long term financing related to a motor vehicle purchase. At one point, explained that he structured the motor vehicle loans based on his experience managing the accounts receivable in his business. In his business, testified that: (1) he often extends $5,000 to $25,000 of to whose account balance can accumulate to $100,000 before payment; (2) he does not perform background checks, file, or personally know the that he extends credit; (3) sometimes he gets burned but most of the time everything is fine; and (4) his competitors in the follow the same methodology managing their accounts receivables. CONCLUSIONS OF LAW Standard of Proof 10

11 follows: Ark. Code Ann (c) (Supp. 2015) provides, in pertinent part, as The burden of proof applied to matters of fact and evidence, whether placed on the taxpayer or the state in controversies regarding the application of a state tax law shall be by preponderance of the evidence. A preponderance of the evidence means the greater weight of the evidence. Chandler v. Baker, 16 Ark. App. 253, 700 S.W.2d 378 (1985). In Edmisten v. Bull Shoals Landing, 2014 Ark. 89, at 12-13, 432 S.W.3d 25, 33, the Arkansas Supreme Court explained: A preponderance of the evidence is not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other. The Department bears the burden of proving that the tax law applies to an item or service sought to be taxed, and a taxpayer bears the burden of proving entitlement to a tax exemption, deduction, or credit. Ark. Code Ann (d) (Supp. 2015). Statutes imposing a tax or providing a tax exemption, deduction, or credit must be reasonably and strictly construed in limitation of their application, giving the words their plain and ordinary meaning. Ark. Code Ann (a), (b), and (e) (Supp. 2015). If a well-founded doubt exists with respect to the application of a statute imposing a tax or providing a tax exemption, deduction, or credit, the doubt must be resolved against the application of the tax, exemption, deduction, or credit. Ark. Code Ann (f)(2) (Supp. 2015). Further, the burden is upon a taxpayer to prove entitlement to a refund claim. Ark. Code Ann (Repl. 2012). 11

12 Legal Analysis Arkansas sales tax generally applies to entire gross receipts of all sales of tangible personal property and certain specifically enumerated services within the State of Arkansas. Ark. Code Ann (Repl. 2014). For purchases of motor vehicles, the consumer is required to directly pay the accompanying sales tax liability to the Department. Ark. Code Ann (a)(1) (Repl. 2014). Ark. Code Ann (b)(1)(C)(i) (Repl. 2014) authorizes a motor vehicle tax credit for the private sale of a used motor vehicle and states: When a used motor vehicle, trailer, or semitrailer is sold by a consumer, rather than traded-in as a credit or part payment on the sale of a new or used motor vehicle, trailer, or semitrailer, and the consumer subsequently purchases a new or used vehicle, trailer, or semitrailer of greater value within forty-five (45) days of the sale, the tax levied by this chapter and all other gross receipts taxes levied by the state shall be paid on the net difference between the total consideration for the new or used vehicle, trailer, or semitrailer purchased subsequently and the amount received from the sale of the used vehicle, trailer, or semitrailer sold in lieu of a trade-in. See also Arkansas Gross Receipts Tax Rule GR Ark. Code Ann (3)(A) defines consumer as the person to whom the taxable sale is made or to whom taxable services are furnished. Person means any individual, partnership, limited liability company, limited liability partnership, corporation, estate, trust, fiduciary, or any other legal entity. Four issues have been presented that require a legal determination in this matter. Two threshold issues are (1) whether the prohibition against self-serving testimony enunciated in Leathers v. A & B Dirt Movers, Inc., 311 Ark. 320, 844 S.W.2d 314 (1992) applies in this matter and (2) whether the exchange of a 12

13 vehicle for debt forgiveness qualifies as a sale under Arkansas Gross Receipts Tax Rule GR-12.1(B)(3). If either of these determinations are made against the Taxpayer, he cannot prevail even if the remaining factual determinations are made in his favor. The two remaining issues are (3) whether the Taxpayer operated as an agent on behalf of the LLC and (4) whether consideration was exchanged on the subsequent transfer of the vehicles to the LLC. As explained below, the Taxpayer cannot demonstrate that the relevant transactions qualify as sales under Arkansas Gross Receipts Tax Rule GR-12.1(B)(3); consequently, the Taxpayers refund claim denials are upheld and issues 3 and 4 are rendered moot. A. Whether the evidentiary holding enunciated in Leathers v. A & B Dirt Movers, Inc., 311 Ark. 320, 844 S.W.2d 314 (1992) applies. The Department argued that self-serving testimony from a Taxpayer, standing alone, is inadequate proof in tax proceedings. That statement appears to be a reference to the Arkansas Supreme Court s language in the case of Leathers v. A & B Dirt Movers, Inc., 311 Ark. 320, 844 S.W.2d 314 (1992). In his post hearing brief, the Taxpayer s Representative argued as follows, in relevant part: In the present matters, DF&A continues to improperly argue that just because Taxpayer and did not sign a written promissory note, Taxpayer's debt owed to was not a valid debt. DF&A further misconstrues and misstates the record in these matters by asserting the money loaned to the Taxpayers was not actually provided; however, the record, including the Taxpayers' and bank statements and cancelled checks, clearly evidence that actually loaned cash sums to Taxpayers, when Taxpayers requested draws. The records of the cash transfers match the transactions involved and cannot be reasonably argued to "be arbitrary or anything other than loans from to the Taxpayers. Certainly, was not intended to make a gift of tens of thousands of dollars to the Taxpayer every time deposited money into Taxpayer's bank accounts or wrote the Taxpayers a check. 13

14 The testimony presented herein was not self-serving, but rather the sworn testimony of actual facts, supported by documentary evidence provided by third parties and sworn testimony of an unrelated, disinterested party,. Further, the DF&A agents testified that they would have approved the Taxpayers' sales tax refunds if they had the additional information regarding the loans from, but due to their own failure to request such additional information, they denied the refund claims. The DF&A agents further testified that the transactions at issue would qualify for the sales tax refund, if such were loans and debt forgiveness was the consideration provided for the purchase of the vehicles. A & B Dirt Movers is not applicable to the matter at hand because an estimated assessment is not at issue. Further, if A & B Dirt Movers was applicable, the Taxpayer satisfied the holding regarding self-serving testimony by providing additional supporting documentary evidence and the third party testimony of. B. Whether the definition of sale in Arkansas Gross Receipts Tax Rule GR-12.1(B)(3) bars the Taxpayer s refund claim. Arkansas Gross Receipts Tax Rule GR-12.1(B)(3) provides as follows: "Sale" means the transfer of title to a used vehicle by a consumer (the seller) to another individual or business enterprise (the buyer) in exchange for cash or the equivalent of cash, such as a check or money order. A sale does not occur, and therefore no credit will be allowed, when the title to a damaged vehicle is transferred by a consumer to an insurance company in exchange for a cash settlement paid by the insurance company. [Emphasis supplied.] In his post hearing brief, the Department s Representative defined a cash equivalent as a short-term security that is liquid enough to be considered cash, citing Black s Law Dictionary (6th ed. 1990), and He further argued that the undocumented, unsecured 14

15 debt to the LLC (if it existed) would not be easily marketable and, thus, lacked the necessary liquidity to be equated with cash. The Taxpayer s Representative argued that: (1) the general definition of sale located at Ark. Code Ann (19) includes bartering transactions (which do not include cash); (2) Ark. Code Ann and the Gross Receipts Tax Rules repeatedly reference only the consideration received when taxing, exempting, and excluding certain proceeds from taxation; and (3) Arkansas Gross Receipts Tax Rule GR-3(H) specifically includes credit in the definition of gross proceeds for a sale. The Taxpayer s Representative argues that the clear statutory definitions and other statutory provisions must control over Departmental regulations and sales utilizing consideration other than cash, checks, or money orders must be allowed to qualify for the motor vehicle trade-in credit under Arkansas Gross Receipts Tax Rule GR The Taxpayer s Representative further cites instances where courts have included financed transactions in determining the market cash value for property in a condemnation action, included debt financing in the purchase price of stock for a damage calculation, and provided excerpts from witness testimony that asserted that transferrable five dollar off coupons for game cartridges could be viewed as cash equivalents. Finally, the Taxpayer s Representative argued that it would be unreasonable to limit the motor vehicle credit to cash sales because the Taxpayer could simply have required the LLC to pay him in cash and used those proceeds to pay off his loan to the LLC. The Taxpayer s Representative describes this as a useless act that improperly places form over substance, citing an Arkansas Supreme Court case that states the general principle of law that a 15

16 claimant need not exhaust administrative remedies where an administrative appeal would be futile. The Arkansas Supreme Court has explained that the interpretation of statutes by an administrative agency, while not conclusive, is highly persuasive. Matter of Sugarloaf Min. Co. Permit No. P-272-M-Co, 310 Ark. 772, 776, 840 S.W.2d 172, 174 (1992). In Ford vs. Keith, 338 Ark. 487, 494, 996. S.W.2d 20, 25 (1999), the Arkansas Supreme Court explained as follows: The construction of a state statute by an administrative agency is not overturned unless it is clearly wrong. Thomas v. Arkansas Department of Human Services, 319 Ark. 782, 894 S.W.2d 584 (1995) (citing Douglass, supra.) Ordinarily, agency interpretations of statutes are afforded great deference, even though they are not binding. Arkansas State Medical Bd. v. Bolding, 324 Ark. 238, 244, 920 S.W.2d 825 (1996). However, although an agency's interpretation is highly persuasive, where the statute is not ambiguous, we will not interpret it to mean anything other than what it says. Kildow, 333 Ark. at 339, 969 S.W.2d 190. Initially, the cases cited by the Taxpayer to argue that debt financing could be considered a cash equivalent are not relevant to the matter at hand and are not persuasive for the purpose for which they were cited. The citations provided by the Department (which limit the definition of cash equivalents to marketable, highly liquid assets) are more persuasive and provide the plain and ordinary meaning of the relevant term. Consequently, if the Department s promulgated interpretation of the governing statutes is not clearly wrong, the regulation requires that the denial of the refunds be sustained because the Taxpayer has not sold his vehicle for purposes of Arkansas Gross Receipts Tax Rule GR-12.1, the regulation which governs application of the credit. 16

17 The relevant portion of Ark. Code Ann (b)(1)(C)(i) states as follows: the tax levied by this chapter and all other gross receipts taxes levied by the state shall be paid on the net difference between the total consideration for the new or used vehicle, trailer, or semitrailer purchased subsequently and the amount received from the sale of the used vehicle, trailer, or semitrailer sold in lieu of a trade-in. [Emphasis supplied.] Here, the legislature utilized the amount received for purposes of determining the amount of credit allowed and utilized the term total consideration when describing the initial tax base for the transaction. 6 The Department (interpreting an ambiguity in the statutory provision) concluded that limiting the amount of credit to only cash proceeds followed the legislative intent by ensuring that the amount of credit was limited to proceeds that are received by a taxpayer (contemplating cash, checks, or money orders) whose value was easily determinable. The Taxpayer has not proven that the relevant regulation contradicts the relevant statutes or that the Department s promulgated interpretation of the relevant statute is clearly wrong. Based on the above analysis, the Taxpayer has not proven by a preponderance of the evidence that it is entitled to the claimed refunds. Because the Taxpayer has not proven that it is entitled to its refund claims even if the remaining arguments are determined in the Taxpayer s favor, the remaining legal arguments shall not be addressed as they are rendered moot. 6 This language appears to represent a tacit acknowledgement that bartering transactions between private parties in motor vehicle sales involves items of uncertain value and can result in undervaluation or overvaluation of the services, goods, and intangibles exchanged due to the potential for collusion. 17

18 DECISION AND ORDER The refund denials are sustained. The file is to be returned to the appropriate section of the Department for further proceedings in accordance with this Administrative Decision and applicable law. Pursuant to Ark. Code Ann (Supp. 2015), unless the Taxpayer requests in writing within twenty (20) days of the mailing of this decision that the Commissioner of Revenues revise the decision of the Administrative Law Judge, this Administrative Decision shall be effective and become the action of the agency. The revision request may be mailed to the Assistant Commissioner of Revenues - Policy & Legal, P.O. Box 1272, Rm. 2440, Little Rock, Arkansas The Commissioner of Revenues, within twenty (20) days of the mailing of this Administrative Decision, may revise the decision regardless of whether the Taxpayer has requested a revision. The Taxpayer may seek relief from the final decision of the Administrative Law Judge or the Commissioner of Revenues on an assessment of refund denial by following the procedure set forth in Ark. Code Ann (Supp. 2015). DATED: May 31,