ADMINISTRATIVE DECISION

STATE OF ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION OFFICE OF HEARINGS & APPEALS ADMINISTRATIVE DECISION IN THE MATTER OF (ACCT. NO.: ) INDIVIDUAL INCOME TAX ASSESSMENTS DOCKET NOS.: 17-471 TAX YEAR 2013 ($ ) 1 17-472 TAX YEAR 2014 ($ ) 2 17-473 TAX YEAR 2015 ($ ) 3 RAY HOWARD, ADMINISTRATIVE LAW JUDGE APPEARANCES This case is before the Office of Hearings and Appeals upon a written protest dated January 22, 2016, signed by, on behalf of himself and, the Taxpayers. The Taxpayers protested assessments for Individual Income Tax issued by Department of Finance and Administration ( Department ). The Letter ID Numbers are,, and. A hearing was held in Pine Bluff, Arkansas, on October 12, 2017, at 10:00 a.m. The Department was represented by Alicia Austin Smith, Attorney at Law, 1 Subsequent to the hearing, the reflected amount was provided to the Office of Hearings and Appeals after an adjustment pursuant to Ark. Code Ann. 26-18-405(d)(1)(C) (Supp. 2017). 2 Subsequent to the hearing, the reflected amount was provided to the Office of Hearings and Appeals after an adjustment pursuant to Ark. Code Ann. 26-18-405(d)(1)(C) (Supp. 2017). 3 Subsequent to the hearing, the reflected amount was provided to the Office of Hearings and Appeals after an adjustment pursuant to Ark. Code Ann. 26-18-405(d)(1)(C) (Supp. 2017). 1

Office of Revenue Legal Counsel. 4 Ben Johns, Tax Auditor Individual Income Tax Section, appeared for the Department. appeared at the hearing and represented the Taxpayers. ISSUE Whether the Taxpayers were residents of the State of Arkansas for income tax purposes during tax years of 2013, 2014, and 2015 ( audit period )? Yes. FINDINGS OF FACT/ CONTENTIONS OF THE PARTIES The protest submitted by summarized the legal position of the Taxpayers as follows: It is my assumption that the issue of my residency arose from my ownership of property in Arkansas, where I do receive occasional mail. I do not believe this precludes me from being considered an Alaskan resident and an Arkansas nonresident after researching the Arkansas Tax Code. Regulation 2.26-51-102(9) "Residency Determination" describes a three pronged test of which only one prong should be met to be considered a resident of Arkansas: Establishing domicile, stated as intent coupled with presence Spending an aggregate of six months per year in Arkansas and maintaining a permanent place of abode in the state Reviewing of the facts regardless of intent At the end of June in 2013 I moved to, Alaska and accepted a position as of a local school,. For the next two years I lived and worked full-time in. During that time I maintained two properties in Arkansas and still do. The addresses of those properties are as follows: My wife, who is not in good health, resides at the AR address where she maintains her residence. The 4 Prior to the hearing, the Department s Answers to Information Request was filed by Chris McNeal, Attorney at Law, Revenue Legal Counsel. 2

AR address was my previous residence, which I have been unable to sell. From June of 2013 through May of 2015, my domicile was AK. On moving there in 2013 it was my intent that be my permanent home. I have attached copies of my Alaska driver's license and voter registration as evidentiary matter. If my comprehension of Regulation 2.26-51-102(9) is correct I have not satisfied any facets of the three prong test to be an Arkansas resident based on the above facts. In May 2015, health concerns and personal issues interrupted my plans to remain in Alaska. I returned to Arkansas to receive medical treatments from a physician familiar with my medical history. Also, the aid previously assisting my wife became unable to tend to her needs. It became obvious that I would need to stay in Arkansas long enough to make different arrangements for my wife. [P. 1-2]. The Department s Answers to Information Request addressed the contention of the Taxpayers regarding domicile and provided, in part: The Taxpayers protested the proposed assessments for tax years ended 2013 and 2014 by letter dated January 22, 2016, a copy of which is attached hereto as Exhibit 5. By that protest letter, the Taxpayers requested an administrative review on the basis of documentation attached thereto as well as that protest letter. Attached to the protest letter was a copy of recently issued Alaska driver's license and his Alaska voter registration card. Alaska voter registration card does not reflect a date of issuance. then called DFA and requested that his protest include tax year 2015 as well. However. Alaska driver's license reflects an issue date of February 18, 2015, a date after the tax years 2013 and 2014 which are at issue in this case. The Taxpayers' protest asserts that was an Alaskan resident and an Arkansas nonresident... for tax years 2013, 2014 and 2015. It is undisputed that the Taxpayers were Arkansas residents for several years through tax year 2012. However, the Taxpayers' protest states that at the end of' June 2013, moved to Alaska and accepted a position as of a local school known as. For the next two (2) years lived and worked full-time in or near Alaska. See Exhibit 5, p. 1. 3

The Taxpayers' protest states that during the time was living and working in Alaska, the Taxpayers maintained two real property locations and still do today. Those property addresses are as follows: During this time,, who was not in good health. resided at the Arkansas address and that remains her residence. The protest states that the Arkansas address was previous address, which he has been unable to sell. See Exhibit 5. p. 2. The Taxpayers' protest states that from June 2013 through May 2015, domicile was Alaska. maintains that upon moving there in June 2013, it was his intent that would be his permanent home. Attached to the protest were Alaska driver's license issued on February 18, 2015 (after the 2013 and 2014 audit periods at issue) and his Alaska voter registration, issue date unknown. Citing 1997-4 Comprehensive Individual Income Tax Regulation 2.26-51- 102(9) ("Arkansas Comprehensive Individual Income Tax Regulations), the Taxpayers argue that satisfies none of the facets of the three prong test to be considered an Arkansas resident in tax years 2013, 2014 and 2015 based upon these facts. Id. The protest states that in May 2015, health concerns and personal issues interrupted plans to remain in Alaska. At that time returned to Arkansas to receive medical treatments from a physician familiar with medical history. Also, the aide that had been previously assisting became unable to attend to needs and it became obvious that would need to stay in Arkansas long enough to make different arrangements for his wife. The protest states that currently the health and personal issues referenced above have been resolved and plans to begin looking for employment in Alaska during the coming months, with the intention to return to Alaska to live and work permanently. Id. Notwithstanding the assertions contained in the Taxpayers' protest, the Department has performed research regarding the true residence of the Taxpayers. First, it is undisputed that at all times relevant to this matter was a resident of 4

Arkansas and specifically resided at the Arkansas address identified above. The Department does not dispute that in 2013 traveled to Alaska and took a job as of a local school, in or near Alaska. However, the evidence is clear that never abandoned his Arkansas residency or ever otherwise ceased being an Arkansas resident. First, as noted above, during the relevant tax years 2013 and 2014. continued to hold a valid Arkansas driver's license. Alaska Driver's License was not issued until February 18, 201[5]. Although possesses an Alaska voter registration card, the date on which it was issued and/or obtained is not known. The County voting records list as an inactive voter", having not voted since 2012. This information is reflected by the attachment to the Taxpayers' protest. See attachment to Exhibit 5. Next, the Taxpayers' federal tax returns for tax years 2012 (filed in 2013), 2013, and 2014 all set forth the Taxpayers' home address, city, state, and ZIP code as, relevant portions of which are attached hereto as Exhibit 6. The Taxpayers' Arkansas state individual income tax returns for these same tax years also list this same home address, city, state, and ZIP code as that appearing on their federal individual income tax returns. A copy of those Arkansas state income tax returns are attached hereto as Exhibit 7. For purposes of the $350.00 "Homestead Tax Credit/Amendment 79 Benefit Registration", on November 16, 2015, signed that form and checked the box specifically representing to the County Assessor's Office that the Arkansas address was his principal place of residence as of 2013, with the year handwritten. Similarly, on that same form, represented that his previous address was the address stated above.... A copy of this $350.00 homestead tax credit form completed by on November 16, 2015, is attached hereto as Exhibit 8. also assessed his personal property in the State of Arkansas for assessment years 2013, 2014, and 2015. The Taxpayers assessed years 2013 and 2014 in County and the personal property items assessed were essentially identical for each year, with differing assessed values, and included a 5

and a. Copies of the Taxpayers' 2013 and 2014 County personal property assessments are attached hereto as Exhibits 9 and 10, respectively. In year 2015, the Taxpayers assessed in County and the personal property items assessed were almost the same as the previous two years that were assessed in County, but also included. A copy of the 2015 County personal property assessment is attached hereto as Exhibit 11.... It is undisputed that moved to Alaska sometime in mid-2013 and took a job as a for a local school. It is also undisputed that left Alaska and returned to Arkansas in May 2015 for medical and personal reasons. It is also undisputed that during this approximate two-year time period, the vast majority of' assets remained in Arkansas. Those assets included stated, as follows: [Footnotes omitted, P. 2-7]. filed the Taxpayers Answers to Information Request which The fact is, I was not a resident of Arkansas during the contested period. I have documented that I was a resident of Alaska, approximately 4,500 miles from Arkansas. I had a job, a home, a P. O. Box, was a registered voter, & held an Alaska driver s license for part of that period. In addition, I was called for jury duty in Alaska. My wife and I were separated and I was living on my own. My wife and I jointly owned property in Arkansas, on which we were obligated to pay taxes, which we did. My wife claimed the Homestead Exemption because she was 63-65 during that time and was totally disabled. During 2014, I did not even come to Arkansas for Christmas, let alone live here. All of my Alaska income during that period went into my Alaska bank. [P. 1-2]. The Tax Auditor presented testimony consistent with the contentions in the Department s Answers to Information Request and he authenticated the Department s Exhibits 1 17. The Tax Auditor also testified that: (1) the Taxpayers individual income tax returns for 2013 2015 were audited; (2) the Taxpayers returns were adjusted based on residency; (3) the Taxpayers 2012, 6

2013, and 2104 income tax returns reflect the Taxpayers address as being in Arkansas; 5 (4) Department Exhibit 8 is a Homestead Tax Credit Registration dated November 16, 2015, for property in Arkansas, signed by with checkmarks beside #1 ( I am the owner of record of the property listed above, which is my principal place of residence as of YEAR 2013. ) and #3 ( Either I or a joint owner is 65 years of age or older. ), and the Taxpayers address in Arkansas, was reflected as the previous address ; (5) personal property was assessed in County, Arkansas, in 2013 and 2014; 6 (6) the Taxpayers personal property was assessed in County, Arkansas, in 2015; 7 (7) Department Exhibits 14 and 15 are documents relating to the Taxpayers purchase of a home in County,, Arkansas, in June of 2013; (8) Department Exhibit 16 is a copy of Arkansas Commercial Driver s License with an issue date of 01-07-14 (the Driver s License was transferred to Alaska in February of 2015); (9) Department Exhibit 17 is a vehicle registration history for a 2011 Toyota which indicates the primary owner was and reflects the renewal issued dates of July 23, 2012 (from Revenue), August 14, 2013 (from Central Revenue), July 22, 2014 (from Central Revenue), and July 30, 2015 (from Arkansas, it was determined that Revenue); (10) based on all of the ties to did not abandon his domicile for income tax purposes even though he was working out-of-state and the 5 See Department Exhibits 6 and 7. 6 See Department Exhibits 9 and 10. The mailing address on the assessment for 2014 was at the Taxpayers property in Arkansas. 7 See Department Exhibit 11. The assessment was dated on November 16, 2015, and included a note that the 2015 list moved from Co. 7

assessments for 2013 and 2014 (which were issued by a different auditor) were upheld; (11) the driver s license for did transfer to Alaska in February of 2015, however, he thought more weight should be applied to the fact that signed the Homestead Credit form in November of 2015 and indicated the home in Arkansas, was the residence since 2013; 8 (12) with respect to 2015, based upon the statements in the Taxpayers protest letter dated January 22, 2016, 9 was in Arkansas from May of 2015 until the end of 2015, so in addition to the factors used to determine residency, the Taxpayers maintained a permanent place of abode and spent more than 6 months of 2015 in Arkansas; (13) in 2014, made a proactive choice to renew his driver s license in Arkansas so it was not a case where he had forgotten about the license; (14) in 2015, an Alaska driver s license was issued to and the address was listed as a P. O. Box (he gives consideration to the address on an out-of-state driver s license); (15) he has never been to Alaska; (16) the Taxpayer was a registered voter in Arkansas between 2013 and 2016 but the Department does not have the Taxpayer s voter registration records ( records indicated that the Taxpayer was an inactive voter); (17) he has no documentation to prove where the Taxpayer was every day during 2013, 2014, or 2015; (18) with respect to Department Exhibit 1 which reflects an amount of overpayment for $ for tax year 2013, the return was adjusted and a refund was not transferred as a result of data-entry error; and (19) the amount of overpayment 8 See Department Exhibit 8. 9 See Department Exhibit 5. 8

for $ on Department Exhibit 1 is not accurate, but a bill which was mailed to the Taxpayers for tax year 2013 on the same day was accurate. 10 presented testimony consistent with the information in the Taxpayers Answers to Information Request and the following testimony and arguments: 11 (1) it was not his intent to become a resident of Alaska for income tax purposes; (2) he regarded himself to be a citizen of Alaska because he lived there (had a job, driver s license, residence, post office box, voter registration, and jury duty/summons); (3) he moved away so he did not live in Arkansas anymore; (4) the only reason he returned to Arkansas was because of his wife s illness: (5) in 2014, he was only in Arkansas a few weeks when he came home to sell a house; (6) in 2014, he did not come home for Christmas, he spent no time in Arkansas (he stayed in his house in Alaska, where he lived); (7) he has a camper that he pulled with a pick-up truck but there are places in Alaska where he could not pull it; (8) it is common for a resident of Alaska to get a P. O. Box because of the terrain and lack of roads; (9) he lived and resided in Alaska for two [2] years, it was his permanent residence; (10) he did not have an Alaska driver s license when he renewed his Arkansas driver s license in January of 2014 and he could not let his driver s license lapse; (11) he was registered to vote in Alaska and not Arkansas; (12) he used the address on tax returns because he had to use a permanent return address on the returns and it took three [3] years to sell the house in ; (13) a vehicle cannot be licensed in Arkansas unless 10 See Department Exhibit 2. 11 In light of the Department s waiver of post-protest interest under Ark. Code Ann. 26-18- 405(d)(1)(C) (Supp. 2017) (as reflected in Footnotes 1 3), the issue relating to the amount of time between the date when the Taxpayers filed their protest and the date of the hearing is moot; therefore, testimony and arguments concerning that issue will not be addressed in this Administrative Decision. 9

it has been assessed and his wife had to have vehicles licensed since she lived in Arkansas; (14) his wife lived in the house in County so she was entitled to claim the homestead credit, he was living in County in November of 2015 (when the form claiming the homestead tax credit was completed) but he had moved to Alaska in 2013; (15) at some point in time, his employer in Alaska required him to obtain an Alaska driver s license; (16) his wife lived in Arkansas during the audit period but he lived in Alaska, they are separate entities; (17) in 2014, he did not come to Arkansas except for a few weeks in the summer, he did not even come home for Christmas, he did not live in Arkansas; (18) his employer in Alaska encouraged him to register to vote so he did; (19) the Department made many mistakes in this case; (20) he will file amended returns to claim business expenses, if it is determined that he owes income taxes to Arkansas for the years in the audit period; (21) he had no intention of coming back to Arkansas after he moved to Alaska; (22) he intended to stay in Alaska forever, that is the reason he registered to vote there, obtained a driver s license there, and served on jury duty there; (23) prior to the audit period, he had worked in Alaska and retired again and came home to ; (24) in 2013, the Taxpayers moved to Arkansas, because their son s family lives in and their daughter-inlaw would help take care of his wife; (25) the Taxpayers house in is 4,300 square feet with a pool and tennis court and he hired a contractor to construct a 30 x 40 shop on the property; 12 (26) for the two [2] years in question, he was employed by a school district in Alaska where he lived in school housing, which was furnished, and paid rent; (27) he voted in some city elections while he was in 12 He obtained a zoning variance for the shop. 10

Alaska, he voted in Arkansas in 2012 and 2016; (28) he renewed his CDL in Arkansas, in January of 2014, when he was home for Christmas in the event he ever needed to use it; (29) his wife lived in the house and other property there; and (30) Arkansas, so he had to keep Arkansas, has been his home-base since May of 2015. Based on the Department s determination that did not abandon his domicile in Arkansas prior to or during the audit period, the Department issued assessments for individual income tax against the Taxpayers. follows: CONCLUSIONS OF LAW Standard of Proof Ark. Code Ann. 26-18-313(c) (Supp. 2017) 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 11

entitlement to a tax exemption, deduction, or credit. Ark. Code Ann. 26-18- 313(d) (Supp. 2017). 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. 26-18-313(a), (b), and (e) (Supp. 2017). 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. 26-18- 313(f)(2) (Supp. 2017). Income Tax Assessments Ark. Code Ann. 26-51-201 (Supp. 2017) imposes the Arkansas individual income tax upon, and with respect to, the entire income of every resident, individual, trust, or estate. For the purpose of tax imposition, the term Resident is defined at Ark. Code Ann. 26-51-102 (Repl. 2012) as follows: (9) Resident means natural persons and includes, for the purpose of determining liability for the tax imposed by this act upon or with reference to the income of any taxable year, any person domiciled in the State of Arkansas and any other person who maintains a permanent place of abode within this state and spends in the aggregate more than six (6) months of the taxable year within this state[.] Arkansas Comprehensive Individual Income Tax Regulation 2.26-51- 102(9) ( Regulation 2.26-51-102(9) ) provides, in pertinent part, as follows: A three pronged test, as set forth below, is used to determine whether or not a person is a resident of Arkansas. Satisfaction of any one prong is sufficient to establish residency. a) any person domiciled in the state of Arkansas. Domicile is comprised of an act coupled with an intent. A domicile is acquired by (1) physical presence at a place coinciding with (2) the state of 12

mind (that is, intent) of regarding the place as a permanent home. A domicile arises instantaneously when these two facts occur. Every person must have one domicile but can have no more than one domicile, regardless of how many residences a person may have at any given time. A domicile, once established, continues until a new domicile of choice is legally established. An established domicile does not end by lack of physical presence alone nor by mental intent alone. The old domicile must be abandoned with the intention not to return to it. If one moves to a new location but intends to stay there only for a limited period of time (no matter how long), the domicile does not become the new location but rather remains unchanged. b) any person who maintains a permanent place of abode within Arkansas and spends in the aggregate more than six (6) months of the year within Arkansas..... c) In situations where it is not clear if the requirements of either domicile (a) or place of abode (b) have been met, a residency determination can only be made after thoroughly reviewing the facts on a case by case basis. When reviewing the facts, the Supreme Court of Arkansas has held that we are not bound to accept a taxpayer's claims of intent when the circumstances point to a contrary conclusion. Furthermore, when acts are inconsistent with a taxpayer's declarations, the acts will control, and our conclusions regarding residency should be based on the facts and circumstances proved. The following factors should be reviewed in making a residency determination: Address used on federal income tax returns; Address used on telephone, utility and commercial documents; Address used on voter registration; Address used on drivers license, hunting and fishing license; Address used on motor vehicle, boat and trailer registration; Address used on real and personal property tax documents; Address used on county and other tax assessments; Address on governmental documents, such as military records. With respect to military records, the Leave and Earning Statement is a very important document; If the Taxpayer has a spouse, the spouse's address on such things as drivers license, voter registration, vehicle registration, etc. should be checked out; Employer and withholding information, nature of Taxpayer's employment (traveling salesperson, etc.); Location of Taxpayer. How often and for how long does Taxpayer reside at the location; 13

Location of immediate family, such as spouse and children; Length of time in Arkansas of Taxpayer and immediate family; Community affiliations, such as club memberships, church, bank accounts, etc.; Absence of factors in other states. The Department s Representative contended that: (1) the Taxpayers are longtime Arkansas residents and they were domiciled in Arkansas prior to 2013; (2) the factors in this case show that did intend to be able to come back to his home, as he had before, since he had traveled to and worked in Alaska before and came home to ; 13 and (3) nothing in this case shows that did not intend to come back to Arkansas, he maintained and had to assess his personal property in Arkansas, his family home was in, he claimed the homestead credit for the home in in 2015 and swore that the home was his primary residence, he utilized an Arkansas address on his tax returns and testified that he had to use a permanent address, and he maintained his Arkansas commercial driver s license (which is not something he could use in Alaska so he intended to come back to Arkansas and potentially be able to utilize the CDL). On behalf of the Taxpayers, contended that: (1) people do what they have to do; (2) he had to assess the personal property; (3) he had to keep the house so his wife would have a place to live; (4) he did not intend to return to Arkansas but to be prudent, in case he did return, he renewed his Arkansas CDL in the event he needed to work; (5) in 2015, he stated whatever he had to state about the homestead credit, but he came home in May of 2015, so he 13 The Taxpayers house in was sold after a number of years on the market. 14

was here and he has never denied that he came home in May of 2015; (6) the homestead credit was switched from the home to the home and his wife was entitled to the homestead credit; (7) the burden of proof is on the Department to establish that he was not a resident of Alaska during the audit period; (8) the evidence demonstrates that he lived in Alaska; (9) if he could have dual residency, he could see some merit in the Department s argument that he is a citizen of Arkansas; and (10) his wife and children were residents of Arkansas but we all know that he was a resident of the State of Alaska. With respect to the domicile during the audit period, the controlling issue is whether he legally established a new domicile of choice. 14 The burden of proving a change of domicile is on the Taxpayers. See National Wire Fabric Corporation v. Nelson, 563 F. Supp. 303 (D.C. Ark., 1983) and Steward v. Steward, 16 Ark. App. 164, 698 S.W.2d 516 (1985). A taxpayer may have more than one (1) residence but he or she can only have one (1) domicile. See Leathers v. Warmack, 341 Ark. 609, 19 S.W.3d 27 (2000). In order to prove a change of domicile prior to or during the audit period, under the provisions of Regulation 2.26-51-102(9)(a), the Taxpayers must establish that abandoned his domicile in Arkansas with the intention not to return to it. In Leathers v. Warmack, supra, the Arkansas Supreme Court addressed the weight to be given to acts that conflicted with statements regarding intent to abandon a domicile and stated, in part: The intent to abandon one's domicile and take up another must be ascertained from all the facts and circumstances of the particular 14 It was not disputed that before, during, and after the audit period, was and is an Arkansas resident for income tax purposes. 15

case. Morris v. Garmon, 285 Ark. 259, 686 S.W.2d 396 (1985). The factfinder is not bound to accept claims of intent when the circumstances point to a contrary conclusion; they cannot prevail unless borne out by acts. Charisse v. Eldred, 252 Ark. 101, 477 S.W.2d 480 (1972). When acts are inconsistent with a person's declarations, the acts will control, and declarations must yield to the conclusions to be drawn from the facts and circumstances proved. Id. at 341 Ark. 618-619, 19 S.W.3d 34. A preponderance of the evidence does not establish that abandoned or changed his domicile in Arkansas prior to or during the audit period. A majority of the applicable factors for making residency determinations in Regulation 2.26-51-102(9)(c) favor the Department s position in this case. Despite the explanations offered by regarding factors such as the address used on tax returns (Department Exhibits 6 and 7), the completed form claiming the homestead tax credit (Department Exhibit 8), 15 and personal property assessments (Department Exhibits 9, 10, and 11), he clearly maintained a number of significant connections to Arkansas throughout the audit period. For example, the Taxpayers purchased a house in, Arkansas, in June of 2013, 16 renewed his Arkansas Commercial Driver s License on January 7, 2014, 17 and an Arkansas license plate was renewed on a vehicle listing 15 Signed by on November 16, 2015, and indicating that, I am the owner of record of the property listed above, which is my principal place of residence as of YEAR 2013. 16 See Department s Exhibits 14 and 15. presented testimony regarding the size and amenities of the house. 17 See Department s Exhibit 16. In Shinn v. Heath, 259 Ark. 577, 535 S.W.2d 57 (1976), the Arkansas Supreme Court found that the taxpayers were residents of Arkansas where, among other things, the taxpayers held Arkansas driver s licenses and used an Arkansas mailing address throughout the tax years in question. With respect to tax year 2015, even though obtained an Alaska driver s license on February 18, 2015, the undisputed evidence established that his permanent place of abode was in Arkansas, for more than six (6) months (May of 2015 through December of 2015). See Regulation 2.26-51-102(9)(b). 16

as the primary owner on August 14, 2013, and July 22, 2014. 18 The Department correctly determined that the Taxpayers were residents of the State of Arkansas for income tax purposes during the audit period. Subject to the limitation in Ark. Code Ann. 26-18-405(d)(1)(C) (Supp. 2017), interest was properly assessed upon the tax deficiency for the use of the State s tax dollars. 19 See Ark. Code Ann. 26-18-508 (Repl. 2012). DECISION AND ORDER The assessments, as adjusted, 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. 26-18-405 (Supp. 2017), unless the Taxpayers request 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, P.O. Box 1272, Rm. 2440, Little Rock, Arkansas 72203. A revision request may also be faxed to the Assistant Commissioner of Revenues at (501) 683-1161 or emailed to revision@dfa.arkansas.gov. The Commissioner of Revenues, within twenty (20) days of the mailing of this Administrative Decision, may revise the decision regardless of whether the Taxpayers have requested a revision. The Taxpayers may seek relief from the final decision of the Administrative Law Judge or the Commissioner of Revenues on a final 18 See Department Exhibit 17. 19 See Footnotes 1 3. 17

assessment by following the procedure set forth in Ark. Code Ann. 26-18-406 (Supp. 2017). OFFICE OF HEARINGS & APPEALS DATED: January 2, 2018 18