LITTLE ROCK -- Besides Rep. Mickey Gates, R-Hot Springs, one other state lawmaker has an active tax lien filed by the state Department of Finance and Administration.
That's after officials for the finance department reported Friday that the agency had filed for release of tax liens filed against Rep. Michelle Gray, R-Melbourne and her ex-husband, and against Rep. Laurie Rushing, R-Hot Springs.
Both Gray and Rushing said they paid what they owed the state after they were contacted by this newspaper.
Nonetheless, Gray said she was frustrated that the state's system shows letters and notices about her unpaid taxes were sent to her, but she never received the documents. Gray said she plans to work on legislation in an upcoming legislative session that makes this process more transparent for the taxpayer regarding due process and their rights.
Beyond Gates, the other lawmaker with an active tax lien is Rep. Vivian Flowers, D-Pine Bluff.
A lien is a legal claim or hold on a piece of property as security for the payment of a debt. It has the same force as a judgment issued by the circuit court where the liens are filed.
In July 2018, the finance department filed a lien against Flowers for individual income taxes totaling $3,057.21 for the periods ending Dec. 31, 2015, and Dec. 31, 2016, according to finance department records obtained by the Arkansas-Democrat Gazette under the Arkansas Freedom of Information Act.
Flowers said the taxes in question came during a year in which she was doing a lot of work on her house, and she had to switch accountants due to one's death.
She said she is working with the finance department to make amendments and claim the appropriate deductions.
"I believe that I don't owe anything for the years that I filed, and if I do, it's very little," Flowers said.
In February of this year, the finance department filed a lien against Rep. Gray and her ex-husband, Adam Gray, for individual income tax totaling $5,662.30 for the period ending Dec. 31, 2017.
When asked about it by this newspaper, Gray said Wednesday she didn't know anything about it. Then, she said Thursday she paid it off.
"We can confirm DFA has filed a release of lien for Rep. Gray," finance department spokesman Scott Hardin said Friday afternoon.
In February of this year, the finance department also filed a lien against Rushing for individual income taxes totaling $2,355.22 for the period ending Dec. 31, 2017.
When asked about it by this newspaper, Rushing said Wednesday, "I was unaware of any liens or unpaid taxes on my part, so I went back through my checking account and I have attached the check [for $2,305.05] that I sent to the DFA for the payment of those taxes.
".. It was sent to DFA on February 1, 2019 and they cashed the check on February 14, 2019," she said in a written statement. "This was paid and I have never received any notice that anything else was due. The only odd thing maybe that during this time is when I was going through my divorce and the taxes were to be paid equally between me and my ex-husband [Cliff Rushing]. However, I sent the entire amount in from my own account so it would be paid."
Rushing said late Friday afternoon in a statement to this newspaper that finance department legal counsel Joel DiPippa "helped me work through the underpayment of my taxes of $50.17, after you brought it to my attention.
"I was unaware that there had been interest charges that did not get taken care of. I took care of the $50.17 interest charges today on the ATAP system," she said.
DiPippa said late Friday afternoon, "I can confirm that DFA has filed a release of lien for that lien, though it is unlikely to be recorded today."
When a tax debt is determined by the finance department, a notice of proposed assessment is issued and sent to the address on file for the taxpayer, Hardin said.
Under state law, "we provide 60 days for a protest of the proposed assessment before a notice of final assessment is issued that concludes the period for an administrative remedy," he said. "The notice of final assessment is sent to the same address that the taxpayer has on file."
After the final assessment, the finance department is instructed to file a lien, which is formally within a few weeks, and the notice of the lien filing is sent to the address of the taxpayer on file as well, Hardin said.
In addition, there is also a process by which a taxpayer may contest the lien as improperly filed, he said.
Gray said Thursday that "the frustrating part, and not that it really matters at this point in time, is that their system shows letters and notices sent to me but I never received them and can not prove that I didn't receive them.
"I can promise you that next session there will be legislation that makes this process more transparent for the taxpayer concerning due process and their rights," she said in a written statement. "At some point in the process there should have been a certified letter mailed or some attempt made besides a system generated letter that I can't prove was ever mailed or not mailed. It's my word against theirs and I've subsequently lost my window of opportunity to protest had I so desired. This makes me wonder how many of my constituents have had this happen to them, and like me, are unaware a lien even exists!"
"The full amount has just been paid," Gray said. "Had I known, I would have paid it when it was due a year ago!"
She said that House Bill 1921 by Rep. Robin Lundstrum, R-Elm Springs, was introduced late in the regular session earlier this year, and "I'm not sure it was ever even heard in committee."
The bill would have changed the Arkansas Tax Procedure Act whereas a taxpayer wouldn't the lose the right to seek administrative relief from a tax assessment unless the state Department of Finance and Administration provides evidence that the taxpayer received actual notice, according to the finance department.
"Starting the clock on 60 days of due process, without proof the taxpayer is even aware that the clock has started, is not fair," she said.
Lundstrum presented House Bill 1921 to the House Revenue and Taxation Committee on March 28, and Rep. Marcus Richmond, R- Harvey, made a motion to pass the bill, but the motion failed, according to the Bureau of Legislative Research. The bill died on the House calendar at the end of the regular session.
The finance department projected the bill would increase mailing cost for the state Department of Finance and Administration by about $1.2 million a year.
The number of proposed notices of assessment and of refund claim denial in 2018 totaled 215,508 and each notice is sent through regular mail, according to the finance department's legislative impact statement on HB1921.
State law formerly required the department to mail final notices of assessment by certified mail, but the department encountered a high percentage of the notices issued being returned as not claimed at the post office by the taxpayer, according to the department.
Information for this article was contributed by Hunter Field of the Arkansas Democrat-Gazette.
Local on 10/13/2019