Arkansas ~ Corporate Income Tax: Cost of Performance Apportionment Method Not Permitted

CCH Tax Day Report

A denial of a corporate income taxpayer’s refunds claim was sustained because the taxpayer failed to show by a preponderance of the evidence that the Arkansas Department of Finance and Administration abused its discretion by requiring the taxpayer to continue to use the market-based sales sourcing method it had used in the past in lieu of the applicable statutory apportionment method. The taxpayer used the market-based apportionment method in the originally filed tax returns for the years at issue. Later on, the taxpayer filed amended returns, requesting refunds, using the cost-of-performance method; however, the Department determined that this method did not accurately reflect the taxpayer’s business activity in the state, and, therefore, denied the refunds.

Administrative Decision Nos. 16-267, 16-268, 16-269, Arkansas Department of Finance and Administration, Office of Hearings & Appeals, June 21, 2016, ¶400-697

Other References:

Explanations at ¶11-520



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