Refunds totaling more than $100,000 are being mailed this month to trucking companies and owner-operators who were overcharged when registering new vehicles with the state's Department of Finance and Administration.
Sales tax was charged on extended warranties purchased for more than 150 vehicles in June and July. It is unclear why the tax on warranties was charged. Registrations that ordinarily cost $10.50 each were averaging $800.
Under a state law that went into effect in 2000 and was amended in 2011, extended warranties on Class 6 and 7 truck purchases are meant to be included as part of the sales-tax exemption. Last year 3,089 trucks that fell under the exemption were registered in Arkansas.
After a meeting with Arkansas Trucking Association President Shannon Newton and others representing local companies, the Department of Finance and Administration reviewed its policy and determined a refund was due.
"For whatever reason they made a unilateral decision without any oversight, comment or notice to anyone," Newton said. "They'd decided the truck was exempt, but the warranty was subject to the full sales tax. That caught some people off guard."
Tim Leathers, the department's deputy director and commissioner of revenue, said a review is ongoing to ensure refunds are delivered to all companies that overpaid. Reimbursement checks should be mailed out within the next two weeks and some owners have already received payment.
"They're running a computer program to identify trucks that fell under the exemption," Leathers said. "Those owners will be sent refunds and don't have to apply or come in or do anything extra. That makes it easy for them."
Concern over the charges on vehicle registration first came to the attention of the Arkansas Trucking Association in June. An owner-operator hired by C.C. Jones Inc. in North Little Rock went to register his truck expecting fees of less than $11. Instead he was charged $722.50.
When the driver reported back to C.C. Jones, he explained his surprise at the cost. Newton, who assumed her position as president of the Arkansas Trucking Association in June, became aware of the issue shortly thereafter.
"They'd arbitrarily decide to change," said Vicki Stephens, CEO of C.C. Jones Inc. "Thankfully, we had a meeting with them and they were receptive to what we had to say."
Newton, Jones and lawyers met with the agency Aug. 4. They were told Aug. 19 of the decision to exempt the extended warranties.
Companies were happy to learn that the agency had reversed course. Some had paid thousands of dollars in registration fees that they were not anticipating.
Because the companies need to get trucks on the road, they were left without much of an option but to pay. Brian Yeager, director of safety and driver relations at Dowell Transport in Batesville, said the company had registered multiple trucks in the summer and paid the fee, although it was higher than he expected.
Dowell, a produce transportation company, has 40 trucks in its fleet and purchases multiple new vehicles every year. The exemption saves the company thousands.
"You're talking about a pretty good chunk of money in taxes, so it's a big deal," Yeager said. "I got the email last week from Shannon saying that the exemption was in place and refunds were coming. That's a pretty big blessing."
Business on 09/05/2014