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Allied Steel Co. v. Larey
Citations: 246 Ark. 1009; 440 S.W.2d 567; 1969 Ark. LEXIS 1340Docket: 5-4926
Court: Supreme Court of Arkansas; May 19, 1969; Arkansas; State Supreme Court
Appellant, an Oklahoma corporation, sought to apply a reciprocal tax credit against the Arkansas Compensating (use) Tax paid under protest. The case arose after the appellant purchased a mobile crane in Memphis, Tennessee, which was delivered to a construction site in Little Rock, Arkansas, where it was used for six weeks before being shipped to Oklahoma. The appellant paid a use tax of $2,700 in Oklahoma and subsequently faced an Arkansas use tax assessment of $4,050. After paying the Arkansas tax under protest, the appellant filed a suit to recover the alleged overpayment, claiming it had already paid a use tax in Oklahoma. The chancellor dismissed the complaint, ruling that the appellant was not entitled to relief. The appellant admitted to sufficient use of the crane in Arkansas but argued that the court erred by not allowing a credit for the Oklahoma tax paid. Arkansas law stipulates that tangible personal property used by contractors within the state is subject to a three percent compensating use tax, but allows for a credit if a similar tax has been paid in another state. However, no credit is permitted if the other state does not offer reciprocal credit for taxes paid to Arkansas. Oklahoma law also provides that if a tangible personal property has been taxed at a lower rate than what is required by Oklahoma, the taxpayer is liable only for the difference, contingent upon reciprocal credit being granted. The appellee contended that Oklahoma lacked jurisdiction over the crane until it physically entered Oklahoma, challenging the validity of the Oklahoma tax payment. Appellee contends that appellant's voluntary payment of an Oklahoma use tax does not qualify as a 'tax' eligible for credit under Arkansas law due to the absence of a valid basis for the Oklahoma tax. The relevant Oklahoma statute defines the use tax as applicable to the storage, use, or consumption of tangible personal property within Oklahoma, imposing a two percent excise tax on such transactions. Evidence shows that appellant paid this tax six weeks prior to the equipment's arrival in Oklahoma, specifically on March 6, as documented by an Oklahoma Tax Commission Excise Tax Receipt. Testimony from an appellant officer confirmed that the crane was not used before its arrival in Little Rock and was subsequently moved to other states. Consequently, the $2,700.00 paid to Oklahoma is not classified as a 'tax' for credit purposes under the Arkansas law, resulting in the denial of a credit against the Arkansas compensating tax. The ruling is affirmed.