County Collectors FAQs
On what property can a county levy taxes? Is there a maximum amount of tax that a county can levy? Do the registered voters of a county have to approve the tax levy? Is any property exempt from property taxes?
According to Article 16, Section 5 of the Arkansas Constitution, both real and personal property is taxable. Section 17 of Arkansas Constitution Amendment 59 repealed the original Article 16, Section 5 and substituted the current wording which, in part, says: “all real and tangible personal property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the State.” Amendment 71 of the Arkansas Constitution, adopted at the 1992 general election, delineates what personal property is exempt from ad valorem taxes and what personal property is taxable.
Counties in Arkansas can levy up to 21 mills of property tax. The maximum rates that can be levied on real and personal property by the county for county use are:
5 Mills – County general government [Arkansas Constitution, Article 16, § 9 and A.C.A. § 26-25-101]. Quorum Court can levy without a vote of the electorate.
5 Mills – County bonded indebtedness [Arkansas Constitution, Amendment 62]. Requires a vote of the electorate.
5 Mills – County Library maintenance and operation [Amendment 38 as amended by Amendments 72 and 89]. Requires a vote of the electorate to lower, raise or abolish the millage.
3 Mills – County Library capital improvements and construction – [Amendment 38 as amended by Amendments 72 and 89]. Requires a vote of the electorate to lower, raise, or abolish the millage.
3 Mills – County Road – [Amendment 61 and § 26-79-101]. Quorum Court can levy without a vote of the electorate.
Note 1: Amendment 61 was approved at the general election of 1982. Prior to the enactment of Amendment 61 the road millage was governed by Amendment 3 which required that the road millage be on the ballot at each general election in each county.
Note 2: 1 mill = a tenth of 1%
The county quorum court is required to levy ad valorem tax rates at its regular meeting in November or December of each year for collection the following year [A.C.A. 14-14-904(b)(1)(A)(i)]. The quorum court must levy not only the county property taxes but municipal taxes and school taxes. The Director of the Assessment Coordination Department may authorize an extension of up to 60 days of the date for levy of taxes if there is good cause shown resulting from reappraisal or rollback of taxes. The application for extension must be filed by the County Judge and County Clerk.
The electorate does not have to approve the levy of general and road taxes for the county. The county is given the authority to levy up to 5 mills for general purposes in Article 16, Section 9 of the Arkansas Constitution – “No county shall levy a tax to exceed one-half of one per cent (5 mills) for all purposes…..” [Also see § 26-25-101]. Amendment 61 to the state constitution says, “County quorum courts may annually levy a county road tax not to exceed three (3) mills on the dollar on all taxable real and personal property within their respective counties.....” Amendment 61 repealed Arkansas Constitution, Amendment 3, which also allowed a maximum 3 mill road tax, but under Amendment 3 the tax had to appear on the ballot every general election. Every November the quorum court has the authority to levy a county general tax up to 5 mills and a road tax up to 3 mills.
A county is also authorized to levy a county library tax by Amendment 38 of the Arkansas Constitution (amended by Amendment 72 and incorporated into Amendment 38 by amending Sections 1 and 3 and adding Section 5). However, this tax must be voted on by the electors of the county and the tax rate cannot exceed five (5) mills on the dollar for maintenance and operation of the library (Amendment 38, Section 1). The maintenance and operation of the library is defined in A.C.A. 13-2-405(2). Once the rate is established by the electorate, the quorum court will levy the established rate each year until there is another election to change the rate. Amendment 38, Section 3 of the state constitution requires an election to raise, reduce or abolish the library tax.
Section 5 of Amendment 38 (added by Amendment 72) provides for an election for a special library tax, in addition to the maintenance and operation tax, to pay bonded indebtedness to finance capital improvements to or construction of a county library or county library service or system. Upon retirement of the bonded indebtedness, any surplus tax collections, which may have accumulated, shall be transferred to the general funds of the county, and shall be used for maintenance of the county library.
County government is also allowed to levy 5 general mills for bonded indebtedness in accordance with Amendment 62 of the Arkansas Constitution. However, since the 1980’s most bonded indebtedness of counties has been funded with a dedicated sales tax rather than a tax levy on real and personal property.
Property tax is a very important source of revenue for local governments and is protected by government leaders. The Arkansas Constitution, Article 16, §5 provides an exemption from taxation on only a few types of property, including:
- (1) public property used exclusively for public purposes;
- (2) churches used as such;
- (3) cemeteries used exclusively as such;
- (4) school buildings and apparatus;
- (5) libraries and grounds used exclusively for school purposes; and
- (6) buildings, grounds & materials used exclusively for public charity.
Article 16, § 6 says, “All laws exempting property from taxation, other than as provided in this Constitution shall be void.”
What is “excess commission” and is the term actually found in Arkansas code? If so, what is the basis for calculating and distributing “excess commission” and who is responsible for seeing that the task is performed?
When the term “excess commission” is used in the arena of Arkansas county government reference is being made to the amount of commission in excess of the level of commission it takes to cover the expenses of the county collector and county treasurer. For example, if a county treasurer earns $250,000 in annual commission and the cost for the operation of the office for that year is $175,000 the excess commission is $75,000. The same principal applies concerning the county collector.
Arkansas Code Annotated §§ 21-6-302 and 21-6-305 are the primary commission codes for county treasurers and county collectors respectively. These codes provide the commission formula to be charged against the funds coming through the hands of these county constitutional officers, as well as any restrictions, exclusions or anomalies to the normal commission structure.
Until recent years, the term “excess commission” was not found in the Arkansas Code. However, it was dealt with in case law dating back to the early 1900’s and in Attorney General Opinions. Since 1997 the term “excess commission” has been added to six Arkansas codes.
The term “excess commission” or “excess commissions” can be found in the following Arkansas codes with the term inserted by the referenced Arkansas Act:§ 26-36-209(d) – Act 213 of 1997 § 21-6-305(d) – Act 1215 of 2001 [only refers to the process] § 6-20-2305(C)(ii)(a) – Act 1186 of 2009 § 6-20-2303(17)(A)(iv) – Act 1397 of 2009 § 26-80-101(d)(3)(D) – Act 1397 of 2009 § 21-6-302(h) – Act 420 of 2017
The prevailing authority, for many years, concerning “excess commissions” is Attorney General Opinion No. 78-112 issued during the tenure of Bill Clinton as Arkansas Attorney General. This opinion was based on: (1) case law; and (2) constitutional principal. This AG Opinion has never been refuted or overturned in a court of law; so it stands as the guide concerning “excess commissions” of county treasurers and collectors. It concisely summarizes the case law and constitutional principal by which counties have handled excess commissions for decades.
At least five (5) court cases were cited in AG Op. No. 78-112 as well as Article 16, § 11 of the Arkansas Constitution which provides that, “No tax shall be levied except in pursuance of the law, and every law imposing a tax shall state distinctly the object of the same; and no moneys arising from a tax levied for one purpose shall be used for any other purpose.”
In summarizing the opinion the Attorney General said, “From the foregoing decisions and the cases cited we are of the opinion that the excess commissions over the operating expenses of the collector’s and treasurer’s office should be returned to the taxing units pro rata.”
To prorate or pro rata is defined by Black’s Law Dictionary – “to divide or distribute proportionately; according to an exact rate”. In other words, each taxing entity or fund account that is commissioned will receive its share of the excess commission based on that fund’s percentage of the whole commission. Here is an easy way to make the calculation: Total commission earned in accordance with § 21-6-302 or § 21-6-305 less the actual office expense of the particular office = the Excess Commission. Divide the excess commission amount by the total commission earned (carried to at least 9 places). This factor will be used to multiply against the commission amount charged each entity to calculate each entity’s share of the excess commission. Here is a simplified example:
Total Treasurer or Collector Commission $224,610.50
Less Total Treasurer or Collector Office Expense $195,307.10
Excess Treasurer or Collector Commission $ 29,303.40
Excess Commission $29,303.40 / Total Commission $224,610.50 = .13046318
County General $25,305.25 X .13046318 = $ 3,301.40
Road $22,305.25 X .13046318 = $ 2,910.01
County Library $18,000.00 X .13046318 = $ 2,348.34
City #1 $ 5,000.00 X .13046318 = $ 652.31
City #2 $ 3,000.00 X .13046318 = $ 391.40
School #1 $90,000.00 X .13046318 = $11,741.69
School #2 $33,000.00 X .13046318 = $ 4,305.28
School #3 $28,000.00 X .13046318 = $ 3,652.97
Excess Commission $29,303.40
Whose responsibility is it to calculate and distribute the excess commissions? Although you will find it nowhere in “black letter law” – the same AG Opinion which we have referenced in answering these questions, AG Op. #78-112, says that it is the responsibility of the county treasurer to calculate and distribute the excess commissions. The Attorney General opined, “Since according to Arkansas Statute 84-1401[§ 21-6-302 - this was prior to the laws being codified and referenced as codes – circa 1987] all funds received by the various county officers including the County Treasurer and County Collector are required to be paid into the treasury, it would appear that the responsibility of returning the excess commissions to the respective units from which they were assessed would inure to the County Treasurer”.
What is the proper procedure for the establishment and use of the County Collector’s Automation Fund?
The Collector’s Automation Fund is funded with a portion of the collector’s commission. In accordance with Arkansas Code Annotated § 21-6-305(c)(2)(A), “The county collector may set aside up to ten percent (10%) of the gross commissions collected annually to be credited to the county collector’s automation fund”.
Because the law concerning the establishment of a County Collector’s Automation Fund is permissive in nature – the collector may choose whether or not to establish the fund and whether or not to keep funding it. If the collector decides to establish the fund, any percentage of annual gross commissions may be set aside in the County Collector’s Automation Fund – up to a maximum of 10%. And, that percentage can change annually at the call of the collector.
The revenue credited to the Collector’s Automation Fund is not subject to the excess commission rule and may accumulate from year to year [Subdivisions (c)(3) and (d)]. The funds are to be appropriated by the quorum court at the direction of the collector for the uses designated in § 21-6-305(c)(2)(A)(i)(ii)(iii)(B).
The original uses of the fund were to “purchase, maintain, and operate an automated record-keeping system.” The acquisition and update of software for the automated accounting and record-keeping system was a permitted use of the original law for this automation fund.
Like other county automation and cost funds, the uses of the County Collector’s Automation Fund were liberalized in 2003. The Arkansas Legislature through Act 847 of 2003 added the terms “to operate the office of county collector” and “for administrative costs” to § 21-6-305. The new language of this law is very broad in nature. Black’s Law Dictionary defines “administrative expenses” or costs as “overhead” which would cover a multitude of expenditures. The language “to operate the office of the county collector” is even broader terminology. No doubt the real focus of the fund should still be “computerization” or “automation” of the collector’s office as the moniker of the fund would indicate. But, with the 2003 amendment to the law, the fund can now be spent on virtually any legal expenditure of the collector’s office [AG Opinion No. 2009-192].
Unlike other “automation funds” or “cost funds” where the officials have the discretion to transfer to the county general fund any moneys they deem excess and not needed for the intended purpose or purposes of the Automation Fund or Cost Fund – that is NOT so with the Collector’s Automation Fund. Any use of the money in the Collector’s Automation Fund, since it is collector commission, taken from local tax entities, must be used solely for the expenses of the County Collector’s office. This logic is based on Attorney General Opinion No. 78-112 which cites several court cases and constitutional law, including Article 16, Section 11 – “no moneys arising from a tax levied for any purpose shall be used for any other purpose
How many years can a county legally go back to make a refund of property taxes paid in error?
As a general rule tax refunds must be made within three (3) years from the date the taxes were paid. Arkansas Code Annotated 26-35-901 is the primary state code dealing with real or personal property taxes erroneously assessed and paid. When a taxpayer provides satisfactory proof to the county court of erroneously assessed and paid taxes, the county court issues a court order directing the county treasurer to refund the person the amount of taxes erroneously assessed and paid. After an amendment to the law in 2017 by Act 729, if an erroneous assessment claim is for erroneous assessments made in two or more tax years, the county court may order that the property tax refund be made in 2 equal annual installments. [As explanation, the county court is the county judge in his/her judicial capacity with exclusive jurisdiction in all matters relating to county taxes pursuant to the Arkansas Constitution, Article 7, § 28 and Arkansas Code §14-14-1105(b)(1).]
The claim for refund at the county level has to be made within 3 years from the date the taxes were paid. And the claim of erroneously assessed and paid taxes must fall within the definition of “erroneously assessed” as defined in § 26-28-111(c).
The refund is paid from the general fund of the county and the general fund is then reimbursed by transfer from funds of the respective taxing units. The amount contributed by each taxing unit will be the amount of the erroneous payment received by the taxing unit [§ 26-35-901]. All of the pertinent information for the tax refund transaction should be contained in the county court order.
There are counties that accomplish the refund by making the appropriate transfers from each tax entity, including County General, to the Collector’s Unapportioned Account, a tax clearing fund. The county treasurer issues the county check from the Collector’s Unapportioned Account and accomplishes the same thing – with cleaner tracking of the transaction. But be sure to follow the directions of the court order.
There is a possibility that a refund could be made for up to a five (5) year period. A.C.A. § 26-39-220 [Adjustment of errors.] says the county court has the duty to reconsider and adjust the settlement of any county officer for any error discovered within 3 years from the date of the settlement. If the error in a settlement is discovered after three (3) years, but within five (5) years from the date of the settlement, the county judge (county court) has the duty to petition the chancery court (now circuit court under Amendment 80) to obtain an order to correct the error or errors. [See AG Op. #1992-357]
Do personal property taxes have to be collected at the same time that real estate taxes are collected? If so, are there any exceptions?
As a general rule the answer to the question is “yes” – personal property taxes should be collected by the collector at the same time real property taxes are collected. A.C.A. § 26-35-601 is straight forward in subsection (a) in stating that “Each county collector in this state shall be charged with the responsibility of collecting personal property taxes shown to be due by the taxpayer as reflected by the records in the county collector’s office at the time the taxpayer pays the general taxes due on real estate.” In fact, subsection (b) of § 26-35-601 imposes a penalty for a collector that willfully accepts payment of general real estate taxes without requiring the payment of personal property taxes due. The law says that the collector, under these circumstances, is deemed guilty of a misdemeanor and upon conviction shall be fined.
However, there are some exceptions to the general rule. A.C.A. § 26-35-601(c)(1) sets the stage for the exceptions to the general rule – but before actually setting forth the exceptions reiterates in even more direct language the intent of the main theme of the law which is “to require the collection of personal property taxes as reflected by the records of the office of the county collector and to prevent a taxpayer from paying and the county collector from receiving payment of general real estate taxes without payment of personal property taxes if any personal property taxes are shown to be due.”
The exceptions to the rule are explained in Subsection (c)(2)(3)(4) of § 26-35-601. They are as follows:Any person, firm, partnership, or corporation can pay the general real estate taxes on property that is securing the payment of indebtedness due the person, firm, partnership, or corporation. In this type of situation the lender is allowed to protect the security of the debt owed to them without paying the personal property taxes of the person who owes the debt. [This exception was a part of the original law.]
In summary, in accordance with § 26-35-601(a), taxpayers must pay their personal property taxes before the collector may accept payment of general real estate taxes with the caveat of the three (3) exceptions listed. A.C.A. 26-35-601(c)(3) addresses the payment of real property taxes at the time of property transfer or conveyance. This exception was made with the passage of Act 994 of 1999 and requires the county collector to accept the payment of real estate property taxes at the time of property transfer as long as the taxpayer transferring title to the property has paid all delinquent personal property taxes. A transferor of property is obligated to pay only delinquent, as opposed to currently due, personal property taxes in conjunction with payment of general real estate taxes upon conveying title to real property. To quote from Attorney General Opinion No. 2000-118 in respect to the transfer of real estate, “On its face, [subsection (c)(3)] absolutely requires the collector to accept payment of general real estate taxes so long as delinquent personal property taxes have been paid. Nothing in the statute authorizes the collector to further demand payment of personal property tax due but not delinquent. Indeed, in my opinion any such demand would directly contravene the statute, which affords the collector no discretion to refuse payment of general real estate taxes when there is no delinquency in personal property taxes.” A purchaser in a foreclosure sale is not responsible for the payment of the personal property taxes required to be paid by A.C.A. 26-35-601(a)(c)(1). This latest exception to the general rule was enacted with the passage of Act 1286 of 2001 which amended A.C.A. 26-35-601 to add subsection (c)(4). This exception had actually been settled in case law going back to 1983 in United State v. Massey and upheld in a 1990 Arkansas case Aldridge v. Tyrrel.
May a newspaper charge for other parts of the required publication of delinquent taxes, such as headers and etc., in addition to the legal fees of $1.50 per tract per insertion for delinquent real estate and $1.25 per name per insertion for delinquent personal?
No. Although newspapers set their advertising rates and the rates vary from paper to paper – the publication costs for publishing delinquent tax lists are set by state law. Arkansas Code Annotated 26-37-107 details the requirements for publication of the delinquent real property list and A.C.A. 26-36-203 details the requirements for publication of the delinquent personal property tax list. A.C.A. 26-37-107(c)(1) says, “The legal fee for each required publication of delinquent real property tax lists shall be one dollar and fifty cents ($1.50) per tract, per insertion.” In the case of delinquent personal property A.C.A. 26-36-203(c)(1) says, “The newspaper publishing this list shall receive as publication cost the sum of one dollar and twenty-five cents ($1.25) per name, per insertion……..”.
The Attorney General has opined, in the case of delinquent real estate, that a newspaper may not charge a fee greater than the amount specified by law for the publication of the list [AG Opinion No. 2005-072]. The Attorney General hinged the opinion on the ruling in a court case that basically said that a court will first look to the plain and ordinary language of a statute. If the code is clear and unambiguous on a plain and ordinary reading of the language, there is no need to resort to further statutory analysis. According to this AG Opinion, A.C.A. 26-37-104 “is clear and unambiguous.” The newspaper may only charge $1.50 per tract per insertion for the publication of the list of delinquent real property.
This same premise would apply to the publication of the delinquent personal property tax list. The law concerning the delinquent personal property tax list is written in the same manner as the law pertaining to the delinquent real property tax list – it is clear and unambiguous.