CLOSURE AUTHORITY. The Department has the authority to close any business that
fails to pay the gross receipts tax due for three (3) months in a twenty-four
(24) month period and does not, within the time allowed, either (i) satisfy
that liability through a lump sum payment or a payment plan, or (ii) request an
Taxpayers are given a number of notices prior to business closure. The number
of notices that the taxpayer receives will depend upon how many months the
taxpayer has failed to pay, or file and pay.
1. The taxpayer receives a notice of proposed
assessment for each month that the taxpayer fails to pay, or fails to file and
pay. These notices are sent by U.S. Mail, first class, to the business address
listed on the taxpayer's permit application, or a subsequent address provided
by the taxpayer. If the taxpayer does not pay or file and pay, then a final
notice is sent by mail to the taxpayer.
2. The notice of business closure is
delivered to the taxpayer when the Department's records show that the taxpayer
failed to pay (or file a report and pay) a third month's tax liability within a
twenty-four (24) consecutive month period. The notice of business closure is
also delivered when the taxpayer defaults on a business closure payment plan
that includes more than three (3) months of delinquency on or after July 1,
2004. The notice of business closure notifies the taxpayer that three (3) or
more months are delinquent and that if the taxpayer does not either (i) pay in
full or enter into a payment plan accepted by the Department, or (ii) request a
hearing within five (5) days of the day the notice is received, the business
will be closed. The Department will attempt to personally deliver the notice of
business closure to either the business owner (if a sole proprietor) or, in the
case of a corporation or other non-individual owner to either the agent for
service, the person who signed the sales tax permit application as a person
authorized to act on behalf of the corporation, or a person who represented
that the person was an officer or agent authorized to accept service for the
corporation or entity. If service cannot be had by any of these methods,
service is made by certified mail to the business address on the sales tax
AVOID BUSINESS CLOSURE. A taxpayer who does not wish to voluntarily close its
business when served with a business closure order has two (2) options:
1. Satisfy the delinquent liability by paying
the liability in full within five (5) business days of the date the business
closure order is served or entering into an installment payment agreement that
is approved by DFA; or
an administrative hearing within five (5) business days of the date the
business closure order is served. The request must be in writing and must be
received by DFA within five (5) business days of the date the business closure
INSTALLMENT PAYMENT AGREEMENTS.
agreements to pay the delinquent liability in installments shall be approved by
the Sales and Use Tax Section of the Department.
2. All payment agreements shall provide for
full payment of the total amount of tax, penalty, and interest owed for months
subsequent to July 1, 2004.
payment agreements will be approved until all delinquent returns are
4. Any taxpayer who requests
a payment agreement rather than an administrative hearing when given a notice
of business closure and who subsequently fails to pay the liability as agreed
will be given an additional notice of business closure upon default. The notice
will notify the taxpayer that it is entitled to a hearing on the closure of the
5. Any taxpayer who is
current on the terms of a business closure payment agreement but fails to pay
(or file and pay) its tax liability for three (3) months that are not included
in the payment agreement will be served with a business closure order. The
notice will notify the taxpayer that it is entitled to a hearing on the closure
of the business.
6. Any taxpayer
who pays the payment agreement liability in full but subsequently fails to pay
(or file and pay) its tax liability for three (3) months in a twenty-four (24)
month period will again be subject to business closure.
1. A business closure hearing must be held
within fourteen (14) calendar days of the date the taxpayer protests and
requests a hearing.
defenses available to a taxpayer at an administrative hearing on business
a. Written proof that the
taxpayer filed all delinquent returns and paid the delinquent tax, penalty, and
b. That the taxpayer
has entered into a payment agreement to satisfy the tax.
JUDICIAL RELIEF. A taxpayer who
receives a decision from the Hearing Board that orders the closure of the
business may appeal the administrative decision to close the business to the
Pulaski County Circuit Court or the circuit court of the county in which the
taxpayer resides or in which the business is located. The appeal must be filed
within twenty (20) calendar days of the date of the administrative decision.
The taxpayer may appeal an unfavorable decision of the
circuit court to the appropriate appellate court.
Representatives of the Sales and Use Tax Section, along with
law enforcement personnel, will affix a business closure sign and close the
business of a taxpayer upon the occurrence of any of the following:
1. Failure of a taxpayer served with a
business closure order to pay the delinquent liability, enter into a payment
agreement, or request an administrative hearing within five (5) business days
of the service of the notice;
administrative decision upholding business closure that is not appealed to the
appellate court within twenty (20) calendar days of the decision; or
3. A decision of the appellate court
upholding business closure.