State responds to legislator's query on tax compliance for marijuana permit applicants | Arkansas Blog

Monday, March 12, 2018

State responds to legislator's query on tax compliance for marijuana permit applicants

Posted By on Mon, Mar 12, 2018 at 12:41 PM

The Department of Finance and Administration has responded to Rep. Scott Baltz's request for confirmation that the state Medical Marijuana Commission made sure no applicants for cultivation permits were delinquent on state taxes.

Baltz said he'd heard rumors that there might be some shortcomings in income, sales, personal or corporate franchise taxes.

Director Larry Walther's detailed response said he couldn't supply specific information on account of the confidentiality of tax records.

But Walther went on to note that delinquencies only apply to individual applicants, not corporations.

For example, you specifically request confirmation of whether corporate income tax delinquencies exist with regard top any applicants. No applicant will have a corporate income tax delinquency because the General Assembly, in Act 641 of 2017, determined that every a0pplicant had to be a natural person. A natural person, an individual, will never be liable for corporate income tax because the corporation is the legal entity on which the tax is levied.
Similarly, a tax deficiency on the part of a corporate entity such as an LLC might not be a personal deficiency, except in circumstances outlined in law.

The letter notes that corporate franchise taxes are obligations of corporations, not individuals and that personal property taxes are not state taxes.

When reviewing applications, the department reviewed individual applicants and owners of legal entities, the letter said. Finally, Walther concluded the department had received a request from a commission member to ensure there'd been compliance with the tax deficiency standard and was preparing an evaluation for Wednesday meeting.

Here's Walther's letter.

On another topic, critics of Commissioner Travis Story's participation in grading a winning applicant, Osage Creek Cultivation, say they have further evidence he likely knew the application was filed by the Jay Trulove family, which he and Rep. Bob Ballinger had represented in a variety of legal matters.

The application that Story saw, with the redactions, was obtained under the Freedom of Information Act. It shows that the name Trulove was redacted throughout, but not the location of the facility in Carroll County or information about several businesses owned by the Truloves, including a dirt works, a graphics company and Sports Corner, where a campaign event was held for Ballinger's Senate race. It also noted Trulove was a pilot. How many pilots with dirt works, a graphics concern and the Sports Corner as a business filed applications for Carroll County?

Story has refused comment. His partner, Ballinger, has told the Democrat-Gazette that he and Story knew the Truloves wanted to get into the marijuana business and said they couldn't represent them. He has not specifically confirmed Story knew one of histhree  top scores went to his former legal clients, but he said he was sure that fact wouldn't have influenced Story's grading.

Here's the Osage Creek application, as it appeared to Story.

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