Ark. Code Ann. § 26-77-102 (2020)

Case Notes

Constitutionality.

This section is constitutional, as it does not discriminate between persons in like situations and pursuing the same classes of occupations. Rogers v. Rogers, 174 Ark. 486, 295 S.W. 708 (1927).

Ordinance requiring payment of tax for the privilege of practicing law was held constitutional against contention that tax was levied for revenue purposes only. Lister v. City of Ft. Smith, 199 Ark. 492, 134 S.W.2d 535 (1939).

Municipal ordinances prohibiting the peddling of books, except the Bible, on the streets and alleys of a municipality without a license therefor and prescribing a fine for violation are, as applied to persons distributing religious books and pamphlets, unconstitutional. Berry v. City of Hope, 205 Ark. 1105, 172 S.W.2d 922 (1943).

Convictions under city ordinance requiring charitable and nonprofit organizations that were exempt from city privilege tax to supply certain information including a financial statement including dues, fees, assessments, and contributions, and by whom paid, could not stand under due process clause of U.S. Const. Amend. 14. Bates v. City of Little Rock, 361 U.S. 516, 80 S. Ct. 412, 4 L. Ed. 2d 480 (1960).

Regardless of any asserted disparate treatment, the rational basis test is the analysis applicable to an equal protection challenge of tax legislation; in order for an appellate court to strike down a classification made by taxation legislation, the classification must be purely arbitrary and the discrimination must be invidious. Howard v. City of Ft. Smith, 311 Ark. 505, 845 S.W.2d 497 (1993).

Proration of tax for licenses issued in the last half of the tax year, but not the first half of the tax year, did not violate the equal protection or due process clauses of the U.S. and Arkansas Constitutions. Howard v. City of Ft. Smith, 311 Ark. 505, 845 S.W.2d 497 (1993).

In General.

This section is a privilege tax, and the exemption from its operation of one who pays for a privilege in another form, and on a different basis, does not necessarily constitute an unjust classification. Davies v. City of Hot Springs, 141 Ark. 521, 217 S.W. 769 (1920).

Even if this section would be invalid as to the exemption of persons who pay a tax on gross incomes to the state or a city, it would not be invalid as to those classes of privileges not affected by such exemption. Davies v. City of Hot Springs, 141 Ark. 521, 217 S.W. 769 (1920).

Construction.

An ordinance imposing an occupation tax on railroads entering the city will, if possible, be construed to exempt railroads engaged exclusively in interstate commerce. City of Ft. Smith v. Midland Valley R.R., 156 Ark. 479, 246 S.W. 842 (1923).

Purpose.

A city ordinance imposing an occupation tax on various businesses for the purpose of raising revenue is authorized by this section. Town of Newark v. Edwards, 208 Ark. 276, 185 S.W.2d 925 (1945).

Classification of Trades.

An ordinance classifying physicians and attorneys for taxation by imposing a greater tax on those who have practiced 10 years or longer violates the provision of this section that no classification shall be based on earnings or income. Davies v. City of Hot Springs, 141 Ark. 521, 217 S.W. 769 (1920).

This section should not be construed as prohibiting any city tax which takes into account the size of an enterprise, so long as the amount is not unreasonable and a reasonable relationship exists between the goods and services afforded by the city and the distinctions drawn as to size. City of Mt. Home v. Drake, 281 Ark. 336, 663 S.W.2d 738 (1984).

Where a city ordinance, which imposed an annual fee on persons, firms, and corporations for the privilege of engaging in a business, trade, or vocation within the city, imposed the occupation licensing fee according to the number of units being operated (such as $7.50 per barber shop chair) and classified certain businesses according to size or units, the ordinance was not based on income or earnings and, therefore, did not violate this section. City of Mt. Home v. Drake, 281 Ark. 336, 663 S.W.2d 738 (1984).

Place of Business.

A city ordinance imposing a broker's tax on persons engaged in buying and selling real estate is valid though they maintain an office in another state. City of Texarkana v. James & Mayo Realty Co., 187 Ark. 764, 62 S.W.2d 42 (1933).

Power to Tax or License.

This section does not prohibit a city of the second class, imposing no occupation tax, from charging an inspection fee from a plumber licensed in a neighboring city. Shaw v. Conway, 179 Ark. 266, 15 S.W.2d 411 (1929).

An ordinance imposing a license tax on certain occupations, including attorneys at law, is valid. City of Texarkana v. Taylor, 185 Ark. 1145, 51 S.W.2d 856 (1932).

Municipalities precluded by statute legalizing business of retail liquor dealers from levying and collecting a tax upon them cannot do so under the guise of imposing occupation tax. Walker v. Pierce, 192 Ark. 797, 94 S.W.2d 693 (1936).

Ordinance imposing an occupation tax to operate a taxicab service within the corporate limits of a city was held authorized by this section. Talley v. City of Blytheville, 204 Ark. 745, 164 S.W.2d 900 (1942).

A taxpayer was not entitled to be exempted completely from the effects of a city ordinance levying an annual business licensing fee merely because this section exempts from an occupation tax any persons, firms, or corporations, “who pay a tax to the city, town or state on gross incomes or premium income,” since the state income tax expressly applies only to net income, and if the taxpayer's interpretation of this section were to prevail, it would operate as a wholesale repeal of the occupation tax on which municipalities depend. City of Mt. Home v. Drake, 281 Ark. 336, 663 S.W.2d 738 (1984).

Privilege of Doing Business.

A city ordinance prohibiting peddling without license was not in violation of this section imposing an occupation tax. Rose v. City of Pine Bluff, 186 Ark. 157, 52 S.W.2d 979 (1932).

A city ordinance imposing a license fee on persons operating motor vehicles for delivery was invalid as applied to retail grocer delivering to his customers. Nesler v. City of Paragould, 187 Ark. 177, 58 S.W.2d 677 (1933).

Where operator of general store installed a meat market in rear of his general store, it was held that, although he was not required to pay a separate tax for the meat market, he was required to pay the higher tax imposed on meat markets instead of the lower tax imposed on general stores. Town of Newark v. Edwards, 208 Ark. 276, 185 S.W.2d 925 (1945).

Where operator of general store acquired a building apart from one in which he was operating the general store and installed in the new building a stock of hardware and began the operation of a hardware business therein, it was held that he had taken on a new occupation so as to require him to pay a separate occupation tax for the hardware store. Town of Newark v. Edwards, 208 Ark. 276, 185 S.W.2d 925 (1945).

Where person was a member of the bar, duly licensed to practice law, his contention that he was not engaged in the practice of law for himself, but only as an agent for his employer and, therefore not liable to the licensing tax imposed by city ordinance could not be maintained; he certainly was engaging in the practice of law where he made appearances in various courts, representing the litigants therein, inasmuch as he could only practice being licensed to practice in his own right and therefore even as an employee he would be subject to and liable for the tax. Brinton v. City of Jonesboro, 229 Ark. 944, 320 S.W.2d 272 (1959).

An information found March 8, 1957, more than one year after the date January 21, 1956, on which date lawyer became subject to the penalty assessed for practicing law without obtaining a license was not barred by the statute of limitation, inasmuch as the pertinent fact was that he did not pay the tax for the entire year 1956, it being true he had violated the ordinance on January 21, 1956, but he continually violated the ordinance until December 31, 1956. Brinton v. City of Jonesboro, 229 Ark. 944, 320 S.W.2d 272 (1959).

Prohibited Classification.

A city ordinance levying a fee on trash collection businesses within the city equal to ten percent of trash haulers' “gross receipts per month for services rendered within the city limit” was a tax directly upon the income of trash haulers, despite characterization in ordinance as “gross receipts,” and violated the prohibition in subsection (d) of this section against classification based on earnings or income. WSC, Inc. v. City of Jacksonville, 302 Ark. 295, 789 S.W.2d 448 (1990).