Sanford v. Walther, 2015 Ark. 285

Appellants (taxpayers) sued DF&A alleging that interest assessed on state tax delinquencies was unlawful, usurious, and constituted an illegal exaction under Ark. Const. art. 16, § 13, and also raised § 1983 and state due-process claims.
Complaint alleged interest was assessed both before and after issuance of certificates of indebtedness.
DF&A moved to dismiss under Ark. R. Civ. P. 12(b)(1) and (6); the circuit court dismissed the second amended complaint with prejudice.
On appeal, the Supreme Court treated complaint facts as true for the motion-to-dismiss review and examined whether appellants stated viable illegal-exaction and due-process claims.
Court narrowed the illegal-exaction inquiry to whether an action under art. 16, § 13 arises when only the interest (not the underlying tax) is challenged.
The court also examined whether the Arkansas Tax Procedure Act (TPA) provides adequate process to preclude a § 1983 due-process claim.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether art. 16, § 13 illegal-exaction remedy applies when only interest on a tax delinquency (not the underlying tax) is challenged	Interest is functionally a tax or otherwise an illegal exaction and thus actionable under art. 16, § 13	Illegal-exaction class action under art. 16, § 13 requires a challenge to the tax itself; interest is distinct from a tax	Court held art. 16, § 13 does not authorize an illegal-exaction action when only interest (not the underlying tax) is challenged; dismissal affirmed
Whether appellants stated a due-process claim under § 1983 and state law for lack of a forum to contest interest assessment	DF&A denied taxpayers a forum to challenge the allegedly improper interest percentage, depriving them of procedural due process	TPA provides administrative and judicial procedures (protest, hearings, judicial review, challenge to certificates) that afford adequate process; therefore no § 1983 claim	Court held appellants failed to plead denial of available administrative/judicial remedies; TPA supplied adequate process, so due-process claims dismissed

City of Hot Springs v. Vapors Theatre Rest., 298 Ark. 444 (recognizing that any governmental burden for the government's benefit is a tax despite legislative labeling)
Harris v. City of Little Rock, 344 Ark. 95 (distinguishing taxes from fees by true character: taxes for general revenue; fees for services/police power)
Miles v. Gordon, 234 Ark. 525 (taxes are enforced contributions under statutory authority)
Penrose v. United States, 18 F. Supp. 413 (interest is an addition to a tax, intended to compensate for delay)
Brewer v. Carter, 365 Ark. 531 (definition of illegal exaction as an exaction not authorized by or contrary to law)