A&P approves 1% tax rules; lawsuit being prepped

The Fort Smith Advertising & Promotion Commission approved on Friday the rules and regulations for collection and enforcement of the 1% prepared food tax, although the attorney representing a group who opposed the tax indicated a lawsuit will be filed Tuesday (May 24.).

The tax was enacted Feb. 24 by the Fort Smith Board of Directors to resolve a more than 10-year search to plug an annual deficit with Fort Smith Convention Center operations predicted to occur when state turnback money dried up. The state turnback program ended for Fort Smith in June 2010 from which the city received about $1.8 million a year. Barring a successful lawsuit stopping the tax, collection will commence June 1.

Also to begin June 1 will be management of the convention center by the Fort Smith A&P.

The A&P met Friday afternoon in a special meeting to approve 50 pages of rules and regs ahead of a series of meetings next week with owners and managers of restaurants and other businesses that sell prepared foods. Collection and enforcement rules related to vendors who sell prepared foods at festivals, fairs and other temporary venues are not complete, but will be added later as an amendment to the rules and regs approved Friday.

Claude Legris, A&P executive director, provided three “easy” tests that, according to the Arkansas Department of Finance & Administration, define what qualifies as a taxable prepared food. They are:
• If the item is sold in a heated state, or heated by the seller to be sold it’s prepared;
• If more than one ingredient is combined by the seller to create one item, it’s prepared; and,
• If it sold with any kind of a utensil, (cup, glass, plate, fork, knife, spoon, napkin) it’s prepared.

Meetings with businesses that fall under the new tax are planned for 10 a.m., 2 a.m. and 7 p.m., on Tuesday (May 24) and Thursday (May 26). Legris said about 500 letters have been mailed to area businesses informing them of the meetings and tax implementation. The meetings will focus on the basics of collection and enforcement policies.

Legris said all direct and phone contact with restaurant owners and other business owners about the tax has been positive.

“Everyone to a person we’ve talked to has been very cordial,” Legris said.

Brian Meadors may soon attempt to delay the collection. Meadors represents a group of restaurant owners who unsuccessfully petitioned to put the tax to a vote.

“We’re very serious about this, and anticipate filing on Tuesday,” Meadors told The City Wire.

Fort Smith City Clerk Sherri Gard ruled April 25 that the petition submitted by the group of restaurant owners was insufficient. Gard’s investigation, including interviews and testimony from several persons who gathered petitions, found that “at least” 1,409 of the 3,363 signatures verified as legal voters “cannot be accepted as verified inasmuch as those affiants have confirmed that there were signatures that they did not personally witness.”

Any action to appeal Gard’s ruling must be filed by May 25.