Secretary’s authority

(a) As provided in Arkansas Code § 26-18-705, the Secretary of the Department of Finance and Administration may enter into an agreement to compound, settle, or compromise any controversy relating to a state tax or any admitted or established tax liability as to any tax collectible under any state law when the:

(1) Controversy is over the amount of tax due; or

(2) Inability to pay results from the insolvency of the taxpayer.

(b) The secretary may waive or remit the interest or penalty, or any portion thereof, ordinarily accruing because of a taxpayer’s failure to pay a state tax within the statutory period allowed for its payment if the:

(1) Taxpayer’s failure to pay the tax is satisfactorily explained to the secretary;

(2) Failure results from a mistake by the taxpayer of either the law or the facts subjecting him or her to such tax; or

(3) Inability to pay the interest or penalty results from the insolvency or bankruptcy of the taxpayer.
(c)(1) In settling or compromising any controversy relating to the liability of a person for any state tax for any taxable period, the secretary is authorized to enter into a written closing agreement concerning the liability.

(2) When the closing agreement is signed by the secretary:

(A) It shall be final and conclusive;

(B) Except upon a showing of fraud or misrepresentation of a material fact, no additional assessment or collection shall be made by the secretary; and

(C) The taxpayer shall not institute any judicial proceeding to recover such liabilities as agreed to in the closing agreement.