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Senate committee rejects bill to credit sales tax on certain total‑loss settlements
Summary
House Bill 18‑45 would have allowed a sales‑tax credit when an insurer's total‑loss settlement did not reimburse sales tax for vehicles that fell below $4,000; DFA said regulation ambiguity should be resolved first and the committee voted the bill down.
Representative Gates presented House Bill 18‑45, which would let an insured claim a trade‑in equivalent credit toward a replacement vehicle purchase when the insured’s totaled vehicle had been purchased for more than $4,000 but a subsequent insurance settlement left its value below $4,000 and did not reimburse sales tax.
Representative Gates framed the measure as a narrow fix that would benefit low‑income owners whose insurers did not include sales tax in total‑loss settlements. He cited state codes and examples and said the bill aims to make those owners "whole" in the way trade‑in or quick resale credits do.
Paul Gehring (DFA) told the committee that Arkansas law (citing Ark. Code §23‑89‑2‑11 and insurance regulation 43) and existing insurance department rules already address total‑loss settlements and that there is ambiguity in how rules are applied. DFA suggested the insurance department should clarify the regulation and warned against shifting insurers’ statutory obligations to taxpayers.
An insurance‑agent member of the committee announced an abstention due to professional affiliation. After discussion, the committee voted on the bill; the chair announced the sponsor’s bill failed. Committee members advised the sponsor to consult further with insurance regulators and the insurance department to resolve any regulatory ambiguity before reintroducing changes.
Action summary: HB 18‑45 was discussed, DFA recommended regulatory clarification rather than statutory change, and the committee voted to reject the bill.
