Tyson Chicken, Inc.; Tyson Mexican Original, Inc.; Abnd Tyson Poultry Inc. v. Jim Hudson, in His Official Capacity as Secretary of the Department of Finance and Administration of the State of Arkansas

── Tyson Chicken, Inc.; Tyson Mexican Original, Inc.; Abnd Tyson Poultry Inc. v. Jim Hudson, in His Official Capacity as Secretary of the Department of Finance and Administration of the State of Arkansas ── Court: Supreme Court of Arkansas Date: June 04, 2026 Category: General Cite as 2026 Ark. 104 SUPREME COURT OF ARKANSAS No. CV-25-16 Opinion Delivered: June 4, 2026 TYSON CHICKEN, INC.; TYSON MEXICAN ORIGINAL, INC.; AND APPEAL FROM THE WASHINGTON TYSON POULTRY INC. COUNTY CIRCUIT COURT APPELLANTS [NO. 72CV-23-2100] HONORABLE JOHN C. THREET, V. JUDGE AFFIRMED. JIM HUDSON, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION OF THE STATE OF ARKANSAS APPELLEE NICHOLAS J. BRONNI, Associate Justice “The issue is, what is chicken?”1 Sixty years after Judge Henry J. Friendly famously asked that question, we face the same query—albeit with a tax-law twist. Three Tyson subsidiaries brought this case seeking a sales-tax refund. They sell chicken and other food products and deliver their products on rented wooden pallets. Tyson claims those pallets are an integral part of the chicken that it sells and that, as such, its pallet rentals are exempt from sales taxes under Arkansas’s sales-for-resale exemption. The Department of Finance and Administration rejected that claim, and the circuit court likewise concluded that the pallet rentals are not tax-exempt sales for resale. 1 Frigaliment Importing Co. v. B.N.S. Int’l Sales Corp., 190 F. Supp. 116, 117 (S.D.N.Y. 1960) (Friendly, J.).  Ultimately, in reviewing that decision, we must decide what Tyson sells. In other words, is chicken just chicken (as the circuit court concluded)? Or is it chicken on a pallet (as Tyson argues)? We conclude chicken is just chicken—not chicken plus a pallet. So we affirm the circuit court’s decision holding that Tyson’s pallet rentals are not tax-exempt sales for resale and rejecting Tyson’s refund claim. Factual and Procedural Background Tyson Chicken, Tyson Mexican Original, and Tyson Poultry—which for simplicity, we will just call Tyson—brought this case seeking a refund for sales taxes they paid on the rental of wooden shipping pallets. Tyson rents those pallets from Commonwealth Handling Equipment Pool, or CHEP for short. CHEP is the world’s largest supplier of reusable pallets and containers. It rents reusable pallets to manufacturers, like Tyson, which then use those pallets to ship their products to distributors and others through the manufacturers’ own supply chains. After delivery, those pallets are unloaded and returned to CHEP, which retains ownership of the pallets throughout the process. CHEP then inspects and, if necessary, repairs the pallets before renting them back out to manufacturers for further use. In a nutshell, then, the pallets are a mechanism for delivering a manufacturer’s product— they are not part of the product itself. Under Ark. Code Ann. § 26-52-301 (Supp. 2025), Tyson paid CHEP sales tax in connection with those rentals and CHEP remitted those payments to DFA. Tyson later concluded that it should not have paid sales tax on the rentals. It sought refunds for the taxes it paid for two periods: (1) between March 1, 2015, and December 31, 2017; and (2) between October 31, 2020, and October 31, 2021. Because CHEP had remitted those 2 payments to DFA, CHEP assigned its right to any refund to Tyson, allowing Tyson to request a refund directly and bypassing any need to involve CHEP. See Ark. Code Ann. § 26-21-109 (Repl. 2020); 006.05.06 Ark. Admin. Code § 005-GR-81.1; Arkansas Tax Form 2004-6. Tyson claimed that its pallet rentals were sales-tax-exempt “sales for resale” under Ark. Code Ann. § 26-52-401(12) because it used the pallets to deliver its products. DFA denied Tyson’s refund reques