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1 State of Arkansas A Bill
2 95th General Assembly
3 Regular Session, 2025 HOUSE BILL 1521
4
5 By: Representative Cavenaugh
6 By: Senator J. Petty
7
8 For An Act To Be Entitled
9 AN ACT TO REPEAL CERTAIN TAX INCENTIVES; TO REPEAL
10 CERTAIN UNUSED, UNDERUSED, OR UNFUNDED TAX
11 INCENTIVES; TO REPEAL TAX INCENTIVES RELATED TO
12 CENTERS FOR APPLIED TECHNOLOGY; TO REPEAL THE
13 ARKANSAS PUBLIC ROADS IMPROVEMENTS CREDIT ACT; TO
14 REPEAL PROVISIONS OF THE CONSOLIDATED INCENTIVE ACT
15 OF 2003; TO REPEAL TAX INCENTIVES FOR MAJOR
16 MAINTENANCE AND IMPROVEMENT PROJECTS; TO REPEAL THE
17 PUBLIC ROADS INCENTIVE FUND; TO REPEAL INCENTIVES
18 RELATED TO THE DONATION OR SALE OF EQUIPMENT TO AN
19 EDUCATIONAL INSTITUTION; TO REPEAL THE SALES AND USE
20 TAX EXEMPTION FOR THE PARTIAL REPLACEMENT AND REPAIR
21 OF CERTAIN MACHINERY AND EQUIPMENT; AND FOR OTHER
22 PURPOSES.
23
24
25 Subtitle
26 TO REPEAL CERTAIN UNUSED, UNDERUSED, OR
27 UNFUNDED TAX INCENTIVES.
28
29 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
30
31 SECTION 1. Arkansas Code � 15-3-110(c)�(e), concerning the power of
32 the Director of the Arkansas Economic Development Commission to promote basic
33 and applied research at Arkansas colleges and universities, are repealed.
34 (c)(1) Any moneys lawfully available to the division for the purpose
35 of supporting basic research at Arkansas colleges and universities shall in
36 no event defray more than sixty percent (60%) of the total cost of the
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1 proposed basic research project being funded.
2 (2) The remaining forty percent (40%) of the total cost of the
3 proposed basic research project shall be funded by moneys or in-kind services
4 provided by the college or university proposing the basic research project.
5 (d)(1)(A) Any moneys lawfully available to the division for the
6 purpose of creating applied research partnerships between private industry
7 and Arkansas colleges and universities shall in no event defray more than
8 fifty percent (50%) of the total cost of the proposed applied research
9 project.
10 (B) However, the contribution of the Director of the
11 Arkansas Economic Development Commission may defray up to sixty-six and two-
12 thirds percent (66%) of the total cost of a proposed applied research
13 project if the Director of the Arkansas Economic Development Commission, with
14 the advice of the Board of Directors of the Division of Science and
15 Technology of the Arkansas Economic Development Commission, finds that the
16 participating private industry is principally located in Arkansas and employs
17 fifty (50) or fewer persons.
18 (2) The proposed applied research project shall be submitted by
19 an Arkansas college or university, and the proposal shall state that a
20 percentage of the total cost of the proposed applied research project will be
21 provided by private sources in accordance with the matching provisions of
22 this subsection.
23 (3) The Director of the Arkansas Economic Development Commission
24 shall approve for funding only those proposed applied research projects for
25 which the Director of the Arkansas Economic Development Commission finds that
26 enhanced employment opportunity within Arkansas will be a likely result.
27 (e)(1) Any moneys lawfully available to the division for the purpose
28 of supporting technology development shall in no event exceed one hundred
29 thousand dollars ($100,000) per project being funded.
30 (2) The Director of the Arkansas Economic Development Commission
31 shall impose a reasonable, nonrefundable fee for the evaluation of the
32 technological and economic potential of emerging technologies contained in
33 proposals from nonpublic sources of innovation.
34 (3) The Director of the Arkansas Economic Development Commission
35 is authorized to incorporate a royalty provision not to exceed five percent
36 (5%) of net sales revenue per year for a period of not more than ten (10)
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1 years as a condition of award.
2 (4) The Director of the Arkansas Economic Development Commission
3 shall approve for funding only those proposed technology development projects
4 for which the Director of the Arkansas Economic Development Commission finds
5 that enhanced economic opportunity within Arkansas will be a likely result.
6
7 SECTION 2. Arkansas Code �� 15-3-130 -- 15-3-135 are repealed.
8 15-3-130. Centers for applied technology -- Definition.
9 For the purposes of this section and �� 15-3-131 -- 15-3-134, "center
10 for applied technology" or "center" means a college or university or
11 university-affiliated unit, or a consortium of such units, which conducts a
12 continuing program of basic research and applied research, development, and
13 technology transfer in one (1) or more technological areas in collaboration
14 with and through the support of private enterprises.
15
16 15-3-131. Centers for applied technology -- Authority to designate.
17 In order to encourage greater collaboration between private enterprises
18 and Arkansas colleges and universities in the development and application of
19 new technologies, the Arkansas Economic Development Commission may designate
20 technological areas as having significant potential for economic growth in
21 Arkansas or in which the application of new technologies could significantly
22 enhance the productivity and stability of Arkansas enterprises.
23
24 15-3-132. Centers for applied technology -- Criteria -- Designation.
25 (a) The Division of Science and Technology of the Arkansas Economic
26 Development Commission shall:
27 (1) Identify technological areas for which centers for applied
28 technology should be designated, including, but not limited to, technological
29 areas that are related to enterprises with significant potential for economic
30 growth and development in Arkansas and areas that are related to the
31 enhancement of productivity in various enterprises in Arkansas;
32 (2) Establish, in consultation with the Division of Higher
33 Education, criteria that must be satisfied for designation as a center,
34 including, but not limited to:
35 (A) An established record of research, development, and
36 instruction in the area of technology;
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1 (B) The capacity to conduct research and development
2 activities in collaboration with private enterprises;
3 (C) The capacity to secure substantial private and other
4 government funding for the proposed center;
5 (D) The ability and willingness to cooperate with other
6 colleges and universities in conducting research and development activities
7 and in disseminating research results and to work with institutions of higher
8 learning to enhance the quality of technological education in the area or
9 areas of technology involved; and
10 (E) The ability and willingness to cooperate with the
11 Division of Science and Technology of the Arkansas Economic Development
12 Commission, the Arkansas Economic Development Council, and other economic
13 development agencies in promoting the growth and development in Arkansas of
14 enterprises based upon or benefiting from the areas of technology involved;
15 and
16 (3) Designate, using a competitive selection process, those
17 centers for applied technology to be created in cooperation with colleges and
18 universities in the state.
19 (b) The Division of Science and Technology of the Arkansas Economic
20 Development Commission may not designate technological areas or establish
21 centers prior to the Division of Science and Technology of the Arkansas
22 Economic Development Commission's adopting rules to govern the program
23 authorized under this section, �� 15-3-130, 15-3-131, 15-3-133, and 15-3-134.
24
25 15-3-133. Centers for applied technology -- Advisory committees.
26 (a) In carrying out its functions under this section, �� 15-3-130 --
27 15-3-132, and 15-3-134, the Division of Science and Technology of the
28 Arkansas Economic Development Commission may create such advisory committees
29 as may be useful in evaluating potential technological areas and centers for
30 applied technology.
31 (b) The memberships of these advisory committees may include both
32 directors and staff members of the division and other persons drawn from
33 sources other than the division, all of whom shall serve at the pleasure of
34 the Director of the Arkansas Economic Development Commission.
35 (c) Members of such advisory committees shall serve without
36 compensation for their membership on such committees but may receive expense
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1 reimbursement in accordance with � 25-16-901 et seq.
2
3 15-3-134. Centers for applied technology -- Disposition of funds.
4 Any moneys lawfully available to the Arkansas Economic Development
5 Commission for the purpose of creating centers for applied technology may be
6 used for the purchase of equipment and fixtures, employment of faculty and
7 support staff, provision of graduate fellowships, and other purposes approved
8 by the commission but may not be used for capital construction.
9
10 15-3-135. Promotion of scientific, medical, and technological jobs and
11 infrastructure enhancements -- Definition.
12 (a) As used in this section, "qualified medical company" means a
13 corporation engaged in:
14 (1) Research and development in the medical field; and
15 (2) Manufacture and distribution of medical products, including
16 therapeutic and diagnostic products.
17 (b)(1) All agencies, departments, boards, commissions, and other
18 instrumentalities of this state and all political subdivisions of this state
19 and all agencies, departments, boards, commissions, and other
20 instrumentalities thereof, to the greatest extent possible, shall expedite
21 the processing of all lawful applications and requests required or permitted
22 by law which are submitted or made by qualified medical companies and, in
23 considering all such applications and requests, give due consideration to the
24 purposes of this section.
25 (2) To the extent available time, personnel, and other resources
26 permit, all state-funded colleges and universities shall provide research
27 assistance to the Arkansas Economic Development Commission to assist with
28 planning to develop scientific, medical, and technological commercial
29 infrastructure enhancements to encourage qualified medical companies to
30 locate in this state.
31
32 SECTION 3. Arkansas Code Title 15, Chapter 4, Subchapter 23, is
33 repealed.
34 Subchapter 23 -- Arkansas Public Roads Improvements Credit Act
35
36 15-4-2301. Title.
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1 This subchapter may be referred to and cited as the "Arkansas Public
2 Roads Improvements Credit Act".
3
4 15-4-2302. Legislative intent.
5 The General Assembly finds and declares that:
6 (1) The state's program for capital improvements for public
7 roads projects and the financing of those projects is inadequate;
8 (2) The economic and other benefits to the state and its people
9 resulting from capital improvements for public roads projects are essential
10 to the public health, safety, and welfare of the people of Arkansas; and
11 (3) Providing tax credits to taxpayers for contributions in aid
12 of construction of capital improvements for public roads projects will
13 encourage public and private participation in these capital improvement
14 projects, will promote the economic welfare of this state and its people, and
15 is in the public interest.
16
17 15-4-2303. Definitions.
18 As used in this subchapter:
19 (1) "Capital improvements" means capital improvements for public
20 roads;
21 (2) "Commission" means the Arkansas Economic Development
22 Commission;
23 (3) "Contribution" means a contribution in aid of construction
24 of a public roads project made by a taxpayer to the Public Roads Incentive
25 Fund;
26 (4) "Council" means the Arkansas Economic Development Council;
27 (5) "County" means any county in the State of Arkansas;
28 (6) [Repealed.]
29 (7) "Fund" means the Public Roads Incentive Fund;
30 (8) "Governing authority" means the quorum court of a county,
31 the governing body of a municipality, and the State Highway Commission;
32 (9) "Municipality" means any city or incorporated town in the
33 State of Arkansas;
34 (10) "Project" means all, any combination, or any part of the
35 capital improvements for public roads which are authorized by a governing
36 authority and approved by the Director of the Arkansas Economic Development
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1 Commission;
2 (11) "Public roads" means roads maintained by a governing
3 authority; and
4 (12) "Taxpayer" includes any individual, fiduciary, or
5 corporation subject to Arkansas state income tax.
6
7 15-4-2304. Approval of projects.
8 Governing authorities may apply to the Director of the Arkansas
9 Economic Development Commission for funding assistance for capital
10 improvement projects for public roads as provided by this subchapter. The
11 director is authorized to approve capital improvements for funding assistance
12 upon a finding that a project is in the public interest.
13
14 15-4-2305. Public Roads Incentive Fund.
15 (a) There is established on the books of the Treasurer of State, the
16 Auditor of State, and the Chief Fiscal Officer of the State a fund to be
17 known as the "Public Roads Incentive Fund" of the Arkansas Economic
18 Development Council.
19 (b) The fund shall consist of contributions made by taxpayers for
20 public roads projects approved by the Director of the Arkansas Economic
21 Development Commission and any other funds as are designated or deposited to
22 the fund by law.
23 (c)(1) A separate account shall be established for each project, and
24 contributions for a project shall be applied to provide funding assistance
25 for such a project.
26 (2) Any contributions which remain in the fund when a project is
27 completed or terminated shall be held and applied to other public roads
28 projects in such manner as the director shall direct.
29
30 15-4-2306. Tax credit.
31 (a) A taxpayer shall be entitled to a credit against any Arkansas
32 income tax liability which may be imposed on the taxpayer for any tax year
33 commencing on or after January 1, 1999, for contributions transmitted to the
34 Treasurer of State pursuant to this subchapter.
35 (b) The credit shall be determined in the following manner:
36 (1) The credit shall be calculated as thirty-three percent (33%)
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1 of the taxpayer's contribution;
2 (2) In any one (1) tax year, the credit allowed by this section
3 shall offset up to one hundred percent (100%) of the net Arkansas state
4 income tax liability of the taxpayer; and
5 (3) Any credit in excess of the amount allowed by subdivision
6 (b)(2) of this section for any one (1) tax year may be carried forward and
7 applied against any Arkansas state income tax liability for the next-
8 succeeding tax year and annually thereafter for a total period of ten (10)
9 years next succeeding the year in which the credit arose, subject to the
10 provisions of subdivision (b)(2) of this section or until the credit is
11 exhausted, whichever occurs first.
12
13 15-4-2307. Powers and duties of the Arkansas Economic Development
14 Commission.
15 The Arkansas Economic Development Commission shall administer the
16 provisions of this subchapter and shall have the following powers and duties,
17 in addition to those mentioned in this subchapter and in other laws of this
18 state:
19 (1) To monitor the implementation and operation of this
20 subchapter and to conduct a continuing evaluation of the progress made;
21 (2) To assist the governing authority in obtaining assistance
22 from any other department of state government;
23 (3) To submit an annual written report evaluating the
24 effectiveness of the program and presenting any suggestions for improving the
25 program, to be submitted to the Governor no later than March 1 of each year;
26 and
27 (4) To promulgate rules in accordance with the Arkansas
28 Administrative Procedure Act, � 25-15-201 et seq., necessary to carry out the
29 provisions of this subchapter.
30
31 SECTION 4. Arkansas Code � 15-4-2705(h), concerning the job-creation
32 tax credit, is amended to read as follows:
33 (h)(1) If a qualified business fails to meet the payroll threshold
34 within two (2) years after the date of the approved financial incentive
35 agreement or within the time period established by an extension approved by
36 the Secretary of the Department of Finance and Administration and the
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1 Director of the Arkansas Economic Development Commission, the qualified
2 business is liable for repayment of all incentives previously received under
3 � 15-4-2706(d) that were conditioned on an approved financial incentive
4 agreement under this section for which the payroll threshold has not been
5 met.
6 (2) If a qualified business fails to reach the payroll threshold
7 of this section in a timely manner, the The department shall have two (2)
8 years to collect incentives previously received by the qualified business or
9 file a lawsuit to enforce the repayment provisions.
10
11 SECTION 5. Arkansas Code � 15-4-2706(b)(7)-(13), concerning investment
12 tax incentives under the Consolidated Incentive Act of 2003, are repealed.
13 (7) Technology-based enterprises, as defined by � 14-164-203,
14 may earn, at the discretion of the director, an income tax credit or sales
15 and use tax credit based on new investment, provided that the technology-
16 based enterprise:
17 (A) Creates a new payroll of at least two hundred fifty
18 thousand dollars ($250,000); and
19 (B) Pays an average hourly wage that is at least one
20 hundred fifty percent (150%) of the lesser of the state or county average
21 hourly wage for the county in which the business locates or expands.
22 (8)(A) The income tax credit or sales and use tax credit that
23 may be earned by a technology-based enterprise is based on the amount of
24 investment as follows:
25 (i) The income tax credit or sales and use tax
26 credit is equal to two percent (2%) of the investment for an investment that
27 is between two hundred fifty thousand dollars ($250,000) and five hundred
28 thousand dollars ($500,000);
29 (ii) The income tax credit or sales and use tax
30 credit is equal to four percent (4%) of the investment for that part of the
31 investment that is over five hundred thousand dollars ($500,000) and less
32 than one million dollars ($1,000,000);
33 (iii) The income tax credit or sales and use tax
34 credit is equal to six percent (6%) of the investment for that part of the
35 investment that is over one million dollars ($1,000,000) and less than two
36 million dollars ($2,000,000); and
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1 (iv) The income tax credit or sales and use tax
2 credit is equal to eight percent (8%) of the investment for that part of the
3 investment that is over two million dollars ($2,000,000).
4 (B) The amount of credit earned is determined based upon
5 the amount invested, as verified by an audit by the department.
6 (9) All investments by a technology-based enterprise shall be
7 made within four (4) years of the date of the approved financial incentive
8 agreement.
9 (10) Prior to commission approval of a financial incentive
10 agreement, the business shall elect to receive the tax credits as either:
11 (A) A sales and use tax credit; or
12 (B) An income tax credit.
13 (11) The income tax credit or sales and use tax credit earned by
14 a technology-based enterprise may offset income tax liabilities or sales and
15 use tax liabilities as follows:
16 (A) A technology-based enterprise that pays at least one
17 hundred fifty percent (150%) of the lesser of the state or county average
18 hourly wage for the county in which the business locates or expands may
19 offset up to fifty percent (50%) of its income tax liability or sales and use
20 tax liability annually;
21 (B) A technology-based enterprise that pays at least one
22 hundred seventy-five percent (175%) of the lesser of the state or county
23 average hourly wage for the county in which the business locates or expands
24 may offset up to seventy-five percent (75%) of its income tax liability or
25 sales and use tax liability annually; and
26 (C) A technology-based enterprise that pays at least two
27 hundred percent (200%) of the lesser of the state or county average hourly
28 wage for the county in which the business locates or expands may offset up to
29 one hundred percent (100%) of its income tax liability or sales and use tax
30 liability annually.
31 (12) After receiving an approved financial incentive agreement
32 from the commission, a qualified business shall certify to the department the
33 eligible project costs and average hourly wages annually at the end of each
34 tax year for the term of the financial incentive agreement.
35 (13) Unused income tax credits or sales and use tax credits may
36 be carried forward for up to nine (9) years after the year in which the
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1 credit was first earned or until the tax credits are exhausted, whichever
2 occurs first.
3
4 SECTION 6. Arkansas Code � 15-4-2706(d) and (e), concerning investment
5 tax incentives under the Consolidated Incentive Act of 2003, are repealed.
6 (d)(1)(A) An application for a state and local sales and use tax
7 refund for a new or expanding business shall be filed with the commission
8 contingent upon the approval of an endorsement resolution from the governing
9 authority of a municipality or county, or both, in whose jurisdiction the
10 business will be located.
11 (B) The resolution shall:
12 (i) Endorse the business's participation in this
13 sales and use tax refund program; and
14 (ii) Specify that the department is authorized to
15 refund local sales taxes to the qualified business.
16 (C) To qualify for a refund under this subsection, a
17 qualified business shall meet the minimum investment thresholds for the tier
18 in which the qualified business expands or locates, as follows:
19 (i) For tier 1 counties, the minimum investment
20 threshold is at least five hundred thousand dollars ($500,000);
21 (ii) For tier 2 counties, the minimum investment
22 threshold is at least four hundred thousand dollars ($400,000);
23 (iii) For tier 3 counties, the minimum investment
24 threshold is at least three hundred thousand dollars ($300,000); and
25 (iv) For tier 4 counties, the minimum investment
26 threshold is at least two hundred thousand dollars ($200,000).
27 (2)(A)(i) The secretary shall authorize a sales and use tax
28 refund of state and local sales and use taxes, excepting the sales and use
29 taxes dedicated to the Educational Adequacy Fund and the Conservation Tax
30 Fund on the purchases of the material used in the construction of a building
31 or buildings or any addition, modernization, or improvement thereon for
32 housing any new or expanding qualified business and machinery and equipment
33 to be located in or in connection with such a building.
34 (ii) The local sales and use tax may be refunded only
35 from the municipality or county, or both, in which the qualified business is
36 located.
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1 (B) A refund shall not be authorized for:
2 (i) Routine operating expenditures; or
3 (ii) The purchase of replacement items previously
4 purchased as part of a project under this subsection unless the items
5 previously purchased are necessary for the implementation or completion of
6 the project.
7 (3)(A) Subject to the approval of the commission, a qualified
8 business may make changes to a project by written amendment to the project
9 plan filed with the commission.
10 (B) The commission shall not approve an amendment under
11 subdivision (d)(3)(A) of this section that results in a cost increase of more
12 than twenty-five percent (25%) of the initial project plan.
13 (4) All claims for sales and use tax refunds under this
14 subsection shall be denied unless they are filed with the department within
15 three (3) years from the date of the qualified purchase or purchases.
16 (5)(A)(i) To be eligible for the incentives under this
17 subsection, a qualified business shall meet all payroll creation requirements
18 of its approved financial incentive agreement under � 15-4-2705 or � 15-4-
19 2707.
20 (ii) However, a business may apply for incentives
21 under this subsection if:
22 (a) The business has an existing financial
23 incentive agreement approved under this subdivision (d)(5)(A) and the
24 provisions of subdivision (d)(5)(B) of this section have been met within the
25 previous four (4) years; or
26 (b) The business has signed a financial
27 incentive agreement approved under � 15-4-2705 or � 15-4-2707 within the
28 previous four (4) years.
29 (B) The financial incentive agreement under � 15-4-2705 or
30 � 15-4-2707 shall be approved within two (2) years after the financial
31 incentive agreement under this subsection is approved.
32 (e)(1) A targeted business may be eligible for a refund of state and
33 local sales and use taxes for qualified expenditures at the discretion of the
34 director if:
35 (A)(i) The annual payroll of the targeted business for
36 Arkansas taxpayers is greater than one hundred thousand dollars ($100,000)
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1 and less than one million dollars ($1,000,000).
2 (ii) The payroll requirement in subdivision
3 (e)(1)(A)(i) of this section applies only to the initial eligibility
4 determination and does not preclude a qualified business from receiving
5 incentives if, at any time after the financial incentive agreement is
6 approved, actual payroll does not satisfy the requirements in subdivision
7 (e)(1)(A)(i) of this section; and
8 (B) The targeted business shows proof of an equity
9 investment of at least two hundred fifty thousand dollars ($250,000).
10 (2)(A) An application for the targeted business state and local
11 sales and use tax refund program for a new or expanding targeted business
12 shall be filed with the commission contingent upon the approval of an
13 endorsement resolution from the governing authority of a municipality or
14 county, or both, in whose jurisdiction the targeted business will be located.
15 (B) The resolution shall:
16 (i) Endorse the business's participation in this
17 sales and use tax refund program; and
18 (ii) Specify that the department is authorized to
19 refund local sales and use taxes to the targeted business.
20 (3) An approved financial incentive agreement and any other
21 pertinent documentation shall be forwarded to the secretary.
22 (4)(A)(i) The secretary shall authorize a sales and use tax
23 refund of state and local sales and use taxes, excepting the sales and use
24 taxes dedicated to the Educational Adequacy Fund and the Conservation Tax
25 Fund on the purchases of the material used in the construction of a building
26 or buildings or any addition, modernization, or improvement thereon for
27 housing any new or expanding qualified business and machinery and equipment
28 to be located in or in connection with such a building.
29 (ii) The local sales and use tax may be refunded
30 only from the municipality or county, or both, in which the qualified
31 business is located.
32 (B) A refund shall not be authorized for:
33 (i) Routine operating expenditures; or
34 (ii) The purchase of replacement items previously
35 purchased as part of a project under this subsection unless the items
36 previously purchased are necessary for the implementation or completion of
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1 the project.
2 (5)(A) Subject to the approval of the commission, a qualified
3 business may make changes to a project by written amendment to the project
4 plan filed with the commission.
5 (B) The commission shall not approve an amendment under
6 subdivision (e)(5)(A) of this section that results in a cost increase of more
7 than twenty-five percent (25%) of the initial project plan.
8 (6) All claims for sales and use tax refunds under this
9 subsection shall be denied unless they are filed with the department within
10 three (3) years after the date of the qualified purchase or purchases.
11 (7) If a targeted business plans to apply for benefits under
12 this subsection and also plans to apply for benefits under � 15-4-2709, the
13 financial incentive agreement under � 15-4-2709 must be signed within twenty-
14 four (24) months of signing the financial incentive agreement under this
15 subsection and comply with the eligibility requirements of the financial
16 incentive agreements.
17 (8) To be eligible for the incentives under this subsection, a
18 targeted business shall meet all payroll creation requirements of an approved
19 financial incentive agreement under � 15-4-2707 or � 15-4-2709 within two (2)
20 years of the date of the approved financial incentive agreement under this
21 subsection or other subsequent date if approved by the director.
22
23 SECTION 7. Arkansas Code � 15-4-2707(e), concerning the Economic
24 Development Incentive Fund and the payroll rebate under the Consolidated
25 Incentive Act of 2003, is repealed.
26 (e)(1) Technology-based enterprises, as defined in � 14-164-203, may
27 earn, at the discretion of the director, a payroll rebate equal to five
28 percent (5%) of the payroll for new full-time permanent employees for a
29 period not to exceed ten (10) years.
30 (2) To qualify for the payroll rebate:
31 (A) The average hourly wage of the payroll for new full-
32 time permanent employees must be at least one hundred fifty percent (150%) of
33 the lesser of the state or county average hourly wage for the county in which
34 the technology-based enterprise locates or expands;
35 (B) The payroll for new full-time permanent employees must
36 exceed two hundred fifty thousand dollars ($250,000); and
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1 (C) The payroll rebate authorized by this subsection shall
2 not be used in combination with the income tax credit based on payroll
3 authorized by � 15-4-2709.
4
5 SECTION 8. Arkansas Code � 15-4-2708(a)(4), concerning research and
6 development tax credits under the Consolidated Incentive Act of 2003, is
7 repealed.
8 (4) A qualified business claiming tax credits earned under this
9 subsection shall not receive the credit granted by � 26-51-1102(b) for the
10 same expenditures.
11
12 SECTION 9. Arkansas Code � 15-4-2708(b)�(d), concerning research and
13 development tax credits under the Consolidated Incentive Act of 2003, are
14 amended to read as follows:
15 (b)(1) Targeted businesses may qualify for an income tax credit equal
16 to thirty-three percent (33%) of the amount spent on in-house research per
17 year for the first five (5) tax years following the targeted business's
18 signing a financial incentive agreement with the commission.
19 (2) The credits earned by targeted businesses may be sold as
20 authorized in � 15-4-2709 under this subsection.
21 (3) Any unused income tax credits under this subsection may be
22 carried forward for up to nine (9) years after the year in which the income
23 tax credit was first earned.
24 (4)(A) To sell income tax credits earned through incentives
25 authorized under this subchapter, a targeted business shall apply to the
26 commission and furnish the information necessary to facilitate the sale of
27 the income tax credits.
28 (B)(i) A taxpayer that purchases income tax credits under
29 this subsection may carry any unused income tax credits forward as provided
30 in subdivision (b)(3) of this section.
31 (ii) The purchase of income tax credits under this
32 subsection does not establish a new carry-forward period for the purchaser.
33 (5) A targeted business that claims or sells income tax credits
34 under this subsection shall not receive the income tax credit allowed under �
35 26-51-1102(b) for the same expenditures.
36 (c)(1) An Arkansas taxpayer may be offered, at the discretion of the
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1 director, an income tax credit equal to thirty-three percent (33%) of the
2 amount spent on the research for the first five (5) tax years following the
3 business's signing a financial incentive agreement with the commission,
4 subject to the limitations established under � 26-51-1103 if the taxpayer
5 invests in:
6 (A) In-house research in a strategic research area; or
7 (B) Projects under the research and development programs
8 of the Division of Science and Technology of the Arkansas Economic
9 Development Commission when the projects directly involve an Arkansas
10 business and are approved by the director with the advice of the Board of
11 Directors of the Division of Science and Technology of the Arkansas Economic
12 Development Commission under rules promulgated by the commission for those
13 programs.
14 (2) However, the maximum tax credit for a qualified business
15 engaged in a research area of strategic value or involved in research and
16 development programs sponsored by the division shall not exceed fifty
17 thousand dollars ($50,000) per year.
18 (3) A qualified business claiming tax credits earned under this
19 subsection shall not receive the credit granted by � 26-51-1102(b) for the
20 same expenditures.
21 (4)(A) A qualified business claiming tax credits earned under
22 this subsection may offset up to one hundred percent (100%) of the business's
23 Arkansas income tax liability annually.
24 (B) Any unused income tax credits may be carried forward
25 for up to nine (9) years after the year in which the credit was first earned
26 or until exhausted, whichever occurs first.
27 (d) To claim the credit granted under subsections (a)-(c) (a) and (b)
28 of this section, the taxpayer shall file with his or her return, as an
29 attachment to the form prescribed by the Secretary of the Department of
30 Finance and Administration, copies of documentation to show that the
31 commission has approved the research expenditure as a part of a qualified in-
32 house research program or under the research and development programs of the
33 division Division of Science and Technology of the Arkansas Economic
34 Development Commission.
35
36 SECTION 10. Arkansas Code � 15-4-2709 is repealed.
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1 15-4-2709. Targeted business special incentive.
2 (a) A special incentive based on the payroll of targeted businesses in
3 the state may be offered, at the discretion of the Director of the Arkansas
4 Economic Development Commission, to:
5 (1) Encourage the development of jobs that pay significantly
6 more than the average hourly wage in the county in which the targeted
7 business locates or the state average hourly wage if the state average hourly
8 wage is less than the county average hourly wage; and
9 (2) Provide an incentive to assist with the start-up of
10 businesses targeted for growth.
11 (b) To qualify for the special incentive provided by subsection (c) of
12 this section, a business shall:
13 (1) Be identified by the Arkansas Economic Development
14 Commission as being one of those business sectors targeted for growth under �
15 15-4-2703;
16 (2)(A) Have an annual payroll of the business for Arkansas
17 taxpayers of not less than one hundred thousand dollars ($100,000) or more
18 than one million dollars ($1,000,000).
19 (B) The payroll requirement under subdivision (b)(2)(A) of
20 this section applies only to the initial eligibility determination and does
21 not preclude qualified businesses from receiving incentives if, at any time
22 after the financial incentive agreement has been approved, actual payroll
23 does not satisfy the requirements in subdivision (b)(2)(A) of this section;
24 (3) Show proof of an equity investment of two hundred fifty
25 thousand dollars ($250,000) or more; and
26 (4) Pay average hourly wages in excess of the lesser of one
27 hundred fifty percent (150%) of the county or state average hourly wage for
28 the county in which the targeted business locates or expands.
29 (c)(1) A targeted business may earn an income tax credit equal to ten
30 percent (10%) of its annual payroll, with the maximum payroll credit not to
31 exceed one hundred thousand dollars ($100,000) in any year during the term of
32 the financial incentive agreement.
33 (2)(A) The term of the financial incentive agreement shall be
34 established by the director for a period not to exceed five (5) years.
35 (B) The term of the financial incentive agreement for
36 targeted businesses earning a tax credit under this subsection shall begin on
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1 January 1 of the year following the year in which the financial incentive
2 agreement was approved.
3 (C) The director may allow a qualified targeted business
4 to sell any income tax credits earned through one (1) or more incentives
5 authorized by this subchapter.
6 (d)(1) To sell income tax credits earned through incentives authorized
7 by this subchapter, the targeted business shall apply to the commission and
8 furnish information necessary to facilitate the sale of income tax credits.
9 (2)(A) Any unused tax credits may be carried forward for up to
10 nine (9) years after the year in which the credit was first earned or until
11 exhausted, whichever occurs first.
12 (B) Taxpayers purchasing tax credits under this subsection
13 shall be subject to the same carry-forward provisions as the targeted
14 business that earned the credits.
15 (C) The purchase of the tax credits does not establish a
16 new carry-forward period for the ultimate recipient.
17 (e) A targeted business claiming or selling tax credits earned under
18 this section or � 15-4-2708 shall not receive the credit granted by � 26-51-
19 1102(b) for the same expenditures.
20
21 SECTION 11. Arkansas Code � 15-4-2711(c) and (d), concerning the
22 administration of the incentives provided under the Consolidated Incentive
23 Act of 2003, are repealed.
24 (c)(1) All claims for sales and use tax refunds under � 15-4-2706(d)
25 and (e) shall be filed annually with the Department of Finance and
26 Administration within three (3) years from the date of the qualified purchase
27 or purchases.
28 (2) Claims filed after three (3) years from the date of the
29 qualified purchase or purchases shall be denied.
30 (d)(1) The time limitation for � 15-4-2706(d) and (e) for filing
31 claims shall be tolled if:
32 (A) A qualified business fails to pay sales tax on an item
33 that was taxable; and
34 (B) The applicable tax is subsequently assessed as a
35 result of an audit by the department.
36 (2) All claims for sales and use tax refunds relating to an
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1 audited purchase are entitled to a refund of interest paid on the amount of
2 tax assessed on the audited purchase if a refund is approved for the
3 purchase.
4
5 SECTION 12. Arkansas Code � 15-4-2712 is amended to read as follows:
6 15-4-2712. Restrictions.
7 (a) Except as provided in subsection (b) of this section, the
8 incentives established by this subchapter may be combined.
9 (b)(1) The investment tax credit authorized in � 15-4-2706(c) shall
10 not be combined with the sales and use tax refund authorized in � 15-4-
11 2706(d) for the same project.
12 (2) The following incentives for targeted businesses may be
13 combined with each other for the same project as long as multiple incentives
14 are not claimed for the same expenditures but shall not be combined with any
15 other incentives authorized in this subchapter during the period in which the
16 qualified business receives incentives under this subchapter:
17 (A) The investment tax credit authorized under � 15-4-
18 2706(b)(7) may be combined with:
19 (i) The research and development income tax credits
20 authorized under � 15-4-2708(b); and
21 (ii) Either the:
22 (a) Payroll rebate program authorized under �
23 15-4-2707(e); or
24 (b) Payroll tax credit program authorized
25 under � 15-4-2709;
26 (B) The sales and use tax refund authorized under � 15-4-
27 2706(e) may be combined with:
28 (i) The research and development income tax credits
29 authorized under � 15-4-2708(b); and
30 (ii) Either the:
31 (a) Payroll rebate program authorized under �
32 15-4-2707(e); or
33 (b) Payroll tax credit program authorized
34 under � 15-4-2709;
35 (C) The payroll rebate program authorized under � 15-4-
36 2707(e) may be combined with:
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1 (i) The research and development income tax credits
2 authorized under � 15-4-2708(b); and
3 (ii) Either the:
4 (a) Investment tax credit program authorized
5 under � 15-4-2706(b)(7); or
6 (b) Sales and use tax refund program
7 authorized under � 15-4-2706(e);
8 (D) The payroll income tax credit authorized under � 15-4-
9 2709 may be combined with:
10 (i) The research and development income tax credits
11 authorized under � 15-4-2708(b); and
12 (ii) Either the:
13 (a) Investment tax credit authorized under �
14 15-4-2706(b)(7); or
15 (b) Sales and use tax refund program
16 authorized under � 15-4-2706(e); and
17 (E) The research and development income tax credits
18 authorized under � 15-4-2708(b) may be combined with:
19 (i) Either the:
20 (a) Payroll rebate program authorized under �
21 15-4-2707(e); or
22 (b) Payroll tax credit program authorized
23 under � 15-4-2709; and
24 (ii) Either the:
25 (a) Investment tax credit program authorized
26 under � 15-4-2706(b)(7); or
27 (b) Sales and use tax refund program
28 authorized under � 15-4-2706(e).
29 (3) The investment tax credit authorized in � 15-4-2706(b) shall
30 not be combined with the sales and use tax credit authorized in � 15-4-
31 2706(e) for the same project.
32 (4) The job-creation tax credit authorized in � 15-4-2705 shall
33 not be combined with the payroll rebate program authorized in � 15-4-2707.
34 (5) The investment tax credit authorized in � 15-4-2706(b) shall
35 not be combined with the sales and use tax refund authorized in � 15-4-
36 2706(d) for the same project.
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1 (6)(2) The investment tax credit authorized under � 15-4-2706(b)
2 shall not be combined with the sales and use tax credit authorized under �
3 15-4-2706(c) for the same project.
4 (c) The following are discretionary incentives and are not available
5 unless offered by the Arkansas Economic Development Commission:
6 (1) The payroll rebate program authorized in � 15-4-2707;
7 (2) The job-creation tax credit authorized in � 15-4-2709;
8 (3) The investment tax credit authorized in � 15-4-2706(b); and
9 (4) The sales and use tax refund authorized in � 15-4-2706(e);
10 and
11 (5)(3) The research and development tax credits authorized in �
12 15-4-2708(a)-(c) 15-4-2708(a) and (b).
13
14 SECTION 13. Arkansas Code Title 15, Chapter 4, Subchapter 35, is
15 repealed.
16 Subchapter 35 -- Incentives for Major Maintenance and Improvement Projects
17
18 15-4-3501. Increased tax refund for major maintenance and improvement
19 projects.
20 (a) A taxpayer that is eligible for a refund of excise taxes under �
21 26-52-447 or � 26-53-149 is eligible for a refund of one hundred percent
22 (100%) of the sales and use taxes levied in �� 26-52-301, 26-52-302, 26-53-
23 106, and 26-53-107 on the tangible personal property and services subject to
24 �� 26-52-447 and 26-53-149 for projects that meet the following requirements:
25 (1) The taxpayer has entered into a financial incentive
26 agreement with the Arkansas Economic Development Commission for the project;
27 and
28 (2) The taxpayer expends at least three million dollars
29 ($3,000,000) on an approved project that includes the purchase of tangible
30 personal property and services that are either exempt or subject to a partial
31 refund of tax under � 26-52-402, � 26-52-447, � 26-53-114, or � 26-53-149.
32 (b) A taxpayer shall file with the commission an application for the
33 increased refund for major maintenance and improvement projects provided in
34 this section.
35 (c) The increased refund of sales and use taxes for major maintenance
36 and improvement projects provided in this section is a discretionary
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1 incentive and is not available unless offered by the Director of the Arkansas
2 Economic Development Commission.
3 (d) The director shall forward the taxpayer's application, financial
4 incentive agreement, any other pertinent documentation, and a written copy of
5 the determination under this subsection to the Secretary of the Department of
6 Finance and Administration if the director:
7 (1) Determines that the taxpayer is eligible for the increased
8 refund for major maintenance and improvement projects provided for in this
9 section;
10 (2) Determines that the taxpayer has provided reasonable proof
11 that there will be a positive return on the taxpayer's investment in the
12 major maintenance and improvement project that is sufficient to offset the
13 taxes refunded under this section;
14 (3) Determines that the taxpayer has provided a defined scope,
15 beginning date, and ending date for the major maintenance and improvement
16 project;
17 (4) Determines that the refund is reasonably necessary for the
18 taxpayer to remain competitive and preserve Arkansas jobs; and
19 (5) Agrees to provide the incentive under this section.
20 (e) A taxpayer that has been approved for the increased refund for
21 major maintenance and improvement projects provided for in this section may
22 make changes in a major maintenance and improvement project by written
23 amendment to the project plan filed with the commission as part of the
24 financial incentive agreement required under this section.
25 (f) Except as otherwise provided in this section, a refund under this
26 section is subject to the Arkansas Tax Procedure Act, � 26-18-101 et seq.,
27 and the Independent Tax Appeals Commission Act, � 26-18-1101 et seq., in the
28 same manner as other refunds permitted under � 26-18-507.
29 (g) An expenditure shall not qualify for both the increased refund for
30 major maintenance and improvement projects under this section and the
31 retention tax credit provided for in � 15-4-2706(c).
32 (h) The director and the secretary may promulgate rules necessary to
33 implement this section.
34 (i)(1) A taxpayer may apply for an increased refund for major
35 maintenance and improvement projects under this section through June 30,
36 2022.
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1 (2) An application for an increased refund for major maintenance
2 and improvement projects under this section shall not be accepted on or after
3 July 1, 2022.
4
5 SECTION 14. Arkansas Code � 19-5-1097 is repealed.
6 19-5-1097. Public Roads Incentive Fund.
7 (a) There is established on the books of the Treasurer of State, the
8 Auditor of State, and the Chief Fiscal Officer of the State a fund to be
9 known as the "Public Roads Incentive Fund" of the Arkansas Economic
10 Development Council.
11 (b) The fund shall consist of contributions made by taxpayers for
12 public roads projects approved by the Director of the Arkansas Economic
13 Development Commission and any other funds as are designated or deposited
14 into the fund by law.
15 (c)(1) A separate account shall be established for each project, and
16 contributions for a project shall be applied to provide funding assistance
17 for that project.
18 (2) Any contributions which remain in the fund when a project is
19 completed or terminated shall be held and applied to other public roads
20 projects in such manner as the director shall direct.
21
22 SECTION 15. Arkansas Code Title 26, Chapter 51, Subchapter 11, is
23 repealed.
24 Subchapter 11 -- Donations or Sales of Equipment to Educational Institutions
25
26 26-51-1101. Definitions.
27 As used in this subchapter:
28 (1) "Accredited institution of higher education" means a four-
29 year public college or university that offers bachelor's degrees and is
30 recognized by the Division of Higher Education for credit;
31 (2) "Cost" means:
32 (A) In the case of a donation or sale below cost by a
33 wholesale or retail business, the amount actually paid by the wholesaler or
34 retailer to the supplier for the machinery and equipment;
35 (B) In the case of a donation or sale below cost by a
36 manufacturer of machinery and equipment, the enhanced value of the materials
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1 used to produce the machinery and equipment, which shall be deemed to be the
2 lowest price at which the manufacturer sells the machinery and equipment; or
3 (C) In the case of a cash donation by a taxpayer to a
4 qualified educational institution for the purchase of new machinery and
5 equipment, the amount actually paid by the qualified educational institution
6 to the wholesale, retail, or manufacturing business, as documented by
7 itemized receipts;
8 (3) "Machinery and equipment" means tangible personal property
9 used in connection with a qualified education program or a qualified research
10 program that has been approved for a tax credit under rules prescribed by the
11 Department of Finance and Administration;
12 (4) "New" means the machinery and equipment are state-of-the-art
13 machinery and equipment that have:
14 (A) Never been used except for normal testing by the
15 manufacturer to ensure that the machinery or equipment is of a proper quality
16 and in good working order; or
17 (B) Been used by the retailer or wholesaler solely for the
18 purpose of demonstrating the product to customers for sale;
19 (5) "Qualified education program" means a program conducted by a
20 qualified educational institution under rules prescribed by the Division of
21 Higher Education for programs in colleges, universities, or junior colleges,
22 by the Division of Career and Technical Education for programs in vocational
23 technical training schools and by the Division of Elementary and Secondary
24 Education for programs in secondary schools, all of which programs are for
25 the purpose of promoting the use of new machinery and equipment for
26 classroom, laboratory, and other educational instruction;
27 (6) "Qualified educational institution" means:
28 (A) A public university, college, junior college, or
29 vocational technical training school located in and supported by the State of
30 Arkansas;
31 (B) A private university, college, junior college, or
32 vocational technical training school located in Arkansas and qualified for
33 tax-exempt status under the Income Tax Act of 1929, � 26-51-101 et seq.; and
34 (C) A public secondary school;
35 (7) "Qualified research expenditures" means the sum of any
36 amounts that are paid or incurred by a taxpayer during the taxable year in
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1 funding a qualified research program that has been approved for tax credit
2 treatment under rules promulgated by the Department of Finance and
3 Administration;
4 (8) "Qualified research program" means a program of applied or
5 basic research undertaken by a qualified educational institution under rules
6 jointly promulgated by the Director of the Arkansas Economic Development
7 Commission and the Division of Higher Education under � 15-3-110;
8 (9) "Research park authority" means a public entity created
9 under the Research Park Authority Act, � 14-144-101 et seq., to provide
10 facilities and support for businesses engaged in research and development in
11 pursuit of economic development opportunities; and
12 (10) "State-of-the-art machinery and equipment" means machinery
13 and equipment that are of the same type, design, and capability as like
14 machinery and equipment that are currently sold or manufactured by the donee
15 for sale to customers.
16
17 26-51-1102. Credit granted.
18 (a)(1) There is granted a credit against a taxpayer's Arkansas
19 corporate income tax or Arkansas individual income tax for the following
20 types of donations or sales, or both, of new machinery and equipment to a
21 qualified educational institution in connection with a qualified education
22 program or a qualified research program:
23 (A) Donations of new machinery and equipment;
24 (B) Sales below cost of machinery and equipment; and
25 (C) Cash donations for the purchase of new machinery and
26 equipment by a qualified educational institution.
27 (2) The amount of the credit granted by this section shall be:
28 (A) In the case of a donation, thirty-three percent (33%)
29 of the cost of the machinery and equipment donated;
30 (B) In the case of a sale below cost, thirty-three percent
31 (33%) of the amount by which the cost is reduced; and
32 (C) In the case of a cash donation, thirty-three percent
33 (33%) of the amount of the cash donation used by the qualified educational
34 institution to purchase new machinery and equipment from a wholesale, retail,
35 or manufacturing business.
36 (b) There is granted a credit against a taxpayer's Arkansas corporate
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1 income tax or Arkansas individual income tax equal to thirty-three percent
2 (33%) of the qualified research expenditures of a taxpayer in qualified
3 research programs.
4 (c)(1) There is granted a credit against a taxpayer's Arkansas
5 corporate income tax or Arkansas individual income tax equal to thirty-three
6 percent (33%) of a donation made to an accredited institution of higher
7 education to support a research park authority.
8 (2) In order to claim this credit authorized by subdivision
9 (c)(1) of this section, a donation made in support of a research park
10 authority shall:
11 (A) Be consistent with the research and development plan
12 approved by the Director of the Arkansas Economic Development Commission with
13 the advice of the Board of Directors of the Division of Science and
14 Technology of the Arkansas Economic Development Commission, as evidenced by a
15 letter of support from the director; and
16 (B) Support either directly or indirectly research subject
17 to being funded by one (1) or more federal agencies, as enumerated in � 15-3-
18 205(1).
19
20 26-51-1103. Limit on total credit.
21 (a) Total credits for qualified research expenditures, donations, and
22 sales under this subchapter shall be allowed up to one hundred percent (100%)
23 of the net tax liability of the taxpayer after all other credits and
24 reductions in tax have been calculated.
25 (b) The credit shall be claimed in the tax year of the qualified
26 research expenditure, donation, or sale. However, all or part of any unused
27 credit may be carried over to and claimed in succeeding tax years until the
28 credits are exhausted or until the end of the nine (9) tax years succeeding
29 the tax year of the qualified research expenditure, donation, or sale,
30 whichever occurs earlier. In no event shall a taxpayer claim a credit under
31 this subchapter for any tax year in excess of one hundred percent (100%) of
32 the net tax due after all other credits and reductions in tax have been
33 calculated.
34 (c) Any person claiming any credit granted by this subchapter for any
35 expense or contribution shall not take any deduction under the Arkansas
36 income tax law for the same expense or contribution.
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1
2 26-51-1104. Documentation required.
3 (a) To claim the credit granted by � 26-51-1102, the taxpayer shall
4 provide the following for each piece of machinery and equipment donated, sold
5 below cost, or purchased by a qualified educational institution with a cash
6 donation:
7 (1) An affidavit from the receiving qualified educational
8 institution that:
9 (A) The qualified educational institution has received the
10 machinery and equipment;
11 (B) The machinery and equipment is new machinery and
12 equipment within the meaning of this subchapter;
13 (C) The qualified educational institution received the
14 machinery and equipment as a donation or, if the qualified educational
15 institution purchased the machinery and equipment, a statement of the amount
16 paid for the machinery and equipment; and
17 (D) The machinery and equipment has been donated,
18 purchased by the qualified educational institution with a cash donation
19 provided by a taxpayer, or sold to the qualified educational institution for
20 use in a qualified education program or a qualified research program; and
21 (2)(A) In the case of a donation or sale by a retail or
22 wholesale business, a copy of the invoice from the business' supplier showing
23 the actual cost of the machinery and equipment.
24 (B) In the case of a donation or sale below cost by a
25 manufacturer, a copy of the manufacturer's wholesale price list showing the
26 lowest price of the machinery and equipment for which credit is claimed.
27 (C) In the case of a purchase by a qualified educational
28 institution with a cash donation, itemized receipts documenting the amount of
29 the cash donation and the purchase costs of the new machinery and equipment.
30 (b) To claim the credit granted by � 26-51-1102, the taxpayer shall
31 show that the Director of the Arkansas Economic Development Commission and
32 the Commissioner of the Division of Higher Education have approved the
33 qualified research expenditure as a part of a qualified research program.
34 (c) Copies of each of the above documents shall be filed by the
35 taxpayer with the Arkansas Economic Development Commission and with his or
36 her return as an attachment to the form prescribed by the Secretary of the
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1 Department of Finance and Administration.
2
3 26-51-1105. Rules.
4 The Secretary of the Department of Finance and Administration, the
5 Commissioner of the Division of Higher Education, the Director of the
6 Division of Career and Technical Education, the Secretary of the Department
7 of Education, and the Director of the Arkansas Economic Development
8 Commission shall jointly promulgate rules to carry out the purposes of this
9 subchapter.
10
11 26-51-1106. Application for credit approval.
12 (a) To apply for a credit under this subchapter, a taxpayer shall
13 submit an original application and one (1) copy to the Director of the
14 Arkansas Economic Development Commission on the forms prescribed by the
15 director.
16 (b) The director shall review each application submitted under this
17 subchapter and shall either:
18 (1) Approve the application; or
19 (2) Reject the application and notify the applicant of the
20 deficiencies in the application.
21 (c) An applicant that receives approval from the director under this
22 section shall sign a financial incentive agreement outlining the terms and
23 conditions of the credit granted under this subchapter.
24 (d) An applicant may resubmit a rejected application after addressing
25 any deficiencies identified by the director.
26 (e) For an application submitted on or after July 24, 2019, an
27 expenditure incurred before the approval date of the financial incentive
28 agreement required under subsection (b) of this section shall be denied a
29 credit under this subchapter.
30
31 SECTION 16. Arkansas Code � 26-52-402(c)(2)(C)(ii), concerning the
32 items not included in the definition of machinery and equipment "used
33 directly" in the manufacturing process for purposes of the sales tax
34 exemption for certain machinery and equipment, is amended to read as follows:
35 (ii) Except as provided in �� 26-52-447 and 26-53-
36 149, machinery Machinery, equipment, and tools used in maintaining and
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1 repairing any type of machinery and equipment;
2
3 SECTION 17. Arkansas Code � 26-52-447 is repealed.
4 26-52-447. Partial replacement and repair of certain machinery and
5 equipment -- Definitions.
6 (a) The taxes levied under �� 26-52-301 and 26-52-302 on the gross
7 receipts or gross proceeds from the sale of the following are subject to a
8 refund or exemption as provided in this section:
9 (1) Machinery and equipment purchased to modify, replace,
10 repair, or maintain, either in whole or in part, existing machinery or
11 equipment used directly in producing, manufacturing, fabricating, assembling,
12 processing, finishing, or packaging articles of commerce at a manufacturing
13 or processing plant or facility in this state;
14 (2) Service relating to the initial installation, alteration,
15 addition, cleaning, refinishing, replacement, or repair of machinery or
16 equipment described in subdivision (a)(1) of this section;
17 (3) Machinery and equipment purchased to modify, replace, or
18 repair, either in whole or in part, existing molds and dies used directly in
19 producing, manufacturing, fabricating, assembling, processing, finishing, or
20 packaging articles of commerce at a manufacturing or processing plant or
21 facility in this state; and
22 (4)(A) Except as provided in subdivision (a)(4)(B) of this
23 section, machinery and equipment purchased for use or possible use by a
24 taxpayer for a purpose described in subdivisions (a)(1)-(3) of this section
25 and placed in inventory for later use by the taxpayer for a purpose described
26 in subdivisions (a)(1)-(3) of this section.
27 (B)(i) As used in this subdivision (a)(4)(B), "withdrawal
28 from inventory" means the withdrawal or use of machinery or equipment held
29 under subdivision (a)(4)(A) of this section by a taxpayer for a purpose that
30 does not qualify for an exemption under this section or any other applicable
31 exemption at the time of the withdrawal from inventory.
32 (ii) A withdrawal from inventory is not eligible for
33 the exemption provided under this section.
34 (iii) For purposes of calculating the gross receipts
35 tax under subdivision (a)(4)(B)(iv) of this section, the gross receipts or
36 gross proceeds for a withdrawal from inventory is the purchase price of the
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1 machinery or equipment withdrawn.
2 (iv) Tax is due on a withdrawal from inventory at
3 the time the withdrawal from inventory occurs.
4 (b)(1) Beginning July 1, 2014, the taxes levied under �� 26-52-301 and
5 26-52-302 that are subject to a refund under this section are the taxes in
6 excess of four and seven-eighths percent (4.875%).
7 (2) The taxes levied under �� 26-52-301 and 26-52-302 that are
8 subject to a refund under this section are the taxes in excess of the
9 following rates:
10 (A) Beginning July 1, 2018, three and seven-eighths
11 percent (3.875%);
12 (B) Beginning July 1, 2019, two and seven-eighths percent
13 (2.875%);
14 (C) Beginning July 1, 2020, one and seven-eighths percent
15 (1.875%); and
16 (D) Beginning July 1, 2021, seven-eighths percent
17 (0.875%).
18 (3) Beginning July 1, 2022, sales qualifying for the tax refund
19 under this section are exempt from the taxes levied under this chapter.
20 (c) The excise tax of one-eighth of one percent (0.125%) levied in
21 Arkansas Constitution, Amendment 75, the temporary excise tax of one-half
22 percent (0.5%) levied in Arkansas Constitution, Amendment 91, and the excise
23 tax of one-half percent (0.5%) levied in Arkansas Constitution, Amendment
24 101, are not subject to refund under this section.
25 (d) As used in this section:
26 (1) "Manufacturing" or "processing" means the same as defined
27 under � 26-52-402(b) and includes activities described in subsection (a) of
28 this section, both independently and collectively; and
29 (2) "Used directly" means the same as defined under � 26-52-
30 402(c).
31 (e) All existing excise tax exemptions, including without limitation
32 exemptions under �� 26-52-402 and 26-53-114, remain in full force and effect
33 and are not limited by this section.
34 (f) A taxpayer may claim the benefit of the tax refund under this
35 section only by using one (1) of the following methods:
36 (1)(A) Both:
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1 (i) Obtaining a direct pay or a limited direct pay
2 sales and use tax permit from the Department of Finance and Administration;
3 and
4 (ii) Self-refunding:
5 (a) At the time the taxpayer files his or her
6 original sales and use tax report; or
7 (b) By later filing an amended sales or use
8 tax report with the department.
9 (B) The statutes of limitation stated in � 26-18-306 apply
10 to claims made under this subdivision (f)(1).
11 (C) Interest shall not accrue or be paid on a refund
12 claimed under this subdivision (f)(1); or
13 (2)(A) Beginning July 1, 2018, for a taxpayer that does not hold
14 a direct pay or limited direct pay permit, holds an active Arkansas sales and
15 use tax permit, and files sales and use tax reports with the department,
16 filing a claim for a credit or rebate with the department.
17 (B)(i) The credit or rebate authorized under this
18 subdivision (f)(2) shall be obtained only by offsetting the amount of the
19 claimed credit or rebate against the state tax to be remitted with the
20 taxpayer's sales and use tax reports.
21 (ii) If the total amount of the credit or rebate
22 authorized under this subdivision (f)(2) is greater than the amount of the
23 state tax to be remitted with the taxpayer's sales and use tax reports, the
24 taxpayer is entitled to a refund of the difference between the amount of the
25 tax owed and the amount of the credit or rebate authorized under this
26 subdivision (f)(2).
27 (C) A taxpayer claiming a credit or rebate under this
28 subdivision (f)(2) shall electronically file all sales and use tax reports.
29 (D) A claim for credit or rebate under this subdivision
30 (f)(2) shall not be paid for a claim filed more than one (1) year following
31 the date of the qualifying sale or more than one (1) year following the date
32 of payment, whichever is later.
33 (E) Interest shall not accrue or be paid on an amount
34 subject to a claim for a credit or rebate under this subdivision (f)(2).
35 (g) A claim for a credit or rebate shall not be paid under subdivision
36 (f)(2) of this section for a sale made before July 1, 2018.
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1 (h) A taxpayer shall not claim the benefit of the refund under this
2 section by filing a verified claim for refund with the department.
3 (i) The following provisions of the Arkansas Tax Procedure Act, � 26-
4 18-101 et seq., apply to claims for a refund under this section:
5 (1) The time limitations that apply to claims for a refund of an
6 overpayment of state tax; and
7 (2) The procedures that apply to the disallowance or proposed
8 disallowance of claims for a refund.
9
10 SECTION 18. Arkansas Code � 26-52-509(a), concerning the direct
11 payment of sales tax by a consumer or user, is amended to read as follows:
12 (a)(1) The Secretary of the Department of Finance and Administration
13 by agreement with any consumer or user may:
14 (A) Permit permit a consumer or user under the agreement
15 to accrue and remit gross receipts taxes directly to the Department of
16 Finance and Administration, instead of the taxes being collected and paid by
17 the seller under � 26-52-508; and
18 (B)(i) Issue limited direct pay authority to permit a user
19 or consumer to accrue and remit gross receipts and compensating use taxes on
20 purchases that include eligible purchases.
21 (ii)(a) A limited direct pay agreement permits a
22 consumer or user to accrue and remit gross receipts and compensating use
23 taxes on purchases that include eligible purchases.
24 (b) As used in this section, "eligible
25 purchases" means property or services subject to a refund of tax under �� 26-
26 52-447 and 26-53-149.
27 (iii)(a) A limited direct pay agreement is available
28 only to a person eligible for a refund of tax under �� 26-52-447 and 26-53-
29 149.
30 (b) A person holding a limited direct pay
31 permit shall use the permit only to make purchases that include eligible
32 purchases.
33 (2)(A) A seller that receives a claim for exemption from a
34 customer based on a limited direct pay permit shall not collect and remit
35 gross receipts or compensating use taxes on purchases that include eligible
36 purchases made by a person holding a limited direct pay permit.
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1 (B) However, if a seller collects and remits gross
2 receipts or compensating use taxes on eligible purchases from a person
3 holding a limited direct pay permit, a refund may be obtained under � 26-18-
4 507.
5 (3) A person who has entered into a limited direct pay agreement
6 under this section and makes purchases of property or services under the
7 authority of that agreement without paying the gross receipts or compensating
8 use taxes due on those purchases is responsible for remitting the proper
9 amount of tax due to the secretary as required by law.
10 (4)(A) A seller shall collect and remit gross receipts and
11 compensating use taxes on purchases made by a person holding a limited direct
12 pay permit that are not eligible purchases.
13 (B) If a seller relies on the limited direct pay permit
14 and fails to properly collect tax on sales other than eligible purchases, the
15 limited direct pay permit holder shall remit the proper amount of tax to the
16 state as required under subdivision (a)(3) of this section.
17 (5) This section does not eliminate the requirement that a
18 consumer or user self-assess and remit compensating use tax under �� 26-53-
19 123 -- 26-53-125.
20
21 SECTION 19. Arkansas Code � 26-53-149 is repealed.
22 26-53-149. Partial replacement and repair of certain machinery and
23 equipment -- Definitions.
24 (a) The taxes levied under �� 26-53-106 and 26-53-107 on the privilege
25 of storing, using, distributing, or consuming the following within this state
26 are subject to a refund or exemption as provided in this section:
27 (1) Machinery and equipment purchased to modify, replace,
28 repair, or maintain, either in whole or in part, existing machinery or
29 equipment used directly in producing, manufacturing, fabricating, assembling,
30 processing, finishing, or packaging articles of commerce at a manufacturing
31 or processing plant or facility in this state;
32 (2) Service relating to the initial installation, alteration,
33 addition, cleaning, refinishing, replacement, or repair of machinery or
34 equipment described in subdivision (a)(1) of this section;
35 (3) Machinery and equipment purchased to modify, replace, or
36 repair, either in whole or in part, existing molds and dies used directly in
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1 producing, manufacturing, fabricating, assembling, processing, finishing, or
2 packaging articles of commerce at a manufacturing or processing plant or
3 facility in this state; and
4 (4)(A) Except as provided in subdivision (a)(4)(B) of this
5 section, machinery and equipment purchased for use or possible use by a
6 taxpayer for a purpose described in subdivisions (a)(1)-(3) of this section
7 and placed in inventory for later use by the taxpayer for a purpose described
8 in subdivisions (a)(1)-(3) of this section.
9 (B)(i) As used in this subdivision (a)(4)(B), "withdrawal
10 from inventory" means the withdrawal or use of machinery or equipment held
11 under subdivision (a)(4)(A) of this section by a taxpayer for a purpose that
12 does not qualify for an exemption under this section or any other applicable
13 exemption at the time of the withdrawal from inventory.
14 (ii) A withdrawal from inventory is not eligible for
15 the exemption provided under this section.
16 (iii) For purposes of calculating the compensating
17 use tax under subdivision (a)(4)(B)(iv) of this section, the gross receipts
18 or gross proceeds for a withdrawal from inventory is the purchase price of
19 the machinery or equipment withdrawn.
20 (iv) Tax is due on a withdrawal from inventory at
21 the time the withdrawal from inventory occurs.
22 (b)(1) Beginning July 1, 2014, the taxes levied under �� 26-53-106 and
23 26-53-107 that are subject to a refund under this section are the taxes in
24 excess of four and seven-eighths percent (4.875%).
25 (2) The taxes levied under �� 26-53-106 and 26-53-107 that are
26 subject to a refund under this section are the taxes in excess of the
27 following rates:
28 (A) Beginning July 1, 2018, three and seven-eighths
29 percent (3.875%);
30 (B) Beginning July 1, 2019, two and seven-eighths percent
31 (2.875%);
32 (C) Beginning July 1, 2020, one and seven-eighths percent
33 (1.875%); and
34 (D) Beginning July 1, 2021, seven-eighths percent
35 (0.875%).
36 (3) Beginning July 1, 2022, purchases qualifying for the tax
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1 refund under this section are exempt from the taxes levied under this
2 chapter.
3 (c) The excise tax of one-eighth of one percent (0.125%) levied in
4 Arkansas Constitution, Amendment 75, the temporary excise tax of one-half
5 percent (0.5%) levied in Arkansas Constitution, Amendment 91, and the excise
6 tax of one-half percent (0.5%) levied in Arkansas Constitution, Amendment
7 101, are not subject to refund under this section.
8 (d) As used in this section:
9 (1) "Manufacturing" or "processing" means the same as defined
10 under � 26-53-114(b) and includes activities described in subsection (a) of
11 this section, both independently and collectively; and
12 (2) "Used directly" means the same as defined under � 26-53-
13 114(c).
14 (e) All existing excise tax exemptions, including without limitation
15 exemptions under �� 26-52-402 and 26-53-114, remain in full force and effect
16 and are not limited by this section.
17 (f) A taxpayer may claim the benefit of the tax refund under this
18 section only by using one (1) of the following methods:
19 (1)(A) Both:
20 (i) Obtaining a direct pay or a limited direct pay
21 sales and use tax permit from the Department of Finance and Administration;
22 and
23 (ii) Self-refunding:
24 (a) At the time the taxpayer files his or her
25 original sales and use tax report; or
26 (b) By later filing an amended sales or use
27 tax report with the department.
28 (B) The statutes of limitation stated in � 26-18-306 apply
29 to claims made under this subdivision (f)(1).
30 (C) Interest shall not accrue or be paid on a refund
31 claimed under this subdivision (f)(1); or
32 (2)(A) Beginning July 1, 2018, for a taxpayer that does not hold
33 a direct pay or limited direct pay permit, holds an active Arkansas sales and
34 use tax permit, and files sales and use tax reports with the department,
35 filing a claim for the credit or rebate with the department.
36 (B)(i) The credit or rebate authorized under this
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1 subdivision (f)(2) shall be obtained only by offsetting the amount of the
2 claimed credit or rebate against the state tax to be remitted with the
3 taxpayer's sales and use tax reports.
4 (ii) If the total amount of the credit or rebate
5 authorized under this subdivision (f)(2) is greater than the amount of the
6 state tax to be remitted with the taxpayer's sales and use tax reports, the
7 taxpayer is entitled to a refund of the difference between the amount of the
8 tax owed and the amount of the credit or rebate authorized under this
9 subdivision (f)(2).
10 (C) A taxpayer claiming a credit or rebate under this
11 subdivision (f)(2) shall electronically file all sales and use tax reports.
12 (D) A claim for credit or rebate under this subdivision
13 (f)(2) shall not be paid for a claim filed more than one (1) year following
14 the date of the qualifying purchase or more than one (1) year following the
15 date of payment, whichever is later.
16 (E) Interest shall not accrue or be paid on an amount
17 subject to a claim for a credit or rebate under this subdivision (f)(2).
18 (g) A claim for a credit or rebate shall not be paid under subdivision
19 (f)(2) of this section for a purchase made before July 1, 2018.
20 (h) A taxpayer shall not claim the benefit of the refund under this
21 section by filing a verified claim for refund with the department.
22 (i) The following provisions of the Arkansas Tax Procedure Act, � 26-
23 18-101 et seq., apply to claims for a refund under this section:
24 (1) The time limitations that apply to claims for a refund of an
25 overpayment of state tax; and
26 (2) The procedures that apply to the disallowance or proposed
27 disallowance of claims for a refund.
28
29 SECTION 20. EFFECTIVE DATE. Sections 1�19 of this act are effective
30 on and after October 1, 2025.
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36 02/18/2025 12:26:07 PM JLL167Every fact on this page links to its source, starting with the official bill record.