Stricken language would be deleted from and underlined language would be added to present law.
*JLL167* 02/18/2025 12:26:07 PM JLL167
State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1521 3
4
By: Representative Cavenaugh 5
By: Senator J. Petty 6
7
For An Act To Be Entitled 8
AN ACT TO REPEAL CERTAIN TAX INCENTIVES; TO REPEAL 9
CERTAIN UNUSED, UNDERUSED, OR UNFUNDED TAX 10
INCENTIVES; TO REPEAL TAX INCENTIVES RELATED TO 11
CENTERS FOR APPLIED TECHNOLOGY; TO REPEAL THE 12
ARKANSAS PUBLIC ROADS IMPROVEMENTS CREDIT ACT; TO 13
REPEAL PROVISIONS OF THE CONSOLIDATED INCENTIVE ACT 14
OF 2003; TO REPEAL TAX INCENTIVES FOR MAJOR 15
MAINTENANCE AND IMPROVEMENT PROJECTS; TO REPEAL THE 16
PUBLIC ROADS INCENTIVE FUND; TO REPEAL INCENTIVES 17
RELATED TO THE DONATION OR SALE OF EQUIPMENT TO AN 18
EDUCATIONAL INSTITUTION; TO REPEAL THE SALES AND USE 19
TAX EXEMPTION FOR THE PARTIAL REPLACEMENT AND REPAIR 20
OF CERTAIN MACHINERY AND EQUIPMENT; AND FOR OTHER 21
PURPOSES. 22
23
24
Subtitle 25
TO REPEAL CERTAIN UNUSED, UNDERUSED, OR 26
UNFUNDED TAX INCENTIVES. 27
28
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 29
30
SECTION 1. Arkansas Code § 15-3-110(c)–(e), concerning the power of 31
the Director of the Arkansas Economic Development Commission to promote basic 32
and applied research at Arkansas colleges and universities, are repealed. 33
(c)(1) Any moneys lawfully available to the division for the purpose 34
of supporting basic research at Arkansas colleges and universities shall in 35
no event defray more than sixty percent (60%) of the total cost of the 36 HB1521
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proposed basic research project being funded. 1
(2) The remaining forty percent (40%) of the total cost of the 2
proposed basic research project shall be funded by moneys or in -kind services 3
provided by the college or university proposing the basic research project. 4
(d)(1)(A) Any moneys lawfully available to the division for the 5
purpose of creating applied research partnerships between private industry 6
and Arkansas colleges and universities shall in no event defray more than 7
fifty percent (50%) of the total cost of the proposed applied research 8
project. 9
(B) However, the contribution of the Director of the 10
Arkansas Economic Development Commission may defray up to sixty -six and two-11
thirds percent (66⅔%) of the total cost of a proposed applied research 12
project if 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, finds that the 15
participating private industry is principally located in Arkansas and employs 16
fifty (50) or fewer persons. 17
(2) The proposed applied research project shall be submitted by 18
an Arkansas college or university, and the proposal shall state that a 19
percentage of the total cost of the proposed applied research project will be 20
provided by private sources in accordance with the matching provisions of 21
this subsection. 22
(3) The Director of the Arkansas Economic Development Commission 23
shall approve for funding only those proposed applied research projects for 24
which the Director of the Arkansas Economic Development Commission finds that 25
enhanced employment opportunity within Arkansas will be a likely result. 26
(e)(1) Any moneys lawfully available to the division for the purpose 27
of supporting technology development shall in no event exceed one hundred 28
thousand dollars ($100,000) per project being funded. 29
(2) The Director of the Arkansas Economic Development Commission 30
shall impose a reasonable, nonrefundable fee for the evaluation of the 31
technological and economic potential of emerging technologies contained in 32
proposals from nonpublic sources of innovation. 33
(3) The Director of the Arkansas Economic Development Commission 34
is authorized to incorporate a royalty provision not to exceed five percent 35
(5%) of net sales revenue per year for a period of not more than ten (10) 36 HB1521
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years as a condition of award. 1
(4) The Director of the Arkansas Economic Development Commission 2
shall approve for funding only those proposed technology development projects 3
for which the Director of the Arkansas Economic Development Commission finds 4
that enhanced economic opportunity within Arkansas will be a likely result. 5
6
SECTION 2. Arkansas Code §§ 15 -3-130 — 15-3-135 are repealed. 7
15-3-130. Centers for applied technology — Definition. 8
For the purposes of this section and §§ 15 -3-131 — 15-3-134, “center 9
for applied technology” or “center” means a college or university or 10
university-affiliated unit, or a consortium of such units, which conducts a 11
continuing program of basic research and applied research, development, and 12
technology transfer in one (1) or more technological areas in collaboration 13
with and through the support of private enterprises. 14
15
15-3-131. Centers for applied technology — Authority to designate. 16
In order to encourage greater collaboration between private enterprises 17
and Arkansas colleges and universities in the development and application of 18
new technologies, the Arkansas Economic Development Commission may designate 19
technological areas as having significant potential for economic growth in 20
Arkansas or in which the application of new technologies could significantly 21
enhance the productivity and stability of Arkansas enterprises. 22
23
15-3-132. Centers for applied technology — Criteria — Designation. 24
(a) The Division of Science and Technology of the Arkansas Economic 25
Development Commission shall: 26
(1) Identify technological areas for which centers for applied 27
technology should be designated, including, but not limited to, technological 28
areas that are related to enterprises with significant potential for economic 29
growth and development in Arkansas and areas that are related to the 30
enhancement of productivity in various enterprises in Arkansas; 31
(2) Establish, in consultation with the Division of Higher 32
Education, criteria that must be satisfied for designation as a center, 33
including, but not limited to: 34
(A) An established record of research, development, and 35
instruction in the area of technology; 36 HB1521
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(B) The capacity to conduct research and development 1
activities in collaboration with private enterprises; 2
(C) The capacity to secure substantial private and other 3
government funding for the proposed center; 4
(D) The ability and willingness to cooperate with other 5
colleges and universities in conducting research and development activities 6
and in disseminating research results and to work with institutions of higher 7
learning to enhance the quality of technological education in the area or 8
areas of technology involved; and 9
(E) The ability and willingness to cooperate with the 10
Division of Science and Technology of the Arkansas Economic Development 11
Commission, the Arkansas Economic Development Council, and other economic 12
development agencies in promoting the growth and development in Arkansas of 13
enterprises based upon or benefiting from the areas of technology involved; 14
and 15
(3) Designate, using a competitive selection process, those 16
centers for applied technology to be created in cooperation with colleges and 17
universities in the state. 18
(b) The Division of Science and Technology of the Arkansas Economic 19
Development Commission may not designate technological areas or establish 20
centers prior to the Division of Science and Technology of the Arkansas 21
Economic Development Commission's adopting rules to govern the program 22
authorized under this section, §§ 15 -3-130, 15-3-131, 15-3-133, and 15-3-134. 23
24
15-3-133. Centers for applied technology — Advisory committees. 25
(a) In carrying out its functions under this section, §§ 15 -3-130 — 26
15-3-132, and 15-3-134, the Division of Science and Technology of the 27
Arkansas Economic Development Commission may create such advisory committees 28
as may be useful in evaluating potential technological areas and centers for 29
applied technology. 30
(b) The memberships of these advisory committees may include both 31
directors and staff members of the division and other persons drawn from 32
sources other than the division, all of whom shall serve at the pleasure of 33
the Director of the Arkansas Economic Development Commission. 34
(c) Members of such advisory committees shall serve without 35
compensation for their membership on such committees but may receive expense 36 HB1521
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reimbursement in accordance with § 25 -16-901 et seq. 1
2
15-3-134. Centers for applied technology — Disposition of funds. 3
Any moneys lawfully available to the Arkansas Economic Development 4
Commission for the purpose of creating centers for applied technology may be 5
used for the purchase of equipment and fixtures, employment of faculty and 6
support staff, provision of graduate fellowships, and other purposes approved 7
by the commission but may not be used for capital construction. 8
9
15-3-135. Promotion of scientific, medical, and technological jobs and 10
infrastructure enhancements — Definition. 11
(a) As used in this section, “qualified medical company” means a 12
corporation engaged in: 13
(1) Research and development in the medical field; and 14
(2) Manufacture and distribution of medical products, including 15
therapeutic and diagnostic products. 16
(b)(1) All agencies, departments, boards, commissions, and other 17
instrumentalities of this state and all political subdivisions of this state 18
and all agencies, departments, boards, commissions, and other 19
instrumentalities thereof, to the greatest extent possible, shall expedite 20
the processing of all lawful applications and requests required or permitted 21
by law which are submitted or made by qualified medical companies and, in 22
considering all such applications and requests, give due consideration to the 23
purposes of this section. 24
(2) To the extent available time, personnel, and other resources 25
permit, all state-funded colleges and universities shall provide research 26
assistance to the Arkansas Economic Development Commission to assist with 27
planning to develop scientific, medical, and technological commercial 28
infrastructure enhancements to encourage qualified medical companies to 29
locate in this state. 30
31
SECTION 3. Arkansas Code Title 15, Chapter 4, Subchapter 23, is 32
repealed. 33
Subchapter 23 — Arkansas Public Roads Improvements Credit Act 34
35
15-4-2301. Title. 36 HB1521
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This subchapter may be referred to and cited as the “Arkansas Public 1
Roads Improvements Credit Act”. 2
3
15-4-2302. Legislative intent. 4
The General Assembly finds and declares that: 5
(1) The state's program for capital improvements for public 6
roads projects and the financing of those projects is inadequate; 7
(2) The economic and other benefits to the state and its people 8
resulting from capital improvements for public roads projects are essential 9
to the public health, safety, and welfare of the people of Arkansas; and 10
(3) Providing tax credits to taxpayers for contributions in aid 11
of construction of capital improvements for public roads projects will 12
encourage public and private participation in these capital improvement 13
projects, will promote the economic welfare of this state and its people, and 14
is in the public interest. 15
16
15-4-2303. Definitions. 17
As used in this subchapter: 18
(1) “Capital improvements” means capital improvements for public 19
roads; 20
(2) “Commission” means the Arkansas Economic Development 21
Commission; 22
(3) “Contribution” means a contribution in aid of construction 23
of a public roads project made by a taxpayer to the Public Roads Incentive 24
Fund; 25
(4) “Council” means the Arkansas Economic Development Council; 26
(5) “County” means any county in the State of Arkansas; 27
(6) [Repealed.] 28
(7) “Fund” means the Public Roads Incentive Fund; 29
(8) “Governing authority” means the quorum court of a county, 30
the governing body of a municipality, and the State Highway Commission; 31
(9) “Municipality” means any city or incorporated town in the 32
State of Arkansas; 33
(10) “Project” means all, any combination, or any part of the 34
capital improvements for public roads which are authorized by a governing 35
authority and approved by the Director of the Arkansas Economic Development 36 HB1521
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Commission; 1
(11) “Public roads” means roads maintained by a governing 2
authority; and 3
(12) “Taxpayer” includes any individual, fiduciary, or 4
corporation subject to Arkansas state income tax. 5
6
15-4-2304. Approval of projects. 7
Governing authorities may apply to the Director of the Arkansas 8
Economic Development Commission for funding assistance for capital 9
improvement projects for public roads as provided by this subchapter. The 10
director is authorized to approve capital improvements for funding assistance 11
upon a finding that a project is in the public interest. 12
13
15-4-2305. Public Roads Incentive Fund. 14
(a) There is established on the books of the Treasurer of State, the 15
Auditor of State, and the Chief Fiscal Officer of the State a fund to be 16
known as the “Public Roads Incentive Fund” of the Arkansas Economic 17
Development Council. 18
(b) The fund shall consist of contributions made by taxpayers for 19
public roads projects approved by the Director of the Arkansas Economic 20
Development Commission and any other funds as are designated or deposited to 21
the fund by law. 22
(c)(1) A separate account shall be established for each project, and 23
contributions for a project shall be applied to provide funding assistance 24
for such a project. 25
(2) Any contributions which remain in the fund when a project is 26
completed or terminated shall be held and applied to other public roads 27
projects in such manner as the director shall direct. 28
29
15-4-2306. Tax credit. 30
(a) A taxpayer shall be entitled to a credit against any Arkansas 31
income tax liability which may be imposed on the taxpayer for any tax year 32
commencing on or after January 1, 1999, for contributions transmitted to the 33
Treasurer of State pursuant to this subchapter. 34
(b) The credit shall be determined in the following manner: 35
(1) The credit shall be calculated as thirty -three percent (33%) 36 HB1521
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of the taxpayer's contribution; 1
(2) In any one (1) tax year, the credit allowed by this section 2
shall offset up to one hundred percent (100%) of the net Arkansas state 3
income tax liability of the taxpayer; and 4
(3) Any credit in excess of the amount allowed by subdivision 5
(b)(2) of this section for any one (1) tax year may be carried forward and 6
applied against any Arkansas state income tax liability for the next-7
succeeding tax year and annually thereafter for a total period of ten (10) 8
years next succeeding the year in which the credit arose, subject to the 9
provisions of subdivision (b)(2) of this section or until the credit is 10
exhausted, whichever occurs first. 11
12
15-4-2307. Powers and duties of the Arkansas Economic Development 13
Commission. 14
The Arkansas Economic Development Commission shall administer the 15
provisions of this subchapter and shall have the following powers and duties, 16
in addition to those mentioned in this subchapter and in other laws of this 17
state: 18
(1) To monitor the implementation and operation of this 19
subchapter and to conduct a continuing evaluation of the progress made; 20
(2) To assist the governing authority in obtaining assistance 21
from any other department of state government; 22
(3) To submit an annual written report evaluating the 23
effectiveness of the program and presenting any suggestions for improving the 24
program, to be submitted to the Governor no later than March 1 of each year; 25
and 26
(4) To promulgate rules in accordance with the Arkansas 27
Administrative Procedure Act, § 25 -15-201 et seq., necessary to carry out the 28
provisions of this subchapter. 29
30
SECTION 4. Arkansas Code § 15 -4-2705(h), concerning the job -creation 31
tax credit, is amended to read as follows: 32
(h)(1) If a qualified business fails to meet the payroll threshold 33
within two (2) years after the date of the approved financial incentive 34
agreement or within the time period established by an extension approved by 35
the Secretary of the Department of Finance and Administration and the 36 HB1521
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Director of the Arkansas Economic Development Commission, the qualified 1
business is liable for repayment of all incentives previously received under 2
§ 15-4-2706(d) that were conditioned on an approved financial incentive 3
agreement under this section for which the payroll threshold has not been 4
met. 5
(2) If a qualified business fails to reach the payroll threshold 6
of this section in a timely manner, the The department shall have two (2) 7
years to collect incentives previously received by the qualified business or 8
file a lawsuit to enforce the repayment provisions. 9
10
SECTION 5. Arkansas Code § 15 -4-2706(b)(7)-(13), concerning investment 11
tax incentives under the Consolidated Incentive Act of 2003, are repealed. 12
(7) Technology-based enterprises, as defined by § 14 -164-203, 13
may earn, at the discretion of the director, an income tax credit or sales 14
and use tax credit based on new investment, provided that the technology -15
based enterprise: 16
(A) Creates a new payroll of at least two hundred fifty 17
thousand dollars ($250,000); and 18
(B) Pays an average hourly wage that is at least one 19
hundred fifty percent (150%) of the lesser of the state or county average 20
hourly wage for the county in which the business locates or expands. 21
(8)(A) The income tax credit or sales and use tax credit that 22
may be earned by a technology -based enterprise is based on the amount of 23
investment as follows: 24
(i) The income tax credit or sales and use tax 25
credit is equal to two percent (2%) of the investment for an investment that 26
is between two hundred fifty thousand dollars ($250,000) and five hundred 27
thousand dollars ($500,000); 28
(ii) The income tax credit or sales and use tax 29
credit is equal to four percent (4%) of the investment for that part of the 30
investment that is over five hundred thousand dollars ($500,000) and less 31
than one million dollars ($1,000,000); 32
(iii) The income tax credit or sales and use tax 33
credit is equal to six percent (6%) of the investment for that part of the 34
investment that is over one million dollars ($1,000,000) and less than two 35
million dollars ($2,000,000); and 36 HB1521
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(iv) The income tax credit or sales and use tax 1
credit is equal to eight percent (8%) of the investment for that part of the 2
investment that is over two million dollars ($2,000,000). 3
(B) The amount of credit earned is determined based upon 4
the amount invested, as verified by an audit by the department. 5
(9) All investments by a technology -based enterprise shall be 6
made within four (4) years of the date of the approved financial incentive 7
agreement. 8
(10) Prior to commission approval of a financial incentive 9
agreement, the business shall elect to receive the tax credits as either: 10
(A) A sales and use tax credit; or 11
(B) An income tax credit. 12
(11) The income tax credit or sales and use tax credit earned by 13
a technology-based enterprise may offset income tax liabilities or sales and 14
use tax liabilities as follows: 15
(A) A technology-based enterprise that pays at least one 16
hundred fifty percent (150%) of the lesser of the state or county average 17
hourly wage for the county in which the business locates or expands may 18
offset up to fifty percent (50%) of its income tax liability or sales and use 19
tax liability annually; 20
(B) A technology-based enterprise that pays at least one 21
hundred seventy-five percent (175%) of the lesser of the state or county 22
average hourly wage for the county in which the business locates or expands 23
may offset up to seventy -five percent (75%) of its income tax liability or 24
sales and use tax liability annually; and 25
(C) A technology-based enterprise that pays at least two 26
hundred percent (200%) of the lesser of the state or county average hourly 27
wage for the county in which the business locates or expands may offset up to 28
one hundred percent (100%) of its income tax liability or sales and use tax 29
liability annually. 30
(12) After receiving an approved financial incentive agreement 31
from the commission, a qualified business shall certify to the department the 32
eligible project costs and average hourly wages annually at the end of each 33
tax year for the term of the financial incentive agreement. 34
(13) Unused income tax credits or sales and use tax credits may 35
be carried forward for up to nine (9) years after the year in which the 36 HB1521
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credit was first earned or until the tax credits are exhausted, whichever 1
occurs first. 2
3
SECTION 6. Arkansas Code § 15 -4-2706(d) and (e), concerning investment 4
tax incentives under the Consolidated Incentive Act of 2003, are repealed. 5
(d)(1)(A) An application for a state and local sales and use tax 6
refund for a new or expanding business shall be filed with the commission 7
contingent upon the approval of an endorsement resolution from the governing 8
authority of a municipality or county, or both, in whose jurisdiction the 9
business will be located. 10
(B) The resolution shall: 11
(i) Endorse the business's participation in this 12
sales and use tax refund program; and 13
(ii) Specify that the department is authorized to 14
refund local sales taxes to the qualified business. 15
(C) To qualify for a refund under this subsection, a 16
qualified business shall meet the minimum investment thresholds for the tier 17
in which the qualified business expands or locates, as follows: 18
(i) For tier 1 counties, the minimum investment 19
threshold is at least five hundred thousand dollars ($500,000); 20
(ii) For tier 2 counties, the minimum investment 21
threshold is at least four hundred thousand dollars ($400,000); 22
(iii) For tier 3 counties, the minimum investment 23
threshold is at least three hundred thousand dollars ($300,000); and 24
(iv) For tier 4 counties, the minimum investment 25
threshold is at least two hundred thousand dollars ($200,000). 26
(2)(A)(i) The secretary shall authorize a sales and use tax 27
refund of state and local sales and use taxes, excepting the sales and use 28
taxes dedicated to the Educational Adequacy Fund and the Conservation Tax 29
Fund on the purchases of the material used in the construction of a building 30
or buildings or any addition, modernization, or improvement thereon for 31
housing any new or expanding qualified business and machinery and equipment 32
to be located in or in connection with such a building. 33
(ii) The local sales and use tax may be refunded only 34
from the municipality or county, or both, in which the qualified business is 35
located. 36 HB1521
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(B) A refund shall not be authorized for: 1
(i) Routine operating expenditures; or 2
(ii) The purchase of replacement items previously 3
purchased as part of a project under this subsection unless the items 4
previously purchased are necessary for the implementation or completion of 5
the project. 6
(3)(A) Subject to the approval of the commission, a qualified 7
business may make changes to a project by written amendment to the project 8
plan filed with the commission. 9
(B) The commission shall not approve an amendment under 10
subdivision (d)(3)(A) of this section that results in a cost increase of more 11
than twenty-five percent (25%) of the initial project plan. 12
(4) All claims for sales and use tax refunds under this 13
subsection shall be denied unless they are filed with the department within 14
three (3) years from the date of the qualified purchase or purchases. 15
(5)(A)(i) To be eligible for the incentives under this 16
subsection, a qualified business shall meet all payroll creation requirements 17
of its approved financial incentive agreement under § 15 -4-2705 or § 15-4-18
2707. 19
(ii) However, a business may apply for incentives 20
under this subsection if: 21
(a) The business has an existing financial 22
incentive agreement approved under this subdivision (d)(5)(A) and the 23
provisions of subdivision (d)(5)(B) of this section have been met within the 24
previous four (4) years; or 25
(b) The business has signed a financial 26
incentive agreement approved under § 15 -4-2705 or § 15-4-2707 within the 27
previous four (4) years. 28
(B) The financial incentive agreement under § 15 -4-2705 or 29
§ 15-4-2707 shall be approved within two (2) years after the financial 30
incentive agreement under this subsection is approved. 31
(e)(1) A targeted business may be eligible for a refund of state and 32
local sales and use taxes for qualified expenditures at the discretion of the 33
director if: 34
(A)(i) The annual payroll of the targeted business for 35
Arkansas taxpayers is greater than one hundred thousand dollars ($100,000) 36 HB1521
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and less than one million dollars ($1,000,000). 1
(ii) The payroll requirement in subdivision 2
(e)(1)(A)(i) of this section applies only to the initial eligibility 3
determination and does not preclude a qualified business from receiving 4
incentives if, at any time after the financial incentive agreement is 5
approved, actual payroll does not satisfy the requirements in subdivision 6
(e)(1)(A)(i) of this section; and 7
(B) The targeted business shows proof of an equity 8
investment of at least two hundred fifty thousand dollars ($250,000). 9
(2)(A) An application for the targeted business state and local 10
sales and use tax refund program for a new or expanding targeted business 11
shall be filed with the commission contingent upon the approval of an 12
endorsement resolution from the governing authority of a municipality or 13
county, or both, in whose jurisdiction the targeted business will be located. 14
(B) The resolution shall: 15
(i) Endorse the business's participation in this 16
sales and use tax refund program; and 17
(ii) Specify that the department is authorized to 18
refund local sales and use taxes to the targeted business. 19
(3) An approved financial incentive agreement and any other 20
pertinent documentation shall be forwarded to the secretary. 21
(4)(A)(i) The secretary shall authorize a sales and use tax 22
refund of state and local sales and use taxes, excepting the sales and use 23
taxes dedicated to the Educational Adequacy Fund and the Conservation Tax 24
Fund on the purchases of the material used in the construction of a building 25
or buildings or any addition, modernization, or improvement thereon for 26
housing any new or expanding qualified business and machinery and equipment 27
to be located in or in connection with such a building. 28
(ii) The local sales and use tax may be refunded 29
only from the municipality or county, or both, in which the qualified 30
business is located. 31
(B) A refund shall not be authorized for: 32
(i) Routine operating expenditures; or 33
(ii) The purchase of replacement items previously 34
purchased as part of a project under this subsection unless the items 35
previously purchased are necessary for the implementation or completion of 36 HB1521
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the project. 1
(5)(A) Subject to the approval of the commission, a qualified 2
business may make changes to a project by written amendment to the project 3
plan filed with the commission. 4
(B) The commission shall not approve an amendment under 5
subdivision (e)(5)(A) of this section that results in a cost increase of more 6
than twenty-five percent (25%) of the initial project plan. 7
(6) All claims for sales and use tax refunds under this 8
subsection shall be denied unless they are filed with the department within 9
three (3) years after the date of the qualified purchase or purchases. 10
(7) If a targeted business plans to apply for benefits under 11
this subsection and also plans to apply for benefits under § 15 -4-2709, the 12
financial incentive agreement under § 15-4-2709 must be signed within twenty -13
four (24) months of signing the financial incentive agreement under this 14
subsection and comply with the eligibility requirements of the financial 15
incentive agreements. 16
(8) To be eligible for the incentives under this subsection, a 17
targeted business shall meet all payroll creation requirements of an approved 18
financial incentive agreement under § 15 -4-2707 or § 15-4-2709 within two (2) 19
years of the date of the approved financial incentive agreement under this 20
subsection or other subsequent date if approved by the director. 21
22
SECTION 7. Arkansas Code § 15 -4-2707(e), concerning the Economic 23
Development Incentive Fund and the payroll rebate under the Consolidated 24
Incentive Act of 2003, is repealed. 25
(e)(1) Technology-based enterprises, as defined in § 14 -164-203, may 26
earn, at the discretion of the director, a payroll rebate equal to five 27
percent (5%) of the payroll for new full -time permanent employees for a 28
period not to exceed ten (10) years. 29
(2) To qualify for the payroll rebate: 30
(A) The average hourly wage of the payroll for new full -31
time permanent employees must be at least one hundred fifty percent (150%) of 32
the lesser of the state or county average hourly wage for the county in which 33
the technology-based enterprise locates or expands; 34
(B) The payroll for new full -time permanent employees must 35
exceed two hundred fifty thousand dollars ($250,000); and 36 HB1521
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(C) The payroll rebate authorized by this subsection shall 1
not be used in combination with the income tax credit based on payroll 2
authorized by § 15-4-2709. 3
4
SECTION 8. Arkansas Code § 15 -4-2708(a)(4), concerning research and 5
development tax credits under the Consolidated Incentive Act of 2003, is 6
repealed. 7
(4) A qualified business claiming tax credits earned under this 8
subsection shall not receive the credit granted by § 26 -51-1102(b) for the 9
same expenditures. 10
11
SECTION 9. Arkansas Code § 15 -4-2708(b)–(d), concerning research and 12
development tax credits under the Consolidated Incentive Act of 2003, are 13
amended to read as follows: 14
(b)(1) Targeted businesses may qualify for an income tax credit equal 15
to thirty-three percent (33%) of the amount spent on in -house research per 16
year for the first five (5) tax years following the targeted business's 17
signing a financial incentive agreement with the commission. 18
(2) The credits earned by targeted businesses may be sold as 19
authorized in § 15-4-2709 under this subsection . 20
(3) Any unused income tax credits under this subsection may be 21
carried forward for up to nine (9) years after the year in which the income 22
tax credit was first earned. 23
(4)(A) To sell income tax credits earned through incentives 24
authorized under this subchapter, a targeted business shall apply to the 25
commission and furnish the information necessary to facilitate the sale of 26
the income tax credits. 27
(B)(i) A taxpayer that purchases income tax credits under 28
this subsection may carry any unused income tax credits forward as provided 29
in subdivision (b)(3) of this section. 30
(ii) The purchase of income tax credits under this 31
subsection does not establish a new carry -forward period for the purchaser. 32
(5) A targeted business that claims or sells income tax credits 33
under this subsection shall not receive the income tax credit allowed under § 34
26-51-1102(b) for the same expenditures. 35
(c)(1) An Arkansas taxpayer may be offered, at the discretion of the 36 HB1521
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director, an income tax credit equal to thirty -three percent (33%) of the 1
amount spent on the research for the first five (5) tax years following the 2
business's signing a financial incentive agreement with the commission, 3
subject to the limitations established under § 26 -51-1103 if the taxpayer 4
invests in: 5
(A) In-house research in a strategic research area; or 6
(B) Projects under the research and development programs 7
of the Division of Science and Technology of the Arkansas Economic 8
Development Commission when the projects directly involve an Arkansas 9
business and are approved by the director with the advice of the Board of 10
Directors of the Division of Science and Technology of the Arkansas Economic 11
Development Commission under rules promulgated by the commission for those 12
programs. 13
(2) However, the maximum tax credit for a qualified business 14
engaged in a research area of strategic value or involved in research and 15
development programs sponsored by the division shall not exceed fifty 16
thousand dollars ($50,000) per year. 17
(3) A qualified business claiming tax credits earned under this 18
subsection shall not receive the credit granted by § 26 -51-1102(b) for the 19
same expenditures. 20
(4)(A) A qualified business claiming tax credits earned under 21
this subsection may offset up to one hundred percent (100%) of the business's 22
Arkansas income tax liability annually. 23
(B) Any unused income tax credits may be carried forward 24
for up to nine (9) years after the year in which the credit was first earned 25
or until exhausted, whichever occurs first. 26
(d) To claim the credit granted under subsections (a)-(c) (a) and (b) 27
of this section, the taxpayer shall file with his or her return, as an 28
attachment to the form prescribed by the Secretary of the Department of 29
Finance and Administration, copies of documentation to show that the 30
commission has approved the research expenditure as a part of a qualified in -31
house research program or under the research and development programs of the 32
division Division of Science and Technology of the Arkansas Economic 33
Development Commission . 34
35
SECTION 10. Arkansas Code § 15 -4-2709 is repealed. 36 HB1521
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15-4-2709. Targeted business special incentive. 1
(a) A special incentive based on the payroll of targeted businesses in 2
the state may be offered, at the discretion of the Director of the Arkansas 3
Economic Development Commission, to: 4
(1) Encourage the development of jobs that pay significantly 5
more than the average hourly wage in the county in which the targeted 6
business locates or the state average hourly wage if the state average hourly 7
wage is less than the county average hourly wage; and 8
(2) Provide an incentive to assist with the start -up of 9
businesses targeted for growth. 10
(b) To qualify for the special incentive provided by subsection (c) of 11
this section, a business shall: 12
(1) Be identified by the Arkansas Economic Development 13
Commission as being one of those business sectors targeted for growth under § 14
15-4-2703; 15
(2)(A) Have an annual payroll of the business for Arkansas 16
taxpayers of not less than one hundred thousand dollars ($100,000) or more 17
than one million dollars ($1,000,000). 18
(B) The payroll requirement under subdivision (b)(2)(A) of 19
this section applies only to the initial eligibility determination and does 20
not preclude qualified businesses from receiving incentives if, at any time 21
after the financial incentive agreement has been approved, actual payroll 22
does not satisfy the requirements in subdivision (b)(2)(A) of this section; 23
(3) Show proof of an equity investment of two hundred fifty 24
thousand dollars ($250,000) or more; and 25
(4) Pay average hourly wages in excess of the lesser of one 26
hundred fifty percent (150%) of the county or state average hourly wage for 27
the county in which the targeted business locates or expands. 28
(c)(1) A targeted business may earn an income tax credit equal to ten 29
percent (10%) of its annual payroll, with the maximum payroll credit not to 30
exceed one hundred thousand dollars ($100,000) in any year during the term of 31
the financial incentive agreement. 32
(2)(A) The term of the financial incentive agreement shall be 33
established by the director for a period not to exceed five (5) years. 34
(B) The term of the financial incentive agreement for 35
targeted businesses earning a tax credit under this subsection shall begin on 36 HB1521
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January 1 of the year following the year in which the financial incentive 1
agreement was approved. 2
(C) The director may allow a qualified targeted business 3
to sell any income tax credits earned through one (1) or more incentives 4
authorized by this subchapter. 5
(d)(1) To sell income tax credits earned through incentives authorized 6
by this subchapter, the targeted business shall apply to the commission and 7
furnish information necessary to facilitate the sale of income tax credits. 8
(2)(A) Any unused tax credits may be carried forward for up to 9
nine (9) years after the year in which the credit was first earned or until 10
exhausted, whichever occurs first. 11
(B) Taxpayers purchasing tax credits under this subsection 12
shall be subject to the same carry -forward provisions as the targeted 13
business that earned the credits. 14
(C) The purchase of the tax credits does not establish a 15
new carry-forward period for the ultimate recipient. 16
(e) A targeted business claiming or selling tax credits earned under 17
this section or § 15 -4-2708 shall not receive the credit granted by § 26 -51-18
1102(b) for the same expenditures. 19
20
SECTION 11. Arkansas Code § 15 -4-2711(c) and (d), concerning the 21
administration of the incentives provided under the Consolidated Incentive 22
Act of 2003, are repealed. 23
(c)(1) All claims for sales and use tax refunds under § 15-4-2706(d) 24
and (e) shall be filed annually with the Department of Finance and 25
Administration within three (3) years from the date of the qualified purchase 26
or purchases. 27
(2) Claims filed after three (3) years from the date of the 28
qualified purchase or purchases shall be denied. 29
(d)(1) The time limitation for § 15 -4-2706(d) and (e) for filing 30
claims shall be tolled if: 31
(A) A qualified business fails to pay sales tax on an item 32
that was taxable; and 33
(B) The applicable tax is subsequently assessed as a 34
result of an audit by the department. 35
(2) All claims for sales and use tax refunds relating to an 36 HB1521
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audited purchase are entitled to a refund of interest paid on the amount of 1
tax assessed on the audited purchase if a refund is approved for the 2
purchase. 3
4
SECTION 12. Arkansas Code § 15 -4-2712 is amended to read as follows: 5
15-4-2712. Restrictions. 6
(a) Except as provided in subsection (b) of this section, the 7
incentives established by this subchapter may be combined. 8
(b)(1) The investment tax credit authorized in § 15 -4-2706(c) shall 9
not be combined with the sales and use tax refund authorized in § 15 -4-10
2706(d) for the same project. 11
(2) The following incentives for targeted businesses may be 12
combined with each other for the same project as long as multiple incentives 13
are not claimed for the same expenditures but shall not be combined with any 14
other incentives authorized in this subchapter during the period in which the 15
qualified business receives incentives under this subchapter: 16
(A) The investment tax credit authorized under § 15 -4-17
2706(b)(7) may be combined with: 18
(i) The research and development income tax credits 19
authorized under § 15 -4-2708(b); and 20
(ii) Either the: 21
(a) Payroll rebate program authorized under § 22
15-4-2707(e); or 23
(b) Payroll tax credit program authorized 24
under § 15-4-2709; 25
(B) The sales and use tax refund authorized under § 15 -4-26
2706(e) may be combined with: 27
(i) The research and development income tax credits 28
authorized under § 15 -4-2708(b); and 29
(ii) Either the: 30
(a) Payroll rebate program authorized under § 31
15-4-2707(e); or 32
(b) Payroll tax credit program authorized 33
under § 15-4-2709; 34
(C) The payroll rebate program authorized under § 15 -4-35
2707(e) may be combined with: 36 HB1521
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(i) The research and development income tax credits 1
authorized under § 15 -4-2708(b); and 2
(ii) Either the: 3
(a) Investment tax credit program authorized 4
under § 15-4-2706(b)(7); or 5
(b) Sales and use tax refund program 6
authorized under § 15 -4-2706(e); 7
(D) The payroll income tax credit authorized under § 15 -4-8
2709 may be combined with: 9
(i) The research and development income tax credits 10
authorized under § 15 -4-2708(b); and 11
(ii) Either the: 12
(a) Investment tax credit authorized under § 13
15-4-2706(b)(7); or 14
(b) Sales and use tax refund program 15
authorized under § 15 -4-2706(e); and 16
(E) The research and development income tax credits 17
authorized under § 15 -4-2708(b) may be combined with: 18
(i) Either the: 19
(a) Payroll rebate program authorized under § 20
15-4-2707(e); or 21
(b) Payroll tax credit program authorized 22
under § 15-4-2709; and 23
(ii) Either the: 24
(a) Investment tax credit program authorized 25
under § 15-4-2706(b)(7); or 26
(b) Sales and use tax refund program 27
authorized under § 15 -4-2706(e). 28
(3) The investment tax credit authorized in § 15 -4-2706(b) shall 29
not be combined with the sales and use tax credit authorized in § 15 -4-30
2706(e) for the same project. 31
(4) The job-creation tax credit authorized in § 15 -4-2705 shall 32
not be combined with the payroll rebate program authorized in § 15 -4-2707. 33
(5) The investment tax credit authorized in § 15 -4-2706(b) shall 34
not be combined with the sales and use tax refund authorized in § 15 -4-35
2706(d) for the same project. 36 HB1521
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(6)(2) The investment tax credit authorized under § 15 -4-2706(b) 1
shall not be combined with the sales and use tax credit authorized under § 2
15-4-2706(c) for the same project. 3
(c) The following are discretionary incentives and are not available 4
unless offered by the Arkansas Economic Development Commission: 5
(1) The payroll rebate program authorized in § 15 -4-2707; 6
(2) The job-creation tax credit authorized in § 15 -4-2709; 7
(3) The investment tax credit authorized in § 15 -4-2706(b); and 8
(4) The sales and use tax refund authorized in § 15 -4-2706(e); 9
and 10
(5)(3) The research and development tax credits authorized in § 11
15-4-2708(a)-(c) 15-4-2708(a) and (b). 12
13
SECTION 13. Arkansas Code Title 15, Chapter 4, Subchapter 35, is 14
repealed. 15
Subchapter 35 — Incentives for Major Maintenance and Improvement Projects 16
17
15-4-3501. Increased tax refund for major maintenance and improvement 18
projects. 19
(a) A taxpayer that is eligible for a refund of excise taxes under § 20
26-52-447 or § 26-53-149 is eligible for a refund of one hundred percent 21
(100%) of the sales and use taxes levied in §§ 26 -52-301, 26-52-302, 26-53-22
106, and 26-53-107 on the tangible personal property and services subject to 23
§§ 26-52-447 and 26-53-149 for projects that meet the following requirements: 24
(1) The taxpayer has entered into a financial incentive 25
agreement with the Arkansas Economic Development Commission for the project; 26
and 27
(2) The taxpayer expends at least three million dollars 28
($3,000,000) on an approved project that includes the purchase of tangible 29
personal property and services that are either exempt or subject to a partial 30
refund of tax under § 26 -52-402, § 26-52-447, § 26-53-114, or § 26-53-149. 31
(b) A taxpayer shall file with the commission an application for the 32
increased refund for major maintenance and improvement projects provided in 33
this section. 34
(c) The increased refund of sales and use taxes for major maintenance 35
and improvement projects provided in this section is a discretionary 36 HB1521
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incentive and is not available unless offered by the Director of the Arkansas 1
Economic Development Commission. 2
(d) The director shall forward the taxpayer's application, financial 3
incentive agreement, any other pertinent documentation, and a written copy of 4
the determination under this subsection to the Secretary of the Department of 5
Finance and Administration if the director: 6
(1) Determines that the taxpayer is eligible for the increased 7
refund for major maintenance and improvement projects provided for in this 8
section; 9
(2) Determines that the taxpayer has provided reasonable proof 10
that there will be a positive return on the taxpayer's investment in the 11
major maintenance and improvement project that is sufficient to offset the 12
taxes refunded under this section; 13
(3) Determines that the taxpayer has provided a defined scope, 14
beginning date, and ending date for the major maintenance and improvement 15
project; 16
(4) Determines that the refund is reasonably necessary for the 17
taxpayer to remain competitive and preserve Arkansas jobs; and 18
(5) Agrees to provide the incentive under this section. 19
(e) A taxpayer that has been approved for the increased refund for 20
major maintenance and improvement projects provided for in this section may 21
make changes in a major maintenance and improvement project by written 22
amendment to the project plan filed with the commission as part of the 23
financial incentive agreement required under this section. 24
(f) Except as otherwise provided in this section, a refund under this 25
section is subject to the Arkansas Tax Procedure Act, § 26 -18-101 et seq., 26
and the Independent Tax Appeals Commission Act, § 26 -18-1101 et seq., in the 27
same manner as other refunds permitted under § 26 -18-507. 28
(g) An expenditure shall not qualify for both the increased refund for 29
major maintenance and improvement projects under this section and the 30
retention tax credit provided for in § 15 -4-2706(c). 31
(h) The director and the secretary may promulgate rules necessary to 32
implement this section. 33
(i)(1) A taxpayer may apply for an increased refund for major 34
maintenance and improvement projects under this section through June 30, 35
2022. 36 HB1521
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(2) An application for an increased refund for major maintenance 1
and improvement projects under this section shall not be accepted on or after 2
July 1, 2022. 3
4
SECTION 14. Arkansas Code § 19 -5-1097 is repealed. 5
19-5-1097. Public Roads Incentive Fund. 6
(a) There is established on the books of the Treasurer of State, the 7
Auditor of State, and the Chief Fiscal Officer of the State a fund to be 8
known as the “Public Roads Incentive Fund” of the Arkansas Economic 9
Development Council. 10
(b) The fund shall consist of contributions made by taxpayers for 11
public roads projects approved by the Director of the Arkansas Economic 12
Development Commission and any other funds as are designated or deposited 13
into the fund by law. 14
(c)(1) A separate account shall be established for each project, and 15
contributions for a project shall be applied to provide funding assistance 16
for that project. 17
(2) Any contributions which remain in the fund when a project is 18
completed or terminated shall be held and applied to other public roads 19
projects in such manner as the director shall direct. 20
21
SECTION 15. Arkansas Code Title 26, Chapter 51, Subchapter 11, is 22
repealed. 23
Subchapter 11 — Donations or Sales of Equipment to Educational Institutions 24
25
26-51-1101. Definitions. 26
As used in this subchapter: 27
(1) “Accredited institution of higher education” means a four -28
year public college or university that offers bachelor's degrees and is 29
recognized by the Division of Higher Education for credit; 30
(2) “Cost” means: 31
(A) In the case of a donation or sale below cost by a 32
wholesale or retail business, the amount actually paid by the wholesaler or 33
retailer to the supplier for the machinery and equipment; 34
(B) In the case of a donation or sale below cost by a 35
manufacturer of machinery and equipment, the enhanced value of the materials 36 HB1521
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used to produce the machinery and equipment, which shall be deemed to be the 1
lowest price at which the manufacturer sells the machinery and equipment; or 2
(C) In the case of a cash donation by a taxpayer to a 3
qualified educational institution for the purchase of new machinery and 4
equipment, the amount actually paid by the qualified educational institution 5
to the wholesale, retail, or manufacturing business, as documented by 6
itemized receipts; 7
(3) “Machinery and equipment” means tangible personal property 8
used in connection with a qualified education program or a qualified research 9
program that has been approved for a tax credit under rules prescribed by the 10
Department of Finance and Administration; 11
(4) “New” means the machinery and equipment are state -of-the-art 12
machinery and equipment that have: 13
(A) Never been used except for normal testing by the 14
manufacturer to ensure that the machinery or equipment is of a proper quality 15
and in good working order; or 16
(B) Been used by the retailer or wholesaler solely for the 17
purpose of demonstrating the product to customers for sale; 18
(5) “Qualified education program” means a program conducted by a 19
qualified educational institution under rules prescribed by the Division of 20
Higher Education for programs in colleges, universities, or junior colleges, 21
by the Division of Career and Technical Education for programs in vocational 22
technical training schools and by the Division of Elementary and Secondary 23
Education for programs in secondary schools, all of which programs are for 24
the purpose of promoting the use of new machinery and equipment for 25
classroom, laboratory, and other educational instruction; 26
(6) “Qualified educational institution” means: 27
(A) A public university, college, junior college, or 28
vocational technical training school located in and supported by the State of 29
Arkansas; 30
(B) A private university, college, junior college, or 31
vocational technical training school located in Arkansas and qualified for 32
tax-exempt status under the Income Tax Act of 1929, § 26 -51-101 et seq.; and 33
(C) A public secondary school; 34
(7) “Qualified research expenditures” means the sum of any 35
amounts that are paid or incurred by a taxpayer during the taxable year in 36 HB1521
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funding a qualified research program that has been approved for tax credit 1
treatment under rules promulgated by the Department of Finance and 2
Administration; 3
(8) “Qualified research program” means a program of applied or 4
basic research undertaken by a qualified educational institution under rules 5
jointly promulgated by the Director of the Arkansas Economic Development 6
Commission and the Division of Higher Education under § 15 -3-110; 7
(9) “Research park authority” means a public entity created 8
under the Research Park Authority Act, § 14 -144-101 et seq., to provide 9
facilities and support for businesses engaged in research and development in 10
pursuit of economic development opportunities; and 11
(10) “State-of-the-art machinery and equipment” means machinery 12
and equipment that are of the same type, design, and capability as like 13
machinery and equipment that are currently sold or manufactured by the donee 14
for sale to customers. 15
16
26-51-1102. Credit granted. 17
(a)(1) There is granted a credit against a taxpayer's Arkansas 18
corporate income tax or Arkansas individual income tax for the following 19
types of donations or sales, or both, of new machinery and equipment to a 20
qualified educational institution in connection with a qualified education 21
program or a qualified research program: 22
(A) Donations of new machinery and equipment; 23
(B) Sales below cost of machinery and equipment; and 24
(C) Cash donations for the purchase of new machinery and 25
equipment by a qualified educational institution. 26
(2) The amount of the credit granted by this section shall be: 27
(A) In the case of a donation, thirty -three percent (33%) 28
of the cost of the machinery and equipment donated; 29
(B) In the case of a sale below cost, thirty -three percent 30
(33%) of the amount by which the cost is reduced; and 31
(C) In the case of a cash donation, thirty -three percent 32
(33%) of the amount of the cash donation used by the qualified educational 33
institution to purchase new machinery and equipment from a wholesale, retail, 34
or manufacturing business. 35
(b) There is granted a credit against a taxpayer's Arkansas corporate 36 HB1521
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income tax or Arkansas individual income tax equal to thirty -three percent 1
(33%) of the qualified research expenditures of a taxpayer in qualified 2
research programs. 3
(c)(1) There is granted a credit against a taxpayer's Arkansas 4
corporate income tax or Arkansas individual income tax equal to thirty -three 5
percent (33%) of a donation made to an accredited institution of higher 6
education to support a research park authority. 7
(2) In order to claim this credit authorized by subdivision 8
(c)(1) of this section, a donation made in support of a research park 9
authority shall: 10
(A) Be consistent with the research and development plan 11
approved by the Director of the Arkansas Economic Development Commission with 12
the advice of the Board of Directors of the Division of Science and 13
Technology of the Arkansas Economic Development Commission, as evidenced by a 14
letter of support from the director; and 15
(B) Support either directly or indirectly research subject 16
to being funded by one (1) or more federal agencies, as enumerated in § 15 -3-17
205(1). 18
19
26-51-1103. Limit on total credit. 20
(a) Total credits for qualified research expenditures, donations, and 21
sales under this subchapter shall be allowed up to one hundred percent (100%) 22
of the net tax liability of the taxpayer after all other credits and 23
reductions in tax have been calculated. 24
(b) The credit shall be claimed in the tax year of the qualified 25
research expenditure, donation, or sale. However, all or part of any unused 26
credit may be carried over to and claimed in succeeding tax years until the 27
credits are exhausted or until the end of the nine (9) tax years succeeding 28
the tax year of the qualified research expenditure, donation, or sale, 29
whichever occurs earlier. In no event shall a taxpayer claim a credit under 30
this subchapter for any tax year in excess of one hundred percent (100%) of 31
the net tax due after all other credits and reductions in tax have been 32
calculated. 33
(c) Any person claiming any credit granted by this subchapter for any 34
expense or contribution shall not take any deduction under the Arkansas 35
income tax law for the same expense or contribution. 36 HB1521
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1
26-51-1104. Documentation required. 2
(a) To claim the credit granted by § 26 -51-1102, the taxpayer shall 3
provide the following for each piece of machinery and equipment donated, sold 4
below cost, or purchased by a qualified educational institution with a cash 5
donation: 6
(1) An affidavit from the receiving qualified educational 7
institution that: 8
(A) The qualified educational institution has received the 9
machinery and equipment; 10
(B) The machinery and equipment is new machinery and 11
equipment within the meaning of this subchapter; 12
(C) The qualified educational institution received the 13
machinery and equipment as a donation or, if the qualified educational 14
institution purchased the machinery and equipment, a statement of the amount 15
paid for the machinery and equipment; and 16
(D) The machinery and equipment has been donated, 17
purchased by the qualified educational institution with a cash donation 18
provided by a taxpayer, or sold to the qualified educational institution for 19
use in a qualified education program or a qualified research program; and 20
(2)(A) In the case of a donation or sale by a retail or 21
wholesale business, a copy of the invoice from the business' supplier showing 22
the actual cost of the machinery and equipment. 23
(B) In the case of a donation or sale below cost by a 24
manufacturer, a copy of the manufacturer's wholesale price list showing the 25
lowest price of the machinery and equipment for which credit is claimed. 26
(C) In the case of a purchase by a qualified educational 27
institution with a cash donation, itemized receipts documenting the amount of 28
the cash donation and the purchase costs of the new machinery and equipment. 29
(b) To claim the credit granted by § 26 -51-1102, the taxpayer shall 30
show that the Director of the Arkansas Economic Development Commission and 31
the Commissioner of the Division of Higher Education have approved the 32
qualified research expenditure as a part of a qualified research program. 33
(c) Copies of each of the above documents shall be filed by the 34
taxpayer with the Arkansas Economic Development Commission and with his or 35
her return as an attachment to the form prescribed by the Secretary of the 36 HB1521
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Department of Finance and Administration. 1
2
26-51-1105. Rules. 3
The Secretary of the Department of Finance and Administration, the 4
Commissioner of the Division of Higher Education, the Director of the 5
Division of Career and Technical Education, the Secretary of the Department 6
of Education, and the Director of the Arkansas Economic Development 7
Commission shall jointly promulgate rules to carry out the purposes of this 8
subchapter. 9
10
26-51-1106. Application for credit approval. 11
(a) To apply for a credit under this subchapter, a taxpayer shall 12
submit an original application and one (1) copy to the Director of the 13
Arkansas Economic Development Commission on the forms prescribed by the 14
director. 15
(b) The director shall review each application submitted under this 16
subchapter and shall either: 17
(1) Approve the application; or 18
(2) Reject the application and notify the applicant of the 19
deficiencies in the application. 20
(c) An applicant that receives approval from the director under this 21
section shall sign a financial incentive agreement outlining the terms and 22
conditions of the credit granted under this subchapter. 23
(d) An applicant may resubmit a rejected application after addressing 24
any deficiencies identified by the director. 25
(e) For an application submitted on or after July 24, 2019, an 26
expenditure incurred before the approval date of the financial incentive 27
agreement required under subsection (b) of this section shall be denied a 28
credit under this subchapter. 29
30
SECTION 16. Arkansas Code § 26 -52-402(c)(2)(C)(ii), concerning the 31
items not included in the definition of machinery and equipment “used 32
directly” in the manufacturing process for purposes of the sales tax 33
exemption for certain machinery and equipment, is amended to read as follows: 34
(ii) Except as provided in §§ 26 -52-447 and 26-53-35
149, machinery Machinery, equipment, and tools used in maintaining and 36 HB1521
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repairing any type of machinery and equipment; 1
2
SECTION 17. Arkansas Code § 26 -52-447 is repealed. 3
26-52-447. Partial replacement and repair of certain machinery and 4
equipment — Definitions. 5
(a) The taxes levied under §§ 26 -52-301 and 26-52-302 on the gross 6
receipts or gross proceeds from the sale of the following are subject to a 7
refund or exemption as provided in this section: 8
(1) Machinery and equipment purchased to modify, replace, 9
repair, or maintain, either in whole or in part, existing machinery or 10
equipment used directly in producing, manufacturing, fabricating, assembling, 11
processing, finishing, or packaging articles of commerce at a manufacturing 12
or processing plant or facility in this state; 13
(2) Service relating to the initial installation, alteration, 14
addition, cleaning, refinishing, replacement, or repair of machinery or 15
equipment described in subdivision (a)(1) of this section; 16
(3) Machinery and equipment purchased to modify, replace, or 17
repair, either in whole or in part, existing molds and dies used directly in 18
producing, manufacturing, fabricating, assembling, processing, finishing, or 19
packaging articles of commerce at a manufacturing or processing plant or 20
facility in this state; and 21
(4)(A) Except as provided in subdivision (a)(4)(B) of this 22
section, machinery and equipment purchased for use or possible use by a 23
taxpayer for a purpose described in subdivisions (a)(1) -(3) of this section 24
and placed in inventory for later use by the taxpayer for a purpose described 25
in subdivisions (a)(1) -(3) of this section. 26
(B)(i) As used in this subdivision (a)(4)(B), “withdrawal 27
from inventory” means the withdrawal or use of machinery or equipment held 28
under subdivision (a)(4)(A) of this section by a taxpayer for a purpose that 29
does not qualify for an exemption under this section or any other applicable 30
exemption at the time of the withdrawal from inventory. 31
(ii) A withdrawal from inventory is not eligible for 32
the exemption provided under this section. 33
(iii) For purposes of calculating the gross receipts 34
tax under subdivision (a)(4)(B)(iv) of this section, the gross receipts or 35
gross proceeds for a withdrawal from inventory is the purchase price of the 36 HB1521
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machinery or equipment withdrawn. 1
(iv) Tax is due on a withdrawal from inventory at 2
the time the withdrawal from inventory occurs. 3
(b)(1) Beginning July 1, 2014, the taxes levied under §§ 26 -52-301 and 4
26-52-302 that are subject to a refund under this section are the taxes in 5
excess of four and seven -eighths percent (4.875%). 6
(2) The taxes levied under §§ 26 -52-301 and 26-52-302 that are 7
subject to a refund under this section are the taxes in excess of the 8
following rates: 9
(A) Beginning July 1, 2018, three and seven -eighths 10
percent (3.875%); 11
(B) Beginning July 1, 2019, two and seven -eighths percent 12
(2.875%); 13
(C) Beginning July 1, 2020, one and seven -eighths percent 14
(1.875%); and 15
(D) Beginning July 1, 2021, seven -eighths percent 16
(0.875%). 17
(3) Beginning July 1, 2022, sales qualifying for the tax refund 18
under this section are exempt from the taxes levied under this chapter. 19
(c) The excise tax of one -eighth of one percent (0.125%) levied in 20
Arkansas Constitution, Amendment 75, the temporary excise tax of one -half 21
percent (0.5%) levied in Arkansas Constitution, Amendment 91, and the excise 22
tax of one-half percent (0.5%) levied in Arkansas Constitution, Amendment 23
101, are not subject to refund under this section. 24
(d) As used in this section: 25
(1) “Manufacturing” or “processing” means the same as defined 26
under § 26-52-402(b) and includes activities described in subsection (a) of 27
this section, both independently and collectively; and 28
(2) “Used directly” means the same as defined under § 26 -52-29
402(c). 30
(e) All existing excise tax exemptions, including without limitation 31
exemptions under §§ 26 -52-402 and 26-53-114, remain in full force and effect 32
and are not limited by this section. 33
(f) A taxpayer may claim the benefit of the tax refund under this 34
section only by using one (1) of the following methods: 35
(1)(A) Both: 36 HB1521
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(i) Obtaining a direct pay or a limited direct pay 1
sales and use tax permit from the Department of Finance and Administration; 2
and 3
(ii) Self-refunding: 4
(a) At the time the taxpayer files his or her 5
original sales and use tax report; or 6
(b) By later filing an amended sales or use 7
tax report with the department. 8
(B) The statutes of limitation stated in § 26 -18-306 apply 9
to claims made under this subdivision (f)(1). 10
(C) Interest shall not accrue or be paid on a refund 11
claimed under this subdivision (f)(1); or 12
(2)(A) Beginning July 1, 2018, for a taxpayer that does not hold 13
a direct pay or limited direct pay permit, holds an active Arkansas sales and 14
use tax permit, and files sales and use tax reports with the department, 15
filing a claim for a credit or rebate with the department. 16
(B)(i) The credit or rebate authorized under this 17
subdivision (f)(2) shall be obtained only by offsetting the amount of the 18
claimed credit or rebate against the state tax to be remitted with the 19
taxpayer's sales and use tax reports. 20
(ii) If the total amount of the credit or rebate 21
authorized under this subdivision (f)(2) is greater than the amount of the 22
state tax to be remitted with the taxpayer's sales and use tax reports, the 23
taxpayer is entitled to a refund of the difference between the amount of the 24
tax owed and the amount of the credit or rebate authorized under this 25
subdivision (f)(2). 26
(C) A taxpayer claiming a credit or rebate under this 27
subdivision (f)(2) shall electronically file all sales and use tax reports. 28
(D) A claim for credit or rebate under this subdivision 29
(f)(2) shall not be paid for a claim filed more than one (1) year following 30
the date of the qualifying sale or more than one (1) year following the date 31
of payment, whichever is later. 32
(E) Interest shall not accrue or be paid on an amount 33
subject to a claim for a credit or rebate under this subdivision (f)(2). 34
(g) A claim for a credit or rebate shall not be paid under subdivision 35
(f)(2) of this section for a sale made before July 1, 2018. 36 HB1521
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(h) A taxpayer shall not claim the benefit of the refund under this 1
section by filing a verified claim for refund with the department. 2
(i) The following provisions of the Arkansas Tax Procedure Act, § 26 -3
18-101 et seq., apply to claims for a refund under this section: 4
(1) The time limitations that apply to claims for a refund of an 5
overpayment of state tax; and 6
(2) The procedures that apply to the disallowance or proposed 7
disallowance of claims for a refund. 8
9
SECTION 18. Arkansas Code § 26 -52-509(a), concerning the direct 10
payment of sales tax by a consumer or user, is amended to read as follows: 11
(a)(1) The Secretary of the Department of Finance and Administration 12
by agreement with any consumer or user may : 13
(A) Permit permit a consumer or user under the agreement 14
to accrue and remit gross receipts taxes directly to the Department of 15
Finance and Administration, instead of the taxes being collected and paid by 16
the seller under § 26 -52-508; and 17
(B)(i) Issue limited direct pay authority to permit a user 18
or consumer to accrue and remit gross receipts and compensating use taxes on 19
purchases that include eligible purchases. 20
(ii)(a) A limited direct pay agreement permits a 21
consumer or user to accrue and remit gross receipts and compensating use 22
taxes on purchases that include eligible purchases. 23
(b) As used in this section, “eligible 24
purchases” means property or services subject to a refund of tax under §§ 26 -25
52-447 and 26-53-149. 26
(iii)(a) A limited direct pay agreement is available 27
only to a person eligible for a refund of tax under §§ 26 -52-447 and 26-53-28
149. 29
(b) A person holding a limited direct pay 30
permit shall use the permit only to make purchases that include eligible 31
purchases. 32
(2)(A) A seller that receives a claim for exemption from a 33
customer based on a limited direct pay permit shall not collect and remit 34
gross receipts or compensating use taxes on purchases that include eligible 35
purchases made by a person holding a limited direct pay permit. 36 HB1521
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(B) However, if a seller collects and remits gross 1
receipts or compensating use taxes on eligible purchases from a person 2
holding a limited direct pay permit, a refund may be obtained under § 26 -18-3
507. 4
(3) A person who has entered into a limited direct pay agreement 5
under this section and makes purchases of property or services under the 6
authority of that agreement without paying the gross receipts or compensating 7
use taxes due on those purchases is responsible for remitting the proper 8
amount of tax due to the secretary as required by law. 9
(4)(A) A seller shall collect and remit gross receipts and 10
compensating use taxes on purchases made by a person holding a limited direct 11
pay permit that are not eligible purchases. 12
(B) If a seller relies on the limited direct pay permit 13
and fails to properly collect tax on sales other than eligible purchases, the 14
limited direct pay permit holder shall remit the proper amount of tax to the 15
state as required under subdivision (a)(3) of this section. 16
(5) This section does not eliminate the requirement that a 17
consumer or user self -assess and remit compensating use tax under §§ 26 -53-18
123 — 26-53-125. 19
20
SECTION 19. Arkansas Code § 26 -53-149 is repealed. 21
26-53-149. Partial replacement and repair of certain machinery and 22
equipment — Definitions. 23
(a) The taxes levied under §§ 26 -53-106 and 26-53-107 on the privilege 24
of storing, using, distributing, or consuming the following within this state 25
are subject to a refund or exemption as provided in this section: 26
(1) Machinery and equipment purchased to modify, replace, 27
repair, or maintain, either in whole or in part, existing machinery or 28
equipment used directly in producing, manufacturing, fabricating, assembling, 29
processing, finishing, or packaging articles of commerce at a manufacturing 30
or processing plant or facility in this state; 31
(2) Service relating to the initial installation, alteration, 32
addition, cleaning, refinishing, replacement, or repair of machinery or 33
equipment described in subdivision (a)(1) of this section; 34
(3) Machinery and equipment purchased to modify, replace, or 35
repair, either in whole or in part, existing molds and dies used directly in 36 HB1521
34 02/18/2025 12:26:07 PM JLL167
producing, manufacturing, fabricating, assembling, processing, finishing, or 1
packaging articles of commerce at a manufacturing or processing plant or 2
facility in this state; and 3
(4)(A) Except as provided in subdivision (a)(4)(B) of this 4
section, machinery and equipment purchased for use or possible use by a 5
taxpayer for a purpose described in subdivisions (a)(1) -(3) of this section 6
and placed in inventory for later use by the taxpayer for a purpose described 7
in subdivisions (a)(1) -(3) of this section. 8
(B)(i) As used in this subdivision (a)(4)(B), “withdrawal 9
from inventory” means the withdrawal or use of machinery or equipment held 10
under subdivision (a)(4)(A) of this section by a taxpayer for a purpose that 11
does not qualify for an exemption under this section or any other applicable 12
exemption at the time of the withdrawal from inventory. 13
(ii) A withdrawal from inventory is not eligible for 14
the exemption provided under this section. 15
(iii) For purposes of calculating the compensating 16
use tax under subdivision (a)(4)(B)(iv) of this section, the gross receipts 17
or gross proceeds for a withdrawal from inventory is the purchase price of 18
the machinery or equipment withdrawn. 19
(iv) Tax is due on a withdrawal from inventory at 20
the time the withdrawal from inventory occurs. 21
(b)(1) Beginning July 1, 2014, the taxes levied under §§ 26 -53-106 and 22
26-53-107 that are subject to a refund under this section are the taxes in 23
excess of four and seven -eighths percent (4.875%). 24
(2) The taxes levied under §§ 26 -53-106 and 26-53-107 that are 25
subject to a refund under this section are the taxes in excess of the 26
following rates: 27
(A) Beginning July 1, 2018, three and seven -eighths 28
percent (3.875%); 29
(B) Beginning July 1, 2019, two and seven -eighths percent 30
(2.875%); 31
(C) Beginning July 1, 2020, one and seven -eighths percent 32
(1.875%); and 33
(D) Beginning July 1, 2021, seven -eighths percent 34
(0.875%). 35
(3) Beginning July 1, 2022, purchases qualifying for the tax 36 HB1521
35 02/18/2025 12:26:07 PM JLL167
refund under this section are exempt from the taxes levied under this 1
chapter. 2
(c) The excise tax of one -eighth of one percent (0.125%) levied in 3
Arkansas Constitution, Amendment 75, the temporary excise tax of one -half 4
percent (0.5%) levied in Arkansas Constitution, Amendment 91, and the excise 5
tax of one-half percent (0.5%) levied in Arkansas Constitution, Amendment 6
101, are not subject to refund under this section. 7
(d) As used in this section: 8
(1) “Manufacturing” or “processing” means the same as defined 9
under § 26-53-114(b) and includes activities described in subsection (a) of 10
this section, both independently and collectively; and 11
(2) “Used directly” means the same as defined under § 26 -53-12
114(c). 13
(e) All existing excise tax exemptions, including without limitation 14
exemptions under §§ 26 -52-402 and 26-53-114, remain in full force and effect 15
and are not limited by this section. 16
(f) A taxpayer may claim the benefit of the tax refund under this 17
section only by using one (1) of the following methods: 18
(1)(A) Both: 19
(i) Obtaining a direct pay or a limited direct pay 20
sales and use tax permit from the Department of Finance and Administration; 21
and 22
(ii) Self-refunding: 23
(a) At the time the taxpayer files his or her 24
original sales and use tax report; or 25
(b) By later filing an amended sales or use 26
tax report with the department. 27
(B) The statutes of limitation stated in § 26 -18-306 apply 28
to claims made under this subdivision (f)(1). 29
(C) Interest shall not accrue or be paid on a refund 30
claimed under this subdivision (f)(1); or 31
(2)(A) Beginning July 1, 2018, for a taxpayer that does not hold 32
a direct pay or limited direct pay permit, holds an active Arkansas sales and 33
use tax permit, and files sales and use tax reports with the department, 34
filing a claim for the credit or rebate with the department. 35
(B)(i) The credit or rebate authorized under this 36 HB1521
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subdivision (f)(2) shall be obtained only by offsetting the amount of the 1
claimed credit or rebate against the state tax to be remitted with the 2
taxpayer's sales and use tax reports. 3
(ii) If the total amount of the credit or rebate 4
authorized under this subdivision (f)(2) is greater than the amount of the 5
state tax to be remitted with the taxpayer's sales and use tax reports, the 6
taxpayer is entitled to a refund of the difference between the amount of the 7
tax owed and the amount of the credit or rebate authorized under this 8
subdivision (f)(2). 9
(C) A taxpayer claiming a credit or rebate under this 10
subdivision (f)(2) shall electronically file all sales and use tax reports. 11
(D) A claim for credit or rebate under this subdivision 12
(f)(2) shall not be paid for a claim filed more than one (1) year following 13
the date of the qualifying purchase or more than one (1) year following the 14
date of payment, whichever is later. 15
(E) Interest shall not accrue or be paid on an amount 16
subject to a claim for a credit or rebate under this subdivision (f)(2). 17
(g) A claim for a credit or rebate shall not be paid under subdivision 18
(f)(2) of this section for a purchase made before July 1, 2018. 19
(h) A taxpayer shall not claim the benefit of the refund under this 20
section by filing a verified claim for refund with the department. 21
(i) The following provisions of the Arkansas Tax Procedure Act, § 26 -22
18-101 et seq., apply to claims for a refund under this section: 23
(1) The time limitations that apply to claims for a refund of an 24
overpayment of state tax; and 25
(2) The procedures that apply to the disallowance or proposed 26
disallowance of claims for a refund. 27
28
SECTION 20. EFFECTIVE DATE. Sections 1 –19 of this act are effective 29
on and after October 1, 2025. 30
31
32
33
34
35
36