Arkansas 2025 Regular Session

Arkansas House Bill HB1521 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	Stricken language would be deleted from and underlined language would be added to present law.
2	2	JLL167 02/18/2025 12:26:07 PM JLL167
3	3	State of Arkansas 1
4	4	95th General Assembly A Bill 2
5	5	Regular Session, 2025 HOUSE BILL 1521 3
6	6	4
7	7	By: Representative Cavenaugh 5
8	8	By: Senator J. Petty 6
9	9	7
10	10	For An Act To Be Entitled 8
11	11	AN ACT TO REPEAL CERTAIN TAX INCENTIVES; TO REPEAL 9
12	12	CERTAIN UNUSED, UNDERUSED, OR UNFUNDED TAX 10
13	13	INCENTIVES; TO REPEAL TAX INCENTIVES RELATED TO 11
14	14	CENTERS FOR APPLIED TECHNOLOGY; TO REPEAL THE 12
15	15	ARKANSAS PUBLIC ROADS IMPROVEMENTS CREDIT ACT; TO 13
16	16	REPEAL PROVISIONS OF THE CONSOLIDATED INCENTIVE ACT 14
17	17	OF 2003; TO REPEAL TAX INCENTIVES FOR MAJOR 15
18	18	MAINTENANCE AND IMPROVEMENT PROJECTS; TO REPEAL THE 16
19	19	PUBLIC ROADS INCENTIVE FUND; TO REPEAL INCENTIVES 17
20	20	RELATED TO THE DONATION OR SALE OF EQUIPMENT TO AN 18
21	21	EDUCATIONAL INSTITUTION; TO REPEAL THE SALES AND USE 19
22	22	TAX EXEMPTION FOR THE PARTIAL REPLACEMENT AND REPAIR 20
23	23	OF CERTAIN MACHINERY AND EQUIPMENT; AND FOR OTHER 21
24	24	PURPOSES. 22
25	25	23
26	26	24
27	27	Subtitle 25
28	28	TO REPEAL CERTAIN UNUSED, UNDERUSED, OR 26
29	29	UNFUNDED TAX INCENTIVES. 27
30	30	28
31	31	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 29
32	32	30
33	33	SECTION 1. Arkansas Code § 15-3-110(c)–(e), concerning the power of 31
34	34	the Director of the Arkansas Economic Development Commission to promote basic 32
35	35	and applied research at Arkansas colleges and universities, are repealed. 33
36	36	(c)(1) Any moneys lawfully available to the division for the purpose 34
37	37	of supporting basic research at Arkansas colleges and universities shall in 35
38	38	no event defray more than sixty percent (60%) of the total cost of the 36 HB1521
39	39
40	40	2 02/18/2025 12:26:07 PM JLL167
41	41	proposed basic research project being funded. 1
42	42	(2) The remaining forty percent (40%) of the total cost of the 2
43	43	proposed basic research project shall be funded by moneys or in -kind services 3
44	44	provided by the college or university proposing the basic research project. 4
45	45	(d)(1)(A) Any moneys lawfully available to the division for the 5
46	46	purpose of creating applied research partnerships between private industry 6
47	47	and Arkansas colleges and universities shall in no event defray more than 7
48	48	fifty percent (50%) of the total cost of the proposed applied research 8
49	49	project. 9
50	50	(B) However, the contribution of the Director of the 10
51	51	Arkansas Economic Development Commission may defray up to sixty -six and two-11
52	52	thirds percent (66⅔%) of the total cost of a proposed applied research 12
53	53	project if the Director of the Arkansas Economic Development Commission, with 13
54	54	the advice of the Board of Directors of the Division of Science and 14
55	55	Technology of the Arkansas Economic Development Commission, finds that the 15
56	56	participating private industry is principally located in Arkansas and employs 16
57	57	fifty (50) or fewer persons. 17
58	58	(2) The proposed applied research project shall be submitted by 18
59	59	an Arkansas college or university, and the proposal shall state that a 19
60	60	percentage of the total cost of the proposed applied research project will be 20
61	61	provided by private sources in accordance with the matching provisions of 21
62	62	this subsection. 22
63	63	(3) The Director of the Arkansas Economic Development Commission 23
64	64	shall approve for funding only those proposed applied research projects for 24
65	65	which the Director of the Arkansas Economic Development Commission finds that 25
66	66	enhanced employment opportunity within Arkansas will be a likely result. 26
67	67	(e)(1) Any moneys lawfully available to the division for the purpose 27
68	68	of supporting technology development shall in no event exceed one hundred 28
69	69	thousand dollars ($100,000) per project being funded. 29
70	70	(2) The Director of the Arkansas Economic Development Commission 30
71	71	shall impose a reasonable, nonrefundable fee for the evaluation of the 31
72	72	technological and economic potential of emerging technologies contained in 32
73	73	proposals from nonpublic sources of innovation. 33
74	74	(3) The Director of the Arkansas Economic Development Commission 34
75	75	is authorized to incorporate a royalty provision not to exceed five percent 35
76	76	(5%) of net sales revenue per year for a period of not more than ten (10) 36 HB1521
77	77
78	78	3 02/18/2025 12:26:07 PM JLL167
79	79	years as a condition of award. 1
80	80	(4) The Director of the Arkansas Economic Development Commission 2
81	81	shall approve for funding only those proposed technology development projects 3
82	82	for which the Director of the Arkansas Economic Development Commission finds 4
83	83	that enhanced economic opportunity within Arkansas will be a likely result. 5
84	84	6
85	85	SECTION 2. Arkansas Code §§ 15 -3-130 — 15-3-135 are repealed. 7
86	86	15-3-130. Centers for applied technology — Definition. 8
87	87	For the purposes of this section and §§ 15 -3-131 — 15-3-134, “center 9
88	88	for applied technology” or “center” means a college or university or 10
89	89	university-affiliated unit, or a consortium of such units, which conducts a 11
90	90	continuing program of basic research and applied research, development, and 12
91	91	technology transfer in one (1) or more technological areas in collaboration 13
92	92	with and through the support of private enterprises. 14
93	93	15
94	94	15-3-131. Centers for applied technology — Authority to designate. 16
95	95	In order to encourage greater collaboration between private enterprises 17
96	96	and Arkansas colleges and universities in the development and application of 18
97	97	new technologies, the Arkansas Economic Development Commission may designate 19
98	98	technological areas as having significant potential for economic growth in 20
99	99	Arkansas or in which the application of new technologies could significantly 21
100	100	enhance the productivity and stability of Arkansas enterprises. 22
101	101	23
102	102	15-3-132. Centers for applied technology — Criteria — Designation. 24
103	103	(a) The Division of Science and Technology of the Arkansas Economic 25
104	104	Development Commission shall: 26
105	105	(1) Identify technological areas for which centers for applied 27
106	106	technology should be designated, including, but not limited to, technological 28
107	107	areas that are related to enterprises with significant potential for economic 29
108	108	growth and development in Arkansas and areas that are related to the 30
109	109	enhancement of productivity in various enterprises in Arkansas; 31
110	110	(2) Establish, in consultation with the Division of Higher 32
111	111	Education, criteria that must be satisfied for designation as a center, 33
112	112	including, but not limited to: 34
113	113	(A) An established record of research, development, and 35
114	114	instruction in the area of technology; 36 HB1521
115	115
116	116	4 02/18/2025 12:26:07 PM JLL167
117	117	(B) The capacity to conduct research and development 1
118	118	activities in collaboration with private enterprises; 2
119	119	(C) The capacity to secure substantial private and other 3
120	120	government funding for the proposed center; 4
121	121	(D) The ability and willingness to cooperate with other 5
122	122	colleges and universities in conducting research and development activities 6
123	123	and in disseminating research results and to work with institutions of higher 7
124	124	learning to enhance the quality of technological education in the area or 8
125	125	areas of technology involved; and 9
126	126	(E) The ability and willingness to cooperate with the 10
127	127	Division of Science and Technology of the Arkansas Economic Development 11
128	128	Commission, the Arkansas Economic Development Council, and other economic 12
129	129	development agencies in promoting the growth and development in Arkansas of 13
130	130	enterprises based upon or benefiting from the areas of technology involved; 14
131	131	and 15
132	132	(3) Designate, using a competitive selection process, those 16
133	133	centers for applied technology to be created in cooperation with colleges and 17
134	134	universities in the state. 18
135	135	(b) The Division of Science and Technology of the Arkansas Economic 19
136	136	Development Commission may not designate technological areas or establish 20
137	137	centers prior to the Division of Science and Technology of the Arkansas 21
138	138	Economic Development Commission's adopting rules to govern the program 22
139	139	authorized under this section, §§ 15 -3-130, 15-3-131, 15-3-133, and 15-3-134. 23
140	140	24
141	141	15-3-133. Centers for applied technology — Advisory committees. 25
142	142	(a) In carrying out its functions under this section, §§ 15 -3-130 — 26
143	143	15-3-132, and 15-3-134, the Division of Science and Technology of the 27
144	144	Arkansas Economic Development Commission may create such advisory committees 28
145	145	as may be useful in evaluating potential technological areas and centers for 29
146	146	applied technology. 30
147	147	(b) The memberships of these advisory committees may include both 31
148	148	directors and staff members of the division and other persons drawn from 32
149	149	sources other than the division, all of whom shall serve at the pleasure of 33
150	150	the Director of the Arkansas Economic Development Commission. 34
151	151	(c) Members of such advisory committees shall serve without 35
152	152	compensation for their membership on such committees but may receive expense 36 HB1521
153	153
154	154	5 02/18/2025 12:26:07 PM JLL167
155	155	reimbursement in accordance with § 25 -16-901 et seq. 1
156	156	2
157	157	15-3-134. Centers for applied technology — Disposition of funds. 3
158	158	Any moneys lawfully available to the Arkansas Economic Development 4
159	159	Commission for the purpose of creating centers for applied technology may be 5
160	160	used for the purchase of equipment and fixtures, employment of faculty and 6
161	161	support staff, provision of graduate fellowships, and other purposes approved 7
162	162	by the commission but may not be used for capital construction. 8
163	163	9
164	164	15-3-135. Promotion of scientific, medical, and technological jobs and 10
165	165	infrastructure enhancements — Definition. 11
166	166	(a) As used in this section, “qualified medical company” means a 12
167	167	corporation engaged in: 13
168	168	(1) Research and development in the medical field; and 14
169	169	(2) Manufacture and distribution of medical products, including 15
170	170	therapeutic and diagnostic products. 16
171	171	(b)(1) All agencies, departments, boards, commissions, and other 17
172	172	instrumentalities of this state and all political subdivisions of this state 18
173	173	and all agencies, departments, boards, commissions, and other 19
174	174	instrumentalities thereof, to the greatest extent possible, shall expedite 20
175	175	the processing of all lawful applications and requests required or permitted 21
176	176	by law which are submitted or made by qualified medical companies and, in 22
177	177	considering all such applications and requests, give due consideration to the 23
178	178	purposes of this section. 24
179	179	(2) To the extent available time, personnel, and other resources 25
180	180	permit, all state-funded colleges and universities shall provide research 26
181	181	assistance to the Arkansas Economic Development Commission to assist with 27
182	182	planning to develop scientific, medical, and technological commercial 28
183	183	infrastructure enhancements to encourage qualified medical companies to 29
184	184	locate in this state. 30
185	185	31
186	186	SECTION 3. Arkansas Code Title 15, Chapter 4, Subchapter 23, is 32
187	187	repealed. 33
188	188	Subchapter 23 — Arkansas Public Roads Improvements Credit Act 34
189	189	35
190	190	15-4-2301. Title. 36 HB1521
191	191
192	192	6 02/18/2025 12:26:07 PM JLL167
193	193	This subchapter may be referred to and cited as the “Arkansas Public 1
194	194	Roads Improvements Credit Act”. 2
195	195	3
196	196	15-4-2302. Legislative intent. 4
197	197	The General Assembly finds and declares that: 5
198	198	(1) The state's program for capital improvements for public 6
199	199	roads projects and the financing of those projects is inadequate; 7
200	200	(2) The economic and other benefits to the state and its people 8
201	201	resulting from capital improvements for public roads projects are essential 9
202	202	to the public health, safety, and welfare of the people of Arkansas; and 10
203	203	(3) Providing tax credits to taxpayers for contributions in aid 11
204	204	of construction of capital improvements for public roads projects will 12
205	205	encourage public and private participation in these capital improvement 13
206	206	projects, will promote the economic welfare of this state and its people, and 14
207	207	is in the public interest. 15
208	208	16
209	209	15-4-2303. Definitions. 17
210	210	As used in this subchapter: 18
211	211	(1) “Capital improvements” means capital improvements for public 19
212	212	roads; 20
213	213	(2) “Commission” means the Arkansas Economic Development 21
214	214	Commission; 22
215	215	(3) “Contribution” means a contribution in aid of construction 23
216	216	of a public roads project made by a taxpayer to the Public Roads Incentive 24
217	217	Fund; 25
218	218	(4) “Council” means the Arkansas Economic Development Council; 26
219	219	(5) “County” means any county in the State of Arkansas; 27
220	220	(6) [Repealed.] 28
221	221	(7) “Fund” means the Public Roads Incentive Fund; 29
222	222	(8) “Governing authority” means the quorum court of a county, 30
223	223	the governing body of a municipality, and the State Highway Commission; 31
224	224	(9) “Municipality” means any city or incorporated town in the 32
225	225	State of Arkansas; 33
226	226	(10) “Project” means all, any combination, or any part of the 34
227	227	capital improvements for public roads which are authorized by a governing 35
228	228	authority and approved by the Director of the Arkansas Economic Development 36 HB1521
229	229
230	230	7 02/18/2025 12:26:07 PM JLL167
231	231	Commission; 1
232	232	(11) “Public roads” means roads maintained by a governing 2
233	233	authority; and 3
234	234	(12) “Taxpayer” includes any individual, fiduciary, or 4
235	235	corporation subject to Arkansas state income tax. 5
236	236	6
237	237	15-4-2304. Approval of projects. 7
238	238	Governing authorities may apply to the Director of the Arkansas 8
239	239	Economic Development Commission for funding assistance for capital 9
240	240	improvement projects for public roads as provided by this subchapter. The 10
241	241	director is authorized to approve capital improvements for funding assistance 11
242	242	upon a finding that a project is in the public interest. 12
243	243	13
244	244	15-4-2305. Public Roads Incentive Fund. 14
245	245	(a) There is established on the books of the Treasurer of State, the 15
246	246	Auditor of State, and the Chief Fiscal Officer of the State a fund to be 16
247	247	known as the “Public Roads Incentive Fund” of the Arkansas Economic 17
248	248	Development Council. 18
249	249	(b) The fund shall consist of contributions made by taxpayers for 19
250	250	public roads projects approved by the Director of the Arkansas Economic 20
251	251	Development Commission and any other funds as are designated or deposited to 21
252	252	the fund by law. 22
253	253	(c)(1) A separate account shall be established for each project, and 23
254	254	contributions for a project shall be applied to provide funding assistance 24
255	255	for such a project. 25
256	256	(2) Any contributions which remain in the fund when a project is 26
257	257	completed or terminated shall be held and applied to other public roads 27
258	258	projects in such manner as the director shall direct. 28
259	259	29
260	260	15-4-2306. Tax credit. 30
261	261	(a) A taxpayer shall be entitled to a credit against any Arkansas 31
262	262	income tax liability which may be imposed on the taxpayer for any tax year 32
263	263	commencing on or after January 1, 1999, for contributions transmitted to the 33
264	264	Treasurer of State pursuant to this subchapter. 34
265	265	(b) The credit shall be determined in the following manner: 35
266	266	(1) The credit shall be calculated as thirty -three percent (33%) 36 HB1521
267	267
268	268	8 02/18/2025 12:26:07 PM JLL167
269	269	of the taxpayer's contribution; 1
270	270	(2) In any one (1) tax year, the credit allowed by this section 2
271	271	shall offset up to one hundred percent (100%) of the net Arkansas state 3
272	272	income tax liability of the taxpayer; and 4
273	273	(3) Any credit in excess of the amount allowed by subdivision 5
274	274	(b)(2) of this section for any one (1) tax year may be carried forward and 6
275	275	applied against any Arkansas state income tax liability for the next-7
276	276	succeeding tax year and annually thereafter for a total period of ten (10) 8
277	277	years next succeeding the year in which the credit arose, subject to the 9
278	278	provisions of subdivision (b)(2) of this section or until the credit is 10
279	279	exhausted, whichever occurs first. 11
280	280	12
281	281	15-4-2307. Powers and duties of the Arkansas Economic Development 13
282	282	Commission. 14
283	283	The Arkansas Economic Development Commission shall administer the 15
284	284	provisions of this subchapter and shall have the following powers and duties, 16
285	285	in addition to those mentioned in this subchapter and in other laws of this 17
286	286	state: 18
287	287	(1) To monitor the implementation and operation of this 19
288	288	subchapter and to conduct a continuing evaluation of the progress made; 20
289	289	(2) To assist the governing authority in obtaining assistance 21
290	290	from any other department of state government; 22
291	291	(3) To submit an annual written report evaluating the 23
292	292	effectiveness of the program and presenting any suggestions for improving the 24
293	293	program, to be submitted to the Governor no later than March 1 of each year; 25
294	294	and 26
295	295	(4) To promulgate rules in accordance with the Arkansas 27
296	296	Administrative Procedure Act, § 25 -15-201 et seq., necessary to carry out the 28
297	297	provisions of this subchapter. 29
298	298	30
299	299	SECTION 4. Arkansas Code § 15 -4-2705(h), concerning the job -creation 31
300	300	tax credit, is amended to read as follows: 32
301	301	(h)(1) If a qualified business fails to meet the payroll threshold 33
302	302	within two (2) years after the date of the approved financial incentive 34
303	303	agreement or within the time period established by an extension approved by 35
304	304	the Secretary of the Department of Finance and Administration and the 36 HB1521
305	305
306	306	9 02/18/2025 12:26:07 PM JLL167
307	307	Director of the Arkansas Economic Development Commission, the qualified 1
308	308	business is liable for repayment of all incentives previously received under 2
309	309	§ 15-4-2706(d) that were conditioned on an approved financial incentive 3
310	310	agreement under this section for which the payroll threshold has not been 4
311	311	met. 5
312	312	(2) If a qualified business fails to reach the payroll threshold 6
313	313	of this section in a timely manner, the The department shall have two (2) 7
314	314	years to collect incentives previously received by the qualified business or 8
315	315	file a lawsuit to enforce the repayment provisions. 9
316	316	10
317	317	SECTION 5. Arkansas Code § 15 -4-2706(b)(7)-(13), concerning investment 11
318	318	tax incentives under the Consolidated Incentive Act of 2003, are repealed. 12
319	319	(7) Technology-based enterprises, as defined by § 14 -164-203, 13
320	320	may earn, at the discretion of the director, an income tax credit or sales 14
321	321	and use tax credit based on new investment, provided that the technology -15
322	322	based enterprise: 16
323	323	(A) Creates a new payroll of at least two hundred fifty 17
324	324	thousand dollars ($250,000); and 18
325	325	(B) Pays an average hourly wage that is at least one 19
326	326	hundred fifty percent (150%) of the lesser of the state or county average 20
327	327	hourly wage for the county in which the business locates or expands. 21
328	328	(8)(A) The income tax credit or sales and use tax credit that 22
329	329	may be earned by a technology -based enterprise is based on the amount of 23
330	330	investment as follows: 24
331	331	(i) The income tax credit or sales and use tax 25
332	332	credit is equal to two percent (2%) of the investment for an investment that 26
333	333	is between two hundred fifty thousand dollars ($250,000) and five hundred 27
334	334	thousand dollars ($500,000); 28
335	335	(ii) The income tax credit or sales and use tax 29
336	336	credit is equal to four percent (4%) of the investment for that part of the 30
337	337	investment that is over five hundred thousand dollars ($500,000) and less 31
338	338	than one million dollars ($1,000,000); 32
339	339	(iii) The income tax credit or sales and use tax 33
340	340	credit is equal to six percent (6%) of the investment for that part of the 34
341	341	investment that is over one million dollars ($1,000,000) and less than two 35
342	342	million dollars ($2,000,000); and 36 HB1521
343	343
344	344	10 02/18/2025 12:26:07 PM JLL167
345	345	(iv) The income tax credit or sales and use tax 1
346	346	credit is equal to eight percent (8%) of the investment for that part of the 2
347	347	investment that is over two million dollars ($2,000,000). 3
348	348	(B) The amount of credit earned is determined based upon 4
349	349	the amount invested, as verified by an audit by the department. 5
350	350	(9) All investments by a technology -based enterprise shall be 6
351	351	made within four (4) years of the date of the approved financial incentive 7
352	352	agreement. 8
353	353	(10) Prior to commission approval of a financial incentive 9
354	354	agreement, the business shall elect to receive the tax credits as either: 10
355	355	(A) A sales and use tax credit; or 11
356	356	(B) An income tax credit. 12
357	357	(11) The income tax credit or sales and use tax credit earned by 13
358	358	a technology-based enterprise may offset income tax liabilities or sales and 14
359	359	use tax liabilities as follows: 15
360	360	(A) A technology-based enterprise that pays at least one 16
361	361	hundred fifty percent (150%) of the lesser of the state or county average 17
362	362	hourly wage for the county in which the business locates or expands may 18
363	363	offset up to fifty percent (50%) of its income tax liability or sales and use 19
364	364	tax liability annually; 20
365	365	(B) A technology-based enterprise that pays at least one 21
366	366	hundred seventy-five percent (175%) of the lesser of the state or county 22
367	367	average hourly wage for the county in which the business locates or expands 23
368	368	may offset up to seventy -five percent (75%) of its income tax liability or 24
369	369	sales and use tax liability annually; and 25
370	370	(C) A technology-based enterprise that pays at least two 26
371	371	hundred percent (200%) of the lesser of the state or county average hourly 27
372	372	wage for the county in which the business locates or expands may offset up to 28
373	373	one hundred percent (100%) of its income tax liability or sales and use tax 29
374	374	liability annually. 30
375	375	(12) After receiving an approved financial incentive agreement 31
376	376	from the commission, a qualified business shall certify to the department the 32
377	377	eligible project costs and average hourly wages annually at the end of each 33
378	378	tax year for the term of the financial incentive agreement. 34
379	379	(13) Unused income tax credits or sales and use tax credits may 35
380	380	be carried forward for up to nine (9) years after the year in which the 36 HB1521
381	381
382	382	11 02/18/2025 12:26:07 PM JLL167
383	383	credit was first earned or until the tax credits are exhausted, whichever 1
384	384	occurs first. 2
385	385	3
386	386	SECTION 6. Arkansas Code § 15 -4-2706(d) and (e), concerning investment 4
387	387	tax incentives under the Consolidated Incentive Act of 2003, are repealed. 5
388	388	(d)(1)(A) An application for a state and local sales and use tax 6
389	389	refund for a new or expanding business shall be filed with the commission 7
390	390	contingent upon the approval of an endorsement resolution from the governing 8
391	391	authority of a municipality or county, or both, in whose jurisdiction the 9
392	392	business will be located. 10
393	393	(B) The resolution shall: 11
394	394	(i) Endorse the business's participation in this 12
395	395	sales and use tax refund program; and 13
396	396	(ii) Specify that the department is authorized to 14
397	397	refund local sales taxes to the qualified business. 15
398	398	(C) To qualify for a refund under this subsection, a 16
399	399	qualified business shall meet the minimum investment thresholds for the tier 17
400	400	in which the qualified business expands or locates, as follows: 18
401	401	(i) For tier 1 counties, the minimum investment 19
402	402	threshold is at least five hundred thousand dollars ($500,000); 20
403	403	(ii) For tier 2 counties, the minimum investment 21
404	404	threshold is at least four hundred thousand dollars ($400,000); 22
405	405	(iii) For tier 3 counties, the minimum investment 23
406	406	threshold is at least three hundred thousand dollars ($300,000); and 24
407	407	(iv) For tier 4 counties, the minimum investment 25
408	408	threshold is at least two hundred thousand dollars ($200,000). 26
409	409	(2)(A)(i) The secretary shall authorize a sales and use tax 27
410	410	refund of state and local sales and use taxes, excepting the sales and use 28
411	411	taxes dedicated to the Educational Adequacy Fund and the Conservation Tax 29
412	412	Fund on the purchases of the material used in the construction of a building 30
413	413	or buildings or any addition, modernization, or improvement thereon for 31
414	414	housing any new or expanding qualified business and machinery and equipment 32
415	415	to be located in or in connection with such a building. 33
416	416	(ii) The local sales and use tax may be refunded only 34
417	417	from the municipality or county, or both, in which the qualified business is 35
418	418	located. 36 HB1521
419	419
420	420	12 02/18/2025 12:26:07 PM JLL167
421	421	(B) A refund shall not be authorized for: 1
422	422	(i) Routine operating expenditures; or 2
423	423	(ii) The purchase of replacement items previously 3
424	424	purchased as part of a project under this subsection unless the items 4
425	425	previously purchased are necessary for the implementation or completion of 5
426	426	the project. 6
427	427	(3)(A) Subject to the approval of the commission, a qualified 7
428	428	business may make changes to a project by written amendment to the project 8
429	429	plan filed with the commission. 9
430	430	(B) The commission shall not approve an amendment under 10
431	431	subdivision (d)(3)(A) of this section that results in a cost increase of more 11
432	432	than twenty-five percent (25%) of the initial project plan. 12
433	433	(4) All claims for sales and use tax refunds under this 13
434	434	subsection shall be denied unless they are filed with the department within 14
435	435	three (3) years from the date of the qualified purchase or purchases. 15
436	436	(5)(A)(i) To be eligible for the incentives under this 16
437	437	subsection, a qualified business shall meet all payroll creation requirements 17
438	438	of its approved financial incentive agreement under § 15 -4-2705 or § 15-4-18
439	439	2707. 19
440	440	(ii) However, a business may apply for incentives 20
441	441	under this subsection if: 21
442	442	(a) The business has an existing financial 22
443	443	incentive agreement approved under this subdivision (d)(5)(A) and the 23
444	444	provisions of subdivision (d)(5)(B) of this section have been met within the 24
445	445	previous four (4) years; or 25
446	446	(b) The business has signed a financial 26
447	447	incentive agreement approved under § 15 -4-2705 or § 15-4-2707 within the 27
448	448	previous four (4) years. 28
449	449	(B) The financial incentive agreement under § 15 -4-2705 or 29
450	450	§ 15-4-2707 shall be approved within two (2) years after the financial 30
451	451	incentive agreement under this subsection is approved. 31
452	452	(e)(1) A targeted business may be eligible for a refund of state and 32
453	453	local sales and use taxes for qualified expenditures at the discretion of the 33
454	454	director if: 34
455	455	(A)(i) The annual payroll of the targeted business for 35
456	456	Arkansas taxpayers is greater than one hundred thousand dollars ($100,000) 36 HB1521
457	457
458	458	13 02/18/2025 12:26:07 PM JLL167
459	459	and less than one million dollars ($1,000,000). 1
460	460	(ii) The payroll requirement in subdivision 2
461	461	(e)(1)(A)(i) of this section applies only to the initial eligibility 3
462	462	determination and does not preclude a qualified business from receiving 4
463	463	incentives if, at any time after the financial incentive agreement is 5
464	464	approved, actual payroll does not satisfy the requirements in subdivision 6
465	465	(e)(1)(A)(i) of this section; and 7
466	466	(B) The targeted business shows proof of an equity 8
467	467	investment of at least two hundred fifty thousand dollars ($250,000). 9
468	468	(2)(A) An application for the targeted business state and local 10
469	469	sales and use tax refund program for a new or expanding targeted business 11
470	470	shall be filed with the commission contingent upon the approval of an 12
471	471	endorsement resolution from the governing authority of a municipality or 13
472	472	county, or both, in whose jurisdiction the targeted business will be located. 14
473	473	(B) The resolution shall: 15
474	474	(i) Endorse the business's participation in this 16
475	475	sales and use tax refund program; and 17
476	476	(ii) Specify that the department is authorized to 18
477	477	refund local sales and use taxes to the targeted business. 19
478	478	(3) An approved financial incentive agreement and any other 20
479	479	pertinent documentation shall be forwarded to the secretary. 21
480	480	(4)(A)(i) The secretary shall authorize a sales and use tax 22
481	481	refund of state and local sales and use taxes, excepting the sales and use 23
482	482	taxes dedicated to the Educational Adequacy Fund and the Conservation Tax 24
483	483	Fund on the purchases of the material used in the construction of a building 25
484	484	or buildings or any addition, modernization, or improvement thereon for 26
485	485	housing any new or expanding qualified business and machinery and equipment 27
486	486	to be located in or in connection with such a building. 28
487	487	(ii) The local sales and use tax may be refunded 29
488	488	only from the municipality or county, or both, in which the qualified 30
489	489	business is located. 31
490	490	(B) A refund shall not be authorized for: 32
491	491	(i) Routine operating expenditures; or 33
492	492	(ii) The purchase of replacement items previously 34
493	493	purchased as part of a project under this subsection unless the items 35
494	494	previously purchased are necessary for the implementation or completion of 36 HB1521
495	495
496	496	14 02/18/2025 12:26:07 PM JLL167
497	497	the project. 1
498	498	(5)(A) Subject to the approval of the commission, a qualified 2
499	499	business may make changes to a project by written amendment to the project 3
500	500	plan filed with the commission. 4
501	501	(B) The commission shall not approve an amendment under 5
502	502	subdivision (e)(5)(A) of this section that results in a cost increase of more 6
503	503	than twenty-five percent (25%) of the initial project plan. 7
504	504	(6) All claims for sales and use tax refunds under this 8
505	505	subsection shall be denied unless they are filed with the department within 9
506	506	three (3) years after the date of the qualified purchase or purchases. 10
507	507	(7) If a targeted business plans to apply for benefits under 11
508	508	this subsection and also plans to apply for benefits under § 15 -4-2709, the 12
509	509	financial incentive agreement under § 15-4-2709 must be signed within twenty -13
510	510	four (24) months of signing the financial incentive agreement under this 14
511	511	subsection and comply with the eligibility requirements of the financial 15
512	512	incentive agreements. 16
513	513	(8) To be eligible for the incentives under this subsection, a 17
514	514	targeted business shall meet all payroll creation requirements of an approved 18
515	515	financial incentive agreement under § 15 -4-2707 or § 15-4-2709 within two (2) 19
516	516	years of the date of the approved financial incentive agreement under this 20
517	517	subsection or other subsequent date if approved by the director. 21
518	518	22
519	519	SECTION 7. Arkansas Code § 15 -4-2707(e), concerning the Economic 23
520	520	Development Incentive Fund and the payroll rebate under the Consolidated 24
521	521	Incentive Act of 2003, is repealed. 25
522	522	(e)(1) Technology-based enterprises, as defined in § 14 -164-203, may 26
523	523	earn, at the discretion of the director, a payroll rebate equal to five 27
524	524	percent (5%) of the payroll for new full -time permanent employees for a 28
525	525	period not to exceed ten (10) years. 29
526	526	(2) To qualify for the payroll rebate: 30
527	527	(A) The average hourly wage of the payroll for new full -31
528	528	time permanent employees must be at least one hundred fifty percent (150%) of 32
529	529	the lesser of the state or county average hourly wage for the county in which 33
530	530	the technology-based enterprise locates or expands; 34
531	531	(B) The payroll for new full -time permanent employees must 35
532	532	exceed two hundred fifty thousand dollars ($250,000); and 36 HB1521
533	533
534	534	15 02/18/2025 12:26:07 PM JLL167
535	535	(C) The payroll rebate authorized by this subsection shall 1
536	536	not be used in combination with the income tax credit based on payroll 2
537	537	authorized by § 15-4-2709. 3
538	538	4
539	539	SECTION 8. Arkansas Code § 15 -4-2708(a)(4), concerning research and 5
540	540	development tax credits under the Consolidated Incentive Act of 2003, is 6
541	541	repealed. 7
542	542	(4) A qualified business claiming tax credits earned under this 8
543	543	subsection shall not receive the credit granted by § 26 -51-1102(b) for the 9
544	544	same expenditures. 10
545	545	11
546	546	SECTION 9. Arkansas Code § 15 -4-2708(b)–(d), concerning research and 12
547	547	development tax credits under the Consolidated Incentive Act of 2003, are 13
548	548	amended to read as follows: 14
549	549	(b)(1) Targeted businesses may qualify for an income tax credit equal 15
550	550	to thirty-three percent (33%) of the amount spent on in -house research per 16
551	551	year for the first five (5) tax years following the targeted business's 17
552	552	signing a financial incentive agreement with the commission. 18
553	553	(2) The credits earned by targeted businesses may be sold as 19
554	554	authorized in § 15-4-2709 under this subsection . 20
555	555	(3) Any unused income tax credits under this subsection may be 21
556	556	carried forward for up to nine (9) years after the year in which the income 22
557	557	tax credit was first earned. 23
558	558	(4)(A) To sell income tax credits earned through incentives 24
559	559	authorized under this subchapter, a targeted business shall apply to the 25
560	560	commission and furnish the information necessary to facilitate the sale of 26
561	561	the income tax credits. 27
562	562	(B)(i) A taxpayer that purchases income tax credits under 28
563	563	this subsection may carry any unused income tax credits forward as provided 29
564	564	in subdivision (b)(3) of this section. 30
565	565	(ii) The purchase of income tax credits under this 31
566	566	subsection does not establish a new carry -forward period for the purchaser. 32
567	567	(5) A targeted business that claims or sells income tax credits 33
568	568	under this subsection shall not receive the income tax credit allowed under § 34
569	569	26-51-1102(b) for the same expenditures. 35
570	570	(c)(1) An Arkansas taxpayer may be offered, at the discretion of the 36 HB1521
571	571
572	572	16 02/18/2025 12:26:07 PM JLL167
573	573	director, an income tax credit equal to thirty -three percent (33%) of the 1
574	574	amount spent on the research for the first five (5) tax years following the 2
575	575	business's signing a financial incentive agreement with the commission, 3
576	576	subject to the limitations established under § 26 -51-1103 if the taxpayer 4
577	577	invests in: 5
578	578	(A) In-house research in a strategic research area; or 6
579	579	(B) Projects under the research and development programs 7
580	580	of the Division of Science and Technology of the Arkansas Economic 8
581	581	Development Commission when the projects directly involve an Arkansas 9
582	582	business and are approved by the director with the advice of the Board of 10
583	583	Directors of the Division of Science and Technology of the Arkansas Economic 11
584	584	Development Commission under rules promulgated by the commission for those 12
585	585	programs. 13
586	586	(2) However, the maximum tax credit for a qualified business 14
587	587	engaged in a research area of strategic value or involved in research and 15
588	588	development programs sponsored by the division shall not exceed fifty 16
589	589	thousand dollars ($50,000) per year. 17
590	590	(3) A qualified business claiming tax credits earned under this 18
591	591	subsection shall not receive the credit granted by § 26 -51-1102(b) for the 19
592	592	same expenditures. 20
593	593	(4)(A) A qualified business claiming tax credits earned under 21
594	594	this subsection may offset up to one hundred percent (100%) of the business's 22
595	595	Arkansas income tax liability annually. 23
596	596	(B) Any unused income tax credits may be carried forward 24
597	597	for up to nine (9) years after the year in which the credit was first earned 25
598	598	or until exhausted, whichever occurs first. 26
599	599	(d) To claim the credit granted under subsections (a)-(c) (a) and (b) 27
600	600	of this section, the taxpayer shall file with his or her return, as an 28
601	601	attachment to the form prescribed by the Secretary of the Department of 29
602	602	Finance and Administration, copies of documentation to show that the 30
603	603	commission has approved the research expenditure as a part of a qualified in -31
604	604	house research program or under the research and development programs of the 32
605	605	division Division of Science and Technology of the Arkansas Economic 33
606	606	Development Commission . 34
607	607	35
608	608	SECTION 10. Arkansas Code § 15 -4-2709 is repealed. 36 HB1521
609	609
610	610	17 02/18/2025 12:26:07 PM JLL167
611	611	15-4-2709. Targeted business special incentive. 1
612	612	(a) A special incentive based on the payroll of targeted businesses in 2
613	613	the state may be offered, at the discretion of the Director of the Arkansas 3
614	614	Economic Development Commission, to: 4
615	615	(1) Encourage the development of jobs that pay significantly 5
616	616	more than the average hourly wage in the county in which the targeted 6
617	617	business locates or the state average hourly wage if the state average hourly 7
618	618	wage is less than the county average hourly wage; and 8
619	619	(2) Provide an incentive to assist with the start -up of 9
620	620	businesses targeted for growth. 10
621	621	(b) To qualify for the special incentive provided by subsection (c) of 11
622	622	this section, a business shall: 12
623	623	(1) Be identified by the Arkansas Economic Development 13
624	624	Commission as being one of those business sectors targeted for growth under § 14
625	625	15-4-2703; 15
626	626	(2)(A) Have an annual payroll of the business for Arkansas 16
627	627	taxpayers of not less than one hundred thousand dollars ($100,000) or more 17
628	628	than one million dollars ($1,000,000). 18
629	629	(B) The payroll requirement under subdivision (b)(2)(A) of 19
630	630	this section applies only to the initial eligibility determination and does 20
631	631	not preclude qualified businesses from receiving incentives if, at any time 21
632	632	after the financial incentive agreement has been approved, actual payroll 22
633	633	does not satisfy the requirements in subdivision (b)(2)(A) of this section; 23
634	634	(3) Show proof of an equity investment of two hundred fifty 24
635	635	thousand dollars ($250,000) or more; and 25
636	636	(4) Pay average hourly wages in excess of the lesser of one 26
637	637	hundred fifty percent (150%) of the county or state average hourly wage for 27
638	638	the county in which the targeted business locates or expands. 28
639	639	(c)(1) A targeted business may earn an income tax credit equal to ten 29
640	640	percent (10%) of its annual payroll, with the maximum payroll credit not to 30
641	641	exceed one hundred thousand dollars ($100,000) in any year during the term of 31
642	642	the financial incentive agreement. 32
643	643	(2)(A) The term of the financial incentive agreement shall be 33
644	644	established by the director for a period not to exceed five (5) years. 34
645	645	(B) The term of the financial incentive agreement for 35
646	646	targeted businesses earning a tax credit under this subsection shall begin on 36 HB1521
647	647
648	648	18 02/18/2025 12:26:07 PM JLL167
649	649	January 1 of the year following the year in which the financial incentive 1
650	650	agreement was approved. 2
651	651	(C) The director may allow a qualified targeted business 3
652	652	to sell any income tax credits earned through one (1) or more incentives 4
653	653	authorized by this subchapter. 5
654	654	(d)(1) To sell income tax credits earned through incentives authorized 6
655	655	by this subchapter, the targeted business shall apply to the commission and 7
656	656	furnish information necessary to facilitate the sale of income tax credits. 8
657	657	(2)(A) Any unused tax credits may be carried forward for up to 9
658	658	nine (9) years after the year in which the credit was first earned or until 10
659	659	exhausted, whichever occurs first. 11
660	660	(B) Taxpayers purchasing tax credits under this subsection 12
661	661	shall be subject to the same carry -forward provisions as the targeted 13
662	662	business that earned the credits. 14
663	663	(C) The purchase of the tax credits does not establish a 15
664	664	new carry-forward period for the ultimate recipient. 16
665	665	(e) A targeted business claiming or selling tax credits earned under 17
666	666	this section or § 15 -4-2708 shall not receive the credit granted by § 26 -51-18
667	667	1102(b) for the same expenditures. 19
668	668	20
669	669	SECTION 11. Arkansas Code § 15 -4-2711(c) and (d), concerning the 21
670	670	administration of the incentives provided under the Consolidated Incentive 22
671	671	Act of 2003, are repealed. 23
672	672	(c)(1) All claims for sales and use tax refunds under § 15-4-2706(d) 24
673	673	and (e) shall be filed annually with the Department of Finance and 25
674	674	Administration within three (3) years from the date of the qualified purchase 26
675	675	or purchases. 27
676	676	(2) Claims filed after three (3) years from the date of the 28
677	677	qualified purchase or purchases shall be denied. 29
678	678	(d)(1) The time limitation for § 15 -4-2706(d) and (e) for filing 30
679	679	claims shall be tolled if: 31
680	680	(A) A qualified business fails to pay sales tax on an item 32
681	681	that was taxable; and 33
682	682	(B) The applicable tax is subsequently assessed as a 34
683	683	result of an audit by the department. 35
684	684	(2) All claims for sales and use tax refunds relating to an 36 HB1521
685	685
686	686	19 02/18/2025 12:26:07 PM JLL167
687	687	audited purchase are entitled to a refund of interest paid on the amount of 1
688	688	tax assessed on the audited purchase if a refund is approved for the 2
689	689	purchase. 3
690	690	4
691	691	SECTION 12. Arkansas Code § 15 -4-2712 is amended to read as follows: 5
692	692	15-4-2712. Restrictions. 6
693	693	(a) Except as provided in subsection (b) of this section, the 7
694	694	incentives established by this subchapter may be combined. 8
695	695	(b)(1) The investment tax credit authorized in § 15 -4-2706(c) shall 9
696	696	not be combined with the sales and use tax refund authorized in § 15 -4-10
697	697	2706(d) for the same project. 11
698	698	(2) The following incentives for targeted businesses may be 12
699	699	combined with each other for the same project as long as multiple incentives 13
700	700	are not claimed for the same expenditures but shall not be combined with any 14
701	701	other incentives authorized in this subchapter during the period in which the 15
702	702	qualified business receives incentives under this subchapter: 16
703	703	(A) The investment tax credit authorized under § 15 -4-17
704	704	2706(b)(7) may be combined with: 18
705	705	(i) The research and development income tax credits 19
706	706	authorized under § 15 -4-2708(b); and 20
707	707	(ii) Either the: 21
708	708	(a) Payroll rebate program authorized under § 22
709	709	15-4-2707(e); or 23
710	710	(b) Payroll tax credit program authorized 24
711	711	under § 15-4-2709; 25
712	712	(B) The sales and use tax refund authorized under § 15 -4-26
713	713	2706(e) may be combined with: 27
714	714	(i) The research and development income tax credits 28
715	715	authorized under § 15 -4-2708(b); and 29
716	716	(ii) Either the: 30
717	717	(a) Payroll rebate program authorized under § 31
718	718	15-4-2707(e); or 32
719	719	(b) Payroll tax credit program authorized 33
720	720	under § 15-4-2709; 34
721	721	(C) The payroll rebate program authorized under § 15 -4-35
722	722	2707(e) may be combined with: 36 HB1521
723	723
724	724	20 02/18/2025 12:26:07 PM JLL167
725	725	(i) The research and development income tax credits 1
726	726	authorized under § 15 -4-2708(b); and 2
727	727	(ii) Either the: 3
728	728	(a) Investment tax credit program authorized 4
729	729	under § 15-4-2706(b)(7); or 5
730	730	(b) Sales and use tax refund program 6
731	731	authorized under § 15 -4-2706(e); 7
732	732	(D) The payroll income tax credit authorized under § 15 -4-8
733	733	2709 may be combined with: 9
734	734	(i) The research and development income tax credits 10
735	735	authorized under § 15 -4-2708(b); and 11
736	736	(ii) Either the: 12
737	737	(a) Investment tax credit authorized under § 13
738	738	15-4-2706(b)(7); or 14
739	739	(b) Sales and use tax refund program 15
740	740	authorized under § 15 -4-2706(e); and 16
741	741	(E) The research and development income tax credits 17
742	742	authorized under § 15 -4-2708(b) may be combined with: 18
743	743	(i) Either the: 19
744	744	(a) Payroll rebate program authorized under § 20
745	745	15-4-2707(e); or 21
746	746	(b) Payroll tax credit program authorized 22
747	747	under § 15-4-2709; and 23
748	748	(ii) Either the: 24
749	749	(a) Investment tax credit program authorized 25
750	750	under § 15-4-2706(b)(7); or 26
751	751	(b) Sales and use tax refund program 27
752	752	authorized under § 15 -4-2706(e). 28
753	753	(3) The investment tax credit authorized in § 15 -4-2706(b) shall 29
754	754	not be combined with the sales and use tax credit authorized in § 15 -4-30
755	755	2706(e) for the same project. 31
756	756	(4) The job-creation tax credit authorized in § 15 -4-2705 shall 32
757	757	not be combined with the payroll rebate program authorized in § 15 -4-2707. 33
758	758	(5) The investment tax credit authorized in § 15 -4-2706(b) shall 34
759	759	not be combined with the sales and use tax refund authorized in § 15 -4-35
760	760	2706(d) for the same project. 36 HB1521
761	761
762	762	21 02/18/2025 12:26:07 PM JLL167
763	763	(6)(2) The investment tax credit authorized under § 15 -4-2706(b) 1
764	764	shall not be combined with the sales and use tax credit authorized under § 2
765	765	15-4-2706(c) for the same project. 3
766	766	(c) The following are discretionary incentives and are not available 4
767	767	unless offered by the Arkansas Economic Development Commission: 5
768	768	(1) The payroll rebate program authorized in § 15 -4-2707; 6
769	769	(2) The job-creation tax credit authorized in § 15 -4-2709; 7
770	770	(3) The investment tax credit authorized in § 15 -4-2706(b); and 8
771	771	(4) The sales and use tax refund authorized in § 15 -4-2706(e); 9
772	772	and 10
773	773	(5)(3) The research and development tax credits authorized in § 11
774	774	15-4-2708(a)-(c) 15-4-2708(a) and (b). 12
775	775	13
776	776	SECTION 13. Arkansas Code Title 15, Chapter 4, Subchapter 35, is 14
777	777	repealed. 15
778	778	Subchapter 35 — Incentives for Major Maintenance and Improvement Projects 16
779	779	17
780	780	15-4-3501. Increased tax refund for major maintenance and improvement 18
781	781	projects. 19
782	782	(a) A taxpayer that is eligible for a refund of excise taxes under § 20
783	783	26-52-447 or § 26-53-149 is eligible for a refund of one hundred percent 21
784	784	(100%) of the sales and use taxes levied in §§ 26 -52-301, 26-52-302, 26-53-22
785	785	106, and 26-53-107 on the tangible personal property and services subject to 23
786	786	§§ 26-52-447 and 26-53-149 for projects that meet the following requirements: 24
787	787	(1) The taxpayer has entered into a financial incentive 25
788	788	agreement with the Arkansas Economic Development Commission for the project; 26
789	789	and 27
790	790	(2) The taxpayer expends at least three million dollars 28
791	791	($3,000,000) on an approved project that includes the purchase of tangible 29
792	792	personal property and services that are either exempt or subject to a partial 30
793	793	refund of tax under § 26 -52-402, § 26-52-447, § 26-53-114, or § 26-53-149. 31
794	794	(b) A taxpayer shall file with the commission an application for the 32
795	795	increased refund for major maintenance and improvement projects provided in 33
796	796	this section. 34
797	797	(c) The increased refund of sales and use taxes for major maintenance 35
798	798	and improvement projects provided in this section is a discretionary 36 HB1521
799	799
800	800	22 02/18/2025 12:26:07 PM JLL167
801	801	incentive and is not available unless offered by the Director of the Arkansas 1
802	802	Economic Development Commission. 2
803	803	(d) The director shall forward the taxpayer's application, financial 3
804	804	incentive agreement, any other pertinent documentation, and a written copy of 4
805	805	the determination under this subsection to the Secretary of the Department of 5
806	806	Finance and Administration if the director: 6
807	807	(1) Determines that the taxpayer is eligible for the increased 7
808	808	refund for major maintenance and improvement projects provided for in this 8
809	809	section; 9
810	810	(2) Determines that the taxpayer has provided reasonable proof 10
811	811	that there will be a positive return on the taxpayer's investment in the 11
812	812	major maintenance and improvement project that is sufficient to offset the 12
813	813	taxes refunded under this section; 13
814	814	(3) Determines that the taxpayer has provided a defined scope, 14
815	815	beginning date, and ending date for the major maintenance and improvement 15
816	816	project; 16
817	817	(4) Determines that the refund is reasonably necessary for the 17
818	818	taxpayer to remain competitive and preserve Arkansas jobs; and 18
819	819	(5) Agrees to provide the incentive under this section. 19
820	820	(e) A taxpayer that has been approved for the increased refund for 20
821	821	major maintenance and improvement projects provided for in this section may 21
822	822	make changes in a major maintenance and improvement project by written 22
823	823	amendment to the project plan filed with the commission as part of the 23
824	824	financial incentive agreement required under this section. 24
825	825	(f) Except as otherwise provided in this section, a refund under this 25
826	826	section is subject to the Arkansas Tax Procedure Act, § 26 -18-101 et seq., 26
827	827	and the Independent Tax Appeals Commission Act, § 26 -18-1101 et seq., in the 27
828	828	same manner as other refunds permitted under § 26 -18-507. 28
829	829	(g) An expenditure shall not qualify for both the increased refund for 29
830	830	major maintenance and improvement projects under this section and the 30
831	831	retention tax credit provided for in § 15 -4-2706(c). 31
832	832	(h) The director and the secretary may promulgate rules necessary to 32
833	833	implement this section. 33
834	834	(i)(1) A taxpayer may apply for an increased refund for major 34
835	835	maintenance and improvement projects under this section through June 30, 35
836	836	2022. 36 HB1521
837	837
838	838	23 02/18/2025 12:26:07 PM JLL167
839	839	(2) An application for an increased refund for major maintenance 1
840	840	and improvement projects under this section shall not be accepted on or after 2
841	841	July 1, 2022. 3
842	842	4
843	843	SECTION 14. Arkansas Code § 19 -5-1097 is repealed. 5
844	844	19-5-1097. Public Roads Incentive Fund. 6
845	845	(a) There is established on the books of the Treasurer of State, the 7
846	846	Auditor of State, and the Chief Fiscal Officer of the State a fund to be 8
847	847	known as the “Public Roads Incentive Fund” of the Arkansas Economic 9
848	848	Development Council. 10
849	849	(b) The fund shall consist of contributions made by taxpayers for 11
850	850	public roads projects approved by the Director of the Arkansas Economic 12
851	851	Development Commission and any other funds as are designated or deposited 13
852	852	into the fund by law. 14
853	853	(c)(1) A separate account shall be established for each project, and 15
854	854	contributions for a project shall be applied to provide funding assistance 16
855	855	for that project. 17
856	856	(2) Any contributions which remain in the fund when a project is 18
857	857	completed or terminated shall be held and applied to other public roads 19
858	858	projects in such manner as the director shall direct. 20
859	859	21
860	860	SECTION 15. Arkansas Code Title 26, Chapter 51, Subchapter 11, is 22
861	861	repealed. 23
862	862	Subchapter 11 — Donations or Sales of Equipment to Educational Institutions 24
863	863	25
864	864	26-51-1101. Definitions. 26
865	865	As used in this subchapter: 27
866	866	(1) “Accredited institution of higher education” means a four -28
867	867	year public college or university that offers bachelor's degrees and is 29
868	868	recognized by the Division of Higher Education for credit; 30
869	869	(2) “Cost” means: 31
870	870	(A) In the case of a donation or sale below cost by a 32
871	871	wholesale or retail business, the amount actually paid by the wholesaler or 33
872	872	retailer to the supplier for the machinery and equipment; 34
873	873	(B) In the case of a donation or sale below cost by a 35
874	874	manufacturer of machinery and equipment, the enhanced value of the materials 36 HB1521
875	875
876	876	24 02/18/2025 12:26:07 PM JLL167
877	877	used to produce the machinery and equipment, which shall be deemed to be the 1
878	878	lowest price at which the manufacturer sells the machinery and equipment; or 2
879	879	(C) In the case of a cash donation by a taxpayer to a 3
880	880	qualified educational institution for the purchase of new machinery and 4
881	881	equipment, the amount actually paid by the qualified educational institution 5
882	882	to the wholesale, retail, or manufacturing business, as documented by 6
883	883	itemized receipts; 7
884	884	(3) “Machinery and equipment” means tangible personal property 8
885	885	used in connection with a qualified education program or a qualified research 9
886	886	program that has been approved for a tax credit under rules prescribed by the 10
887	887	Department of Finance and Administration; 11
888	888	(4) “New” means the machinery and equipment are state -of-the-art 12
889	889	machinery and equipment that have: 13
890	890	(A) Never been used except for normal testing by the 14
891	891	manufacturer to ensure that the machinery or equipment is of a proper quality 15
892	892	and in good working order; or 16
893	893	(B) Been used by the retailer or wholesaler solely for the 17
894	894	purpose of demonstrating the product to customers for sale; 18
895	895	(5) “Qualified education program” means a program conducted by a 19
896	896	qualified educational institution under rules prescribed by the Division of 20
897	897	Higher Education for programs in colleges, universities, or junior colleges, 21
898	898	by the Division of Career and Technical Education for programs in vocational 22
899	899	technical training schools and by the Division of Elementary and Secondary 23
900	900	Education for programs in secondary schools, all of which programs are for 24
901	901	the purpose of promoting the use of new machinery and equipment for 25
902	902	classroom, laboratory, and other educational instruction; 26
903	903	(6) “Qualified educational institution” means: 27
904	904	(A) A public university, college, junior college, or 28
905	905	vocational technical training school located in and supported by the State of 29
906	906	Arkansas; 30
907	907	(B) A private university, college, junior college, or 31
908	908	vocational technical training school located in Arkansas and qualified for 32
909	909	tax-exempt status under the Income Tax Act of 1929, § 26 -51-101 et seq.; and 33
910	910	(C) A public secondary school; 34
911	911	(7) “Qualified research expenditures” means the sum of any 35
912	912	amounts that are paid or incurred by a taxpayer during the taxable year in 36 HB1521
913	913
914	914	25 02/18/2025 12:26:07 PM JLL167
915	915	funding a qualified research program that has been approved for tax credit 1
916	916	treatment under rules promulgated by the Department of Finance and 2
917	917	Administration; 3
918	918	(8) “Qualified research program” means a program of applied or 4
919	919	basic research undertaken by a qualified educational institution under rules 5
920	920	jointly promulgated by the Director of the Arkansas Economic Development 6
921	921	Commission and the Division of Higher Education under § 15 -3-110; 7
922	922	(9) “Research park authority” means a public entity created 8
923	923	under the Research Park Authority Act, § 14 -144-101 et seq., to provide 9
924	924	facilities and support for businesses engaged in research and development in 10
925	925	pursuit of economic development opportunities; and 11
926	926	(10) “State-of-the-art machinery and equipment” means machinery 12
927	927	and equipment that are of the same type, design, and capability as like 13
928	928	machinery and equipment that are currently sold or manufactured by the donee 14
929	929	for sale to customers. 15
930	930	16
931	931	26-51-1102. Credit granted. 17
932	932	(a)(1) There is granted a credit against a taxpayer's Arkansas 18
933	933	corporate income tax or Arkansas individual income tax for the following 19
934	934	types of donations or sales, or both, of new machinery and equipment to a 20
935	935	qualified educational institution in connection with a qualified education 21
936	936	program or a qualified research program: 22
937	937	(A) Donations of new machinery and equipment; 23
938	938	(B) Sales below cost of machinery and equipment; and 24
939	939	(C) Cash donations for the purchase of new machinery and 25
940	940	equipment by a qualified educational institution. 26
941	941	(2) The amount of the credit granted by this section shall be: 27
942	942	(A) In the case of a donation, thirty -three percent (33%) 28
943	943	of the cost of the machinery and equipment donated; 29
944	944	(B) In the case of a sale below cost, thirty -three percent 30
945	945	(33%) of the amount by which the cost is reduced; and 31
946	946	(C) In the case of a cash donation, thirty -three percent 32
947	947	(33%) of the amount of the cash donation used by the qualified educational 33
948	948	institution to purchase new machinery and equipment from a wholesale, retail, 34
949	949	or manufacturing business. 35
950	950	(b) There is granted a credit against a taxpayer's Arkansas corporate 36 HB1521
951	951
952	952	26 02/18/2025 12:26:07 PM JLL167
953	953	income tax or Arkansas individual income tax equal to thirty -three percent 1
954	954	(33%) of the qualified research expenditures of a taxpayer in qualified 2
955	955	research programs. 3
956	956	(c)(1) There is granted a credit against a taxpayer's Arkansas 4
957	957	corporate income tax or Arkansas individual income tax equal to thirty -three 5
958	958	percent (33%) of a donation made to an accredited institution of higher 6
959	959	education to support a research park authority. 7
960	960	(2) In order to claim this credit authorized by subdivision 8
961	961	(c)(1) of this section, a donation made in support of a research park 9
962	962	authority shall: 10
963	963	(A) Be consistent with the research and development plan 11
964	964	approved by the Director of the Arkansas Economic Development Commission with 12
965	965	the advice of the Board of Directors of the Division of Science and 13
966	966	Technology of the Arkansas Economic Development Commission, as evidenced by a 14
967	967	letter of support from the director; and 15
968	968	(B) Support either directly or indirectly research subject 16
969	969	to being funded by one (1) or more federal agencies, as enumerated in § 15 -3-17
970	970	205(1). 18
971	971	19
972	972	26-51-1103. Limit on total credit. 20
973	973	(a) Total credits for qualified research expenditures, donations, and 21
974	974	sales under this subchapter shall be allowed up to one hundred percent (100%) 22
975	975	of the net tax liability of the taxpayer after all other credits and 23
976	976	reductions in tax have been calculated. 24
977	977	(b) The credit shall be claimed in the tax year of the qualified 25
978	978	research expenditure, donation, or sale. However, all or part of any unused 26
979	979	credit may be carried over to and claimed in succeeding tax years until the 27
980	980	credits are exhausted or until the end of the nine (9) tax years succeeding 28
981	981	the tax year of the qualified research expenditure, donation, or sale, 29
982	982	whichever occurs earlier. In no event shall a taxpayer claim a credit under 30
983	983	this subchapter for any tax year in excess of one hundred percent (100%) of 31
984	984	the net tax due after all other credits and reductions in tax have been 32
985	985	calculated. 33
986	986	(c) Any person claiming any credit granted by this subchapter for any 34
987	987	expense or contribution shall not take any deduction under the Arkansas 35
988	988	income tax law for the same expense or contribution. 36 HB1521
989	989
990	990	27 02/18/2025 12:26:07 PM JLL167
991	991	1
992	992	26-51-1104. Documentation required. 2
993	993	(a) To claim the credit granted by § 26 -51-1102, the taxpayer shall 3
994	994	provide the following for each piece of machinery and equipment donated, sold 4
995	995	below cost, or purchased by a qualified educational institution with a cash 5
996	996	donation: 6
997	997	(1) An affidavit from the receiving qualified educational 7
998	998	institution that: 8
999	999	(A) The qualified educational institution has received the 9
1000	1000	machinery and equipment; 10
1001	1001	(B) The machinery and equipment is new machinery and 11
1002	1002	equipment within the meaning of this subchapter; 12
1003	1003	(C) The qualified educational institution received the 13
1004	1004	machinery and equipment as a donation or, if the qualified educational 14
1005	1005	institution purchased the machinery and equipment, a statement of the amount 15
1006	1006	paid for the machinery and equipment; and 16
1007	1007	(D) The machinery and equipment has been donated, 17
1008	1008	purchased by the qualified educational institution with a cash donation 18
1009	1009	provided by a taxpayer, or sold to the qualified educational institution for 19
1010	1010	use in a qualified education program or a qualified research program; and 20
1011	1011	(2)(A) In the case of a donation or sale by a retail or 21
1012	1012	wholesale business, a copy of the invoice from the business' supplier showing 22
1013	1013	the actual cost of the machinery and equipment. 23
1014	1014	(B) In the case of a donation or sale below cost by a 24
1015	1015	manufacturer, a copy of the manufacturer's wholesale price list showing the 25
1016	1016	lowest price of the machinery and equipment for which credit is claimed. 26
1017	1017	(C) In the case of a purchase by a qualified educational 27
1018	1018	institution with a cash donation, itemized receipts documenting the amount of 28
1019	1019	the cash donation and the purchase costs of the new machinery and equipment. 29
1020	1020	(b) To claim the credit granted by § 26 -51-1102, the taxpayer shall 30
1021	1021	show that the Director of the Arkansas Economic Development Commission and 31
1022	1022	the Commissioner of the Division of Higher Education have approved the 32
1023	1023	qualified research expenditure as a part of a qualified research program. 33
1024	1024	(c) Copies of each of the above documents shall be filed by the 34
1025	1025	taxpayer with the Arkansas Economic Development Commission and with his or 35
1026	1026	her return as an attachment to the form prescribed by the Secretary of the 36 HB1521
1027	1027
1028	1028	28 02/18/2025 12:26:07 PM JLL167
1029	1029	Department of Finance and Administration. 1
1030	1030	2
1031	1031	26-51-1105. Rules. 3
1032	1032	The Secretary of the Department of Finance and Administration, the 4
1033	1033	Commissioner of the Division of Higher Education, the Director of the 5
1034	1034	Division of Career and Technical Education, the Secretary of the Department 6
1035	1035	of Education, and the Director of the Arkansas Economic Development 7
1036	1036	Commission shall jointly promulgate rules to carry out the purposes of this 8
1037	1037	subchapter. 9
1038	1038	10
1039	1039	26-51-1106. Application for credit approval. 11
1040	1040	(a) To apply for a credit under this subchapter, a taxpayer shall 12
1041	1041	submit an original application and one (1) copy to the Director of the 13
1042	1042	Arkansas Economic Development Commission on the forms prescribed by the 14
1043	1043	director. 15
1044	1044	(b) The director shall review each application submitted under this 16
1045	1045	subchapter and shall either: 17
1046	1046	(1) Approve the application; or 18
1047	1047	(2) Reject the application and notify the applicant of the 19
1048	1048	deficiencies in the application. 20
1049	1049	(c) An applicant that receives approval from the director under this 21
1050	1050	section shall sign a financial incentive agreement outlining the terms and 22
1051	1051	conditions of the credit granted under this subchapter. 23
1052	1052	(d) An applicant may resubmit a rejected application after addressing 24
1053	1053	any deficiencies identified by the director. 25
1054	1054	(e) For an application submitted on or after July 24, 2019, an 26
1055	1055	expenditure incurred before the approval date of the financial incentive 27
1056	1056	agreement required under subsection (b) of this section shall be denied a 28
1057	1057	credit under this subchapter. 29
1058	1058	30
1059	1059	SECTION 16. Arkansas Code § 26 -52-402(c)(2)(C)(ii), concerning the 31
1060	1060	items not included in the definition of machinery and equipment “used 32
1061	1061	directly” in the manufacturing process for purposes of the sales tax 33
1062	1062	exemption for certain machinery and equipment, is amended to read as follows: 34
1063	1063	(ii) Except as provided in §§ 26 -52-447 and 26-53-35
1064	1064	149, machinery Machinery, equipment, and tools used in maintaining and 36 HB1521
1065	1065
1066	1066	29 02/18/2025 12:26:07 PM JLL167
1067	1067	repairing any type of machinery and equipment; 1
1068	1068	2
1069	1069	SECTION 17. Arkansas Code § 26 -52-447 is repealed. 3
1070	1070	26-52-447. Partial replacement and repair of certain machinery and 4
1071	1071	equipment — Definitions. 5
1072	1072	(a) The taxes levied under §§ 26 -52-301 and 26-52-302 on the gross 6
1073	1073	receipts or gross proceeds from the sale of the following are subject to a 7
1074	1074	refund or exemption as provided in this section: 8
1075	1075	(1) Machinery and equipment purchased to modify, replace, 9
1076	1076	repair, or maintain, either in whole or in part, existing machinery or 10
1077	1077	equipment used directly in producing, manufacturing, fabricating, assembling, 11
1078	1078	processing, finishing, or packaging articles of commerce at a manufacturing 12
1079	1079	or processing plant or facility in this state; 13
1080	1080	(2) Service relating to the initial installation, alteration, 14
1081	1081	addition, cleaning, refinishing, replacement, or repair of machinery or 15
1082	1082	equipment described in subdivision (a)(1) of this section; 16
1083	1083	(3) Machinery and equipment purchased to modify, replace, or 17
1084	1084	repair, either in whole or in part, existing molds and dies used directly in 18
1085	1085	producing, manufacturing, fabricating, assembling, processing, finishing, or 19
1086	1086	packaging articles of commerce at a manufacturing or processing plant or 20
1087	1087	facility in this state; and 21
1088	1088	(4)(A) Except as provided in subdivision (a)(4)(B) of this 22
1089	1089	section, machinery and equipment purchased for use or possible use by a 23
1090	1090	taxpayer for a purpose described in subdivisions (a)(1) -(3) of this section 24
1091	1091	and placed in inventory for later use by the taxpayer for a purpose described 25
1092	1092	in subdivisions (a)(1) -(3) of this section. 26
1093	1093	(B)(i) As used in this subdivision (a)(4)(B), “withdrawal 27
1094	1094	from inventory” means the withdrawal or use of machinery or equipment held 28
1095	1095	under subdivision (a)(4)(A) of this section by a taxpayer for a purpose that 29
1096	1096	does not qualify for an exemption under this section or any other applicable 30
1097	1097	exemption at the time of the withdrawal from inventory. 31
1098	1098	(ii) A withdrawal from inventory is not eligible for 32
1099	1099	the exemption provided under this section. 33
1100	1100	(iii) For purposes of calculating the gross receipts 34
1101	1101	tax under subdivision (a)(4)(B)(iv) of this section, the gross receipts or 35
1102	1102	gross proceeds for a withdrawal from inventory is the purchase price of the 36 HB1521
1103	1103
1104	1104	30 02/18/2025 12:26:07 PM JLL167
1105	1105	machinery or equipment withdrawn. 1
1106	1106	(iv) Tax is due on a withdrawal from inventory at 2
1107	1107	the time the withdrawal from inventory occurs. 3
1108	1108	(b)(1) Beginning July 1, 2014, the taxes levied under §§ 26 -52-301 and 4
1109	1109	26-52-302 that are subject to a refund under this section are the taxes in 5
1110	1110	excess of four and seven -eighths percent (4.875%). 6
1111	1111	(2) The taxes levied under §§ 26 -52-301 and 26-52-302 that are 7
1112	1112	subject to a refund under this section are the taxes in excess of the 8
1113	1113	following rates: 9
1114	1114	(A) Beginning July 1, 2018, three and seven -eighths 10
1115	1115	percent (3.875%); 11
1116	1116	(B) Beginning July 1, 2019, two and seven -eighths percent 12
1117	1117	(2.875%); 13
1118	1118	(C) Beginning July 1, 2020, one and seven -eighths percent 14
1119	1119	(1.875%); and 15
1120	1120	(D) Beginning July 1, 2021, seven -eighths percent 16
1121	1121	(0.875%). 17
1122	1122	(3) Beginning July 1, 2022, sales qualifying for the tax refund 18
1123	1123	under this section are exempt from the taxes levied under this chapter. 19
1124	1124	(c) The excise tax of one -eighth of one percent (0.125%) levied in 20
1125	1125	Arkansas Constitution, Amendment 75, the temporary excise tax of one -half 21
1126	1126	percent (0.5%) levied in Arkansas Constitution, Amendment 91, and the excise 22
1127	1127	tax of one-half percent (0.5%) levied in Arkansas Constitution, Amendment 23
1128	1128	101, are not subject to refund under this section. 24
1129	1129	(d) As used in this section: 25
1130	1130	(1) “Manufacturing” or “processing” means the same as defined 26
1131	1131	under § 26-52-402(b) and includes activities described in subsection (a) of 27
1132	1132	this section, both independently and collectively; and 28
1133	1133	(2) “Used directly” means the same as defined under § 26 -52-29
1134	1134	402(c). 30
1135	1135	(e) All existing excise tax exemptions, including without limitation 31
1136	1136	exemptions under §§ 26 -52-402 and 26-53-114, remain in full force and effect 32
1137	1137	and are not limited by this section. 33
1138	1138	(f) A taxpayer may claim the benefit of the tax refund under this 34
1139	1139	section only by using one (1) of the following methods: 35
1140	1140	(1)(A) Both: 36 HB1521
1141	1141
1142	1142	31 02/18/2025 12:26:07 PM JLL167
1143	1143	(i) Obtaining a direct pay or a limited direct pay 1
1144	1144	sales and use tax permit from the Department of Finance and Administration; 2
1145	1145	and 3
1146	1146	(ii) Self-refunding: 4
1147	1147	(a) At the time the taxpayer files his or her 5
1148	1148	original sales and use tax report; or 6
1149	1149	(b) By later filing an amended sales or use 7
1150	1150	tax report with the department. 8
1151	1151	(B) The statutes of limitation stated in § 26 -18-306 apply 9
1152	1152	to claims made under this subdivision (f)(1). 10
1153	1153	(C) Interest shall not accrue or be paid on a refund 11
1154	1154	claimed under this subdivision (f)(1); or 12
1155	1155	(2)(A) Beginning July 1, 2018, for a taxpayer that does not hold 13
1156	1156	a direct pay or limited direct pay permit, holds an active Arkansas sales and 14
1157	1157	use tax permit, and files sales and use tax reports with the department, 15
1158	1158	filing a claim for a credit or rebate with the department. 16
1159	1159	(B)(i) The credit or rebate authorized under this 17
1160	1160	subdivision (f)(2) shall be obtained only by offsetting the amount of the 18
1161	1161	claimed credit or rebate against the state tax to be remitted with the 19
1162	1162	taxpayer's sales and use tax reports. 20
1163	1163	(ii) If the total amount of the credit or rebate 21
1164	1164	authorized under this subdivision (f)(2) is greater than the amount of the 22
1165	1165	state tax to be remitted with the taxpayer's sales and use tax reports, the 23
1166	1166	taxpayer is entitled to a refund of the difference between the amount of the 24
1167	1167	tax owed and the amount of the credit or rebate authorized under this 25
1168	1168	subdivision (f)(2). 26
1169	1169	(C) A taxpayer claiming a credit or rebate under this 27
1170	1170	subdivision (f)(2) shall electronically file all sales and use tax reports. 28
1171	1171	(D) A claim for credit or rebate under this subdivision 29
1172	1172	(f)(2) shall not be paid for a claim filed more than one (1) year following 30
1173	1173	the date of the qualifying sale or more than one (1) year following the date 31
1174	1174	of payment, whichever is later. 32
1175	1175	(E) Interest shall not accrue or be paid on an amount 33
1176	1176	subject to a claim for a credit or rebate under this subdivision (f)(2). 34
1177	1177	(g) A claim for a credit or rebate shall not be paid under subdivision 35
1178	1178	(f)(2) of this section for a sale made before July 1, 2018. 36 HB1521
1179	1179
1180	1180	32 02/18/2025 12:26:07 PM JLL167
1181	1181	(h) A taxpayer shall not claim the benefit of the refund under this 1
1182	1182	section by filing a verified claim for refund with the department. 2
1183	1183	(i) The following provisions of the Arkansas Tax Procedure Act, § 26 -3
1184	1184	18-101 et seq., apply to claims for a refund under this section: 4
1185	1185	(1) The time limitations that apply to claims for a refund of an 5
1186	1186	overpayment of state tax; and 6
1187	1187	(2) The procedures that apply to the disallowance or proposed 7
1188	1188	disallowance of claims for a refund. 8
1189	1189	9
1190	1190	SECTION 18. Arkansas Code § 26 -52-509(a), concerning the direct 10
1191	1191	payment of sales tax by a consumer or user, is amended to read as follows: 11
1192	1192	(a)(1) The Secretary of the Department of Finance and Administration 12
1193	1193	by agreement with any consumer or user may : 13
1194	1194	(A) Permit permit a consumer or user under the agreement 14
1195	1195	to accrue and remit gross receipts taxes directly to the Department of 15
1196	1196	Finance and Administration, instead of the taxes being collected and paid by 16
1197	1197	the seller under § 26 -52-508; and 17
1198	1198	(B)(i) Issue limited direct pay authority to permit a user 18
1199	1199	or consumer to accrue and remit gross receipts and compensating use taxes on 19
1200	1200	purchases that include eligible purchases. 20
1201	1201	(ii)(a) A limited direct pay agreement permits a 21
1202	1202	consumer or user to accrue and remit gross receipts and compensating use 22
1203	1203	taxes on purchases that include eligible purchases. 23
1204	1204	(b) As used in this section, “eligible 24
1205	1205	purchases” means property or services subject to a refund of tax under §§ 26 -25
1206	1206	52-447 and 26-53-149. 26
1207	1207	(iii)(a) A limited direct pay agreement is available 27
1208	1208	only to a person eligible for a refund of tax under §§ 26 -52-447 and 26-53-28
1209	1209	149. 29
1210	1210	(b) A person holding a limited direct pay 30
1211	1211	permit shall use the permit only to make purchases that include eligible 31
1212	1212	purchases. 32
1213	1213	(2)(A) A seller that receives a claim for exemption from a 33
1214	1214	customer based on a limited direct pay permit shall not collect and remit 34
1215	1215	gross receipts or compensating use taxes on purchases that include eligible 35
1216	1216	purchases made by a person holding a limited direct pay permit. 36 HB1521
1217	1217
1218	1218	33 02/18/2025 12:26:07 PM JLL167
1219	1219	(B) However, if a seller collects and remits gross 1
1220	1220	receipts or compensating use taxes on eligible purchases from a person 2
1221	1221	holding a limited direct pay permit, a refund may be obtained under § 26 -18-3
1222	1222	507. 4
1223	1223	(3) A person who has entered into a limited direct pay agreement 5
1224	1224	under this section and makes purchases of property or services under the 6
1225	1225	authority of that agreement without paying the gross receipts or compensating 7
1226	1226	use taxes due on those purchases is responsible for remitting the proper 8
1227	1227	amount of tax due to the secretary as required by law. 9
1228	1228	(4)(A) A seller shall collect and remit gross receipts and 10
1229	1229	compensating use taxes on purchases made by a person holding a limited direct 11
1230	1230	pay permit that are not eligible purchases. 12
1231	1231	(B) If a seller relies on the limited direct pay permit 13
1232	1232	and fails to properly collect tax on sales other than eligible purchases, the 14
1233	1233	limited direct pay permit holder shall remit the proper amount of tax to the 15
1234	1234	state as required under subdivision (a)(3) of this section. 16
1235	1235	(5) This section does not eliminate the requirement that a 17
1236	1236	consumer or user self -assess and remit compensating use tax under §§ 26 -53-18
1237	1237	123 — 26-53-125. 19
1238	1238	20
1239	1239	SECTION 19. Arkansas Code § 26 -53-149 is repealed. 21
1240	1240	26-53-149. Partial replacement and repair of certain machinery and 22
1241	1241	equipment — Definitions. 23
1242	1242	(a) The taxes levied under §§ 26 -53-106 and 26-53-107 on the privilege 24
1243	1243	of storing, using, distributing, or consuming the following within this state 25
1244	1244	are subject to a refund or exemption as provided in this section: 26
1245	1245	(1) Machinery and equipment purchased to modify, replace, 27
1246	1246	repair, or maintain, either in whole or in part, existing machinery or 28
1247	1247	equipment used directly in producing, manufacturing, fabricating, assembling, 29
1248	1248	processing, finishing, or packaging articles of commerce at a manufacturing 30
1249	1249	or processing plant or facility in this state; 31
1250	1250	(2) Service relating to the initial installation, alteration, 32
1251	1251	addition, cleaning, refinishing, replacement, or repair of machinery or 33
1252	1252	equipment described in subdivision (a)(1) of this section; 34
1253	1253	(3) Machinery and equipment purchased to modify, replace, or 35
1254	1254	repair, either in whole or in part, existing molds and dies used directly in 36 HB1521
1255	1255
1256	1256	34 02/18/2025 12:26:07 PM JLL167
1257	1257	producing, manufacturing, fabricating, assembling, processing, finishing, or 1
1258	1258	packaging articles of commerce at a manufacturing or processing plant or 2
1259	1259	facility in this state; and 3
1260	1260	(4)(A) Except as provided in subdivision (a)(4)(B) of this 4
1261	1261	section, machinery and equipment purchased for use or possible use by a 5
1262	1262	taxpayer for a purpose described in subdivisions (a)(1) -(3) of this section 6
1263	1263	and placed in inventory for later use by the taxpayer for a purpose described 7
1264	1264	in subdivisions (a)(1) -(3) of this section. 8
1265	1265	(B)(i) As used in this subdivision (a)(4)(B), “withdrawal 9
1266	1266	from inventory” means the withdrawal or use of machinery or equipment held 10
1267	1267	under subdivision (a)(4)(A) of this section by a taxpayer for a purpose that 11
1268	1268	does not qualify for an exemption under this section or any other applicable 12
1269	1269	exemption at the time of the withdrawal from inventory. 13
1270	1270	(ii) A withdrawal from inventory is not eligible for 14
1271	1271	the exemption provided under this section. 15
1272	1272	(iii) For purposes of calculating the compensating 16
1273	1273	use tax under subdivision (a)(4)(B)(iv) of this section, the gross receipts 17
1274	1274	or gross proceeds for a withdrawal from inventory is the purchase price of 18
1275	1275	the machinery or equipment withdrawn. 19
1276	1276	(iv) Tax is due on a withdrawal from inventory at 20
1277	1277	the time the withdrawal from inventory occurs. 21
1278	1278	(b)(1) Beginning July 1, 2014, the taxes levied under §§ 26 -53-106 and 22
1279	1279	26-53-107 that are subject to a refund under this section are the taxes in 23
1280	1280	excess of four and seven -eighths percent (4.875%). 24
1281	1281	(2) The taxes levied under §§ 26 -53-106 and 26-53-107 that are 25
1282	1282	subject to a refund under this section are the taxes in excess of the 26
1283	1283	following rates: 27
1284	1284	(A) Beginning July 1, 2018, three and seven -eighths 28
1285	1285	percent (3.875%); 29
1286	1286	(B) Beginning July 1, 2019, two and seven -eighths percent 30
1287	1287	(2.875%); 31
1288	1288	(C) Beginning July 1, 2020, one and seven -eighths percent 32
1289	1289	(1.875%); and 33
1290	1290	(D) Beginning July 1, 2021, seven -eighths percent 34
1291	1291	(0.875%). 35
1292	1292	(3) Beginning July 1, 2022, purchases qualifying for the tax 36 HB1521
1293	1293
1294	1294	35 02/18/2025 12:26:07 PM JLL167
1295	1295	refund under this section are exempt from the taxes levied under this 1
1296	1296	chapter. 2
1297	1297	(c) The excise tax of one -eighth of one percent (0.125%) levied in 3
1298	1298	Arkansas Constitution, Amendment 75, the temporary excise tax of one -half 4
1299	1299	percent (0.5%) levied in Arkansas Constitution, Amendment 91, and the excise 5
1300	1300	tax of one-half percent (0.5%) levied in Arkansas Constitution, Amendment 6
1301	1301	101, are not subject to refund under this section. 7
1302	1302	(d) As used in this section: 8
1303	1303	(1) “Manufacturing” or “processing” means the same as defined 9
1304	1304	under § 26-53-114(b) and includes activities described in subsection (a) of 10
1305	1305	this section, both independently and collectively; and 11
1306	1306	(2) “Used directly” means the same as defined under § 26 -53-12
1307	1307	114(c). 13
1308	1308	(e) All existing excise tax exemptions, including without limitation 14
1309	1309	exemptions under §§ 26 -52-402 and 26-53-114, remain in full force and effect 15
1310	1310	and are not limited by this section. 16
1311	1311	(f) A taxpayer may claim the benefit of the tax refund under this 17
1312	1312	section only by using one (1) of the following methods: 18
1313	1313	(1)(A) Both: 19
1314	1314	(i) Obtaining a direct pay or a limited direct pay 20
1315	1315	sales and use tax permit from the Department of Finance and Administration; 21
1316	1316	and 22
1317	1317	(ii) Self-refunding: 23
1318	1318	(a) At the time the taxpayer files his or her 24
1319	1319	original sales and use tax report; or 25
1320	1320	(b) By later filing an amended sales or use 26
1321	1321	tax report with the department. 27
1322	1322	(B) The statutes of limitation stated in § 26 -18-306 apply 28
1323	1323	to claims made under this subdivision (f)(1). 29
1324	1324	(C) Interest shall not accrue or be paid on a refund 30
1325	1325	claimed under this subdivision (f)(1); or 31
1326	1326	(2)(A) Beginning July 1, 2018, for a taxpayer that does not hold 32
1327	1327	a direct pay or limited direct pay permit, holds an active Arkansas sales and 33
1328	1328	use tax permit, and files sales and use tax reports with the department, 34
1329	1329	filing a claim for the credit or rebate with the department. 35
1330	1330	(B)(i) The credit or rebate authorized under this 36 HB1521
1331	1331
1332	1332	36 02/18/2025 12:26:07 PM JLL167
1333	1333	subdivision (f)(2) shall be obtained only by offsetting the amount of the 1
1334	1334	claimed credit or rebate against the state tax to be remitted with the 2
1335	1335	taxpayer's sales and use tax reports. 3
1336	1336	(ii) If the total amount of the credit or rebate 4
1337	1337	authorized under this subdivision (f)(2) is greater than the amount of the 5
1338	1338	state tax to be remitted with the taxpayer's sales and use tax reports, the 6
1339	1339	taxpayer is entitled to a refund of the difference between the amount of the 7
1340	1340	tax owed and the amount of the credit or rebate authorized under this 8
1341	1341	subdivision (f)(2). 9
1342	1342	(C) A taxpayer claiming a credit or rebate under this 10
1343	1343	subdivision (f)(2) shall electronically file all sales and use tax reports. 11
1344	1344	(D) A claim for credit or rebate under this subdivision 12
1345	1345	(f)(2) shall not be paid for a claim filed more than one (1) year following 13
1346	1346	the date of the qualifying purchase or more than one (1) year following the 14
1347	1347	date of payment, whichever is later. 15
1348	1348	(E) Interest shall not accrue or be paid on an amount 16
1349	1349	subject to a claim for a credit or rebate under this subdivision (f)(2). 17
1350	1350	(g) A claim for a credit or rebate shall not be paid under subdivision 18
1351	1351	(f)(2) of this section for a purchase made before July 1, 2018. 19
1352	1352	(h) A taxpayer shall not claim the benefit of the refund under this 20
1353	1353	section by filing a verified claim for refund with the department. 21
1354	1354	(i) The following provisions of the Arkansas Tax Procedure Act, § 26 -22
1355	1355	18-101 et seq., apply to claims for a refund under this section: 23
1356	1356	(1) The time limitations that apply to claims for a refund of an 24
1357	1357	overpayment of state tax; and 25
1358	1358	(2) The procedures that apply to the disallowance or proposed 26
1359	1359	disallowance of claims for a refund. 27
1360	1360	28
1361	1361	SECTION 20. EFFECTIVE DATE. Sections 1 –19 of this act are effective 29
1362	1362	on and after October 1, 2025. 30
1363	1363	31
1364	1364	32
1365	1365	33
1366	1366	34
1367	1367	35
1368	1368	36