Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1674 3
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By: Representative L. Johnson 5
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For An Act To Be Entitled 8
AN ACT TO PROVIDE FOR AN INCOME TAX INCENTIVE FOR 9
DONATIONS TO A RURAL HOSPITAL ORGANIZATION; TO CREATE 10
AN INCOME TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN 11
RURAL HOSPITAL ORGANIZATIONS; TO CREATE THE HELPING 12
ENHANCE ACCESS TO RURAL TREATMENT (HEART) ACT; AND 13
FOR OTHER PURPOSES. 14
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16
Subtitle 17
TO CREATE AN INCOME TAX CREDIT FOR 18
CONTRIBUTIONS TO CERTAIN RURAL HOSPITAL 19
ORGANIZATIONS; AND TO CREATE THE HELPING 20
ENHANCE ACCESS TO RURAL TREATMENT 21
(HEART) ACT. 22
23
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 24
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SECTION 1. Arkansas Code Title 20, Chapter 12, is amended to add an 26
additional subchapter to read as follows: 27
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Subchapter 7 — Helping Enhance Access to Rural Treatment (HEART) Act 29
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20-12-701. Title. 31
This subchapter shall be known and may be cited as the "Helping Enhance 32
Access to Rural Treatment (HEART) Act". 33
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20-12-702. Definitions. 35
As used in this subchapter: 36 HB1674
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(1) “Critical access hospital” means a hospital that is 1
designated by the Centers for Medicare and Medicaid Services as a critical 2
access hospital and that is recognized by the Department of Health as a 3
critical access hospital for purposes of Medicaid; 4
(2) “Rural county” means a county having a population of less 5
than fifty thousand (50,000) according to the most recent federal decennial 6
census, excluding any military personnel and their dependents living in a 7
county that contains a military base or installation; and 8
(3) “Rural hospital organization” means a licensed acute care 9
hospital that: 10
(A) Either provides inpatient hospital services at a 11
facility located in a rural county or is a critical access hospital; 12
(B) Participates in both Medicaid and Medicare and accepts 13
both Medicaid and Medicare patients; 14
(C) Provides healthcare services to indigent patients; 15
(D) Has at least ten percent (10%) of its annual net 16
revenue categorized as indigent care, charity care, or bad debt; 17
(E) Annually files either: 18
(i) IRS Form 990, Return of Organization Exempt From 19
Income Tax, with the department; or 20
(ii) For any hospital not required to file IRS Form 21
990, the form prescribed by the department that collects the same information 22
as the IRS Form 990; 23
(F) Is operated by a county or municipal authority or is 24
designated as a tax-exempt organization under 26 U.S.C. § 501(c)(3), as it 25
existed on January 1, 2025; and 26
(G) Is current with all audits and reports required by 27
law. 28
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20-12-703. Powers and duties of Department of Health — List of 30
approved rural hospital organizations. 31
(a) The Department of Health may accept and expend any donations and 32
contributions received under this subchapter. 33
(b) The Department of Health shall: 34
(1) By December 1 of each year, approve a list of rural hospital 35
organizations eligible to receive contributions from the income tax credit 36 HB1674
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provided under § 26-51-518 and transmit the list to the Department of Finance 1
and Administration; 2
(2)(A) Create an operations manual for identifying rural 3
hospital organizations and ranking rural hospital organizations in order of 4
financial need. 5
(B) The operations manual required under subdivision 6
(b)(2)(A) of this section shall include without limitation: 7
(i) All deadlines for rural hospital organizations 8
to submit the required information to the Department of Health; 9
(ii) The criteria to be included in the five-year 10
plan required under § 20-12-704 for rural hospital organizations; and 11
(iii) The formula applied to rank rural hospital 12
organizations in order of financial need; 13
(3) Prepare an annual report compiling the information received 14
under § 20-12-704 and submit it to the Chair of the House Committee on Public 15
Health, Welfare, and Labor and the Chair of the Senate Committee on Public 16
Health, Welfare, and Labor; and 17
(4) Post the following information in a prominent location on 18
the Department of Health's website: 19
(A) The list of rural hospital organizations eligible to 20
receive contributions as approved under subdivision (b)(1) of this section; 21
(B) The operations manual required under subdivision 22
(b)(2) of this section; 23
(C) The annual report required under subdivision (b)(3) of 24
this section; 25
(D) The total amount received by each third party that 26
participated in soliciting, administering, or managing contributions under 27
this subchapter; and 28
(E) A link to the Department of Finance and 29
Administration's website containing the information required under § 26-51-30
518(h). 31
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20-12-704. Requirements for rural hospital organizations. 33
(a)(1) Before a rural hospital organization is included on the list 34
required under § 20-12-703 and is eligible to receive contributions from the 35
income tax credit provided under § 26-51-518, the rural hospital organization 36 HB1674
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shall submit to the Department of Health a five-year plan detailing the 1
financial viability and stability of the rural hospital organization. 2
(2) The criteria to be included in the five-year plan required 3
under subdivision (a)(1) of this section shall be established by the 4
department under § 20-12-703. 5
(b)(1) A rural hospital organization that receives contributions under 6
§ 26-51-518 shall: 7
(A) Use the contributions received under § 26-51-518 for 8
the provision of healthcare-related services for residents of a rural county 9
or for residents of the area served by a critical access hospital; and 10
(B) Report on a form provided by the department: 11
(i) All contributions received from individual and 12
corporate donors under § 26-51-518 detailing the manner in which the 13
contributions received were expended by the rural hospital organization; and 14
(ii)(a) Any payments made to a third party to 15
solicit, administer, or manage the contributions received by the rural 16
hospital organization under this subchapter or § 26-51-518. 17
(b) Payments made to a third party to solicit, 18
administer, or manage the contributions received under this subchapter shall 19
not exceed three percent (3%) of the total amount of the contributions 20
received by a rural hospital organization. 21
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SECTION 2. Arkansas Code Title 26, Chapter 51, Subchapter 5, is 23
amended to add an additional section to read as follows: 24
26-51-518. Contributions to rural hospital organizations. 25
(a) As used in this section, “rural hospital organization” means an 26
organization that is approved by the Department of Health under the Helping 27
Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq. 28
(b)(1)(A) There is allowed an income tax credit against the income tax 29
imposed by this chapter in the amount determined under subdivision (b)(1)(B) 30
of this section for contributions made to a rural hospital organization. 31
(B) Except as otherwise provided in this section, the 32
credit allowed under this subdivision (b)(1) shall be in the following 33
amounts: 34
(i) For an individual or a head of household, the 35
actual amount contributed; 36 HB1674
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(ii) For a married couple filing a joint return, the 1
actual amount contributed; or 2
(iii) For an individual who is a member of a limited 3
liability company formed under state law, a shareholder of a Subchapter S 4
corporation, or a partner in a partnership, the amount contributed using 5
income on which tax was actually paid by the individual under this chapter or 6
under the Elective Pass-Through Entity Tax Act, § 26-65-101 et seq. 7
(2) There is allowed an income tax credit against the income tax 8
imposed by this chapter for contributions made to a rural hospital 9
organization by a corporation or other entity in an amount not to exceed the 10
lesser of the actual amount expended or seventy-five percent (75%) of the 11
liability of the corporation or other entity under this chapter. 12
(c)(1) From January 1 to June 30 each taxable year, an individual 13
taxpayer is limited in the rural hospital organization contributions that are 14
allowable for credit under this section. 15
(2) The rural hospital organization contributions approved by 16
the Secretary of the Department of Finance and Administration for the period 17
of January 1 to June 30 of a taxable year shall not exceed the following 18
limits: 19
(A) For an individual or a head of household, five 20
thousand dollars ($5,000); 21
(B) For a married couple filing a joint return, ten 22
thousand dollars ($10,000); or 23
(C) For an individual who is a member of a limited 24
liability company formed under state law, a shareholder of a Subchapter S 25
corporation, or a partner in a partnership, ten thousand dollars ($10,000). 26
(d)(1) The amount of the income tax credit under this section that may 27
be claimed by the taxpayer in a tax year shall not exceed the amount of 28
income tax due by the taxpayer. 29
(2) Any unused income tax credit under this section may be 30
carried forward for five (5) consecutive tax years following the tax year in 31
which the income tax credit was earned. 32
(3) A taxpayer shall not claim the credit allowed under this 33
section against prior years’ tax liability. 34
(e)(1) The aggregate amount of credits allowed under this section 35
shall not exceed seventy-five million dollars ($75,000,000) in a taxable 36 HB1674
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year. 1
(2)(A)(i) Total contributions to an individual rural hospital 2
organization shall not exceed four million dollars ($4,000,000) in a taxable 3
year. 4
(ii) From January 1 to June 30 each taxable year, 5
the secretary shall not preapprove contributions submitted by: 6
(a) Individual taxpayers in an amount that 7
exceeds two million dollars ($2,000,000) to an individual rural hospital 8
organization; and 9
(b) Corporate donors in an amount that exceeds 10
two million dollars ($2,000,000) to an individual rural hospital 11
organization. 12
(iii) Subject to the limits otherwise stated in this 13
subsection, from July 1 to December 31 each taxable year, the secretary shall 14
approve contributions submitted by individual taxpayers and corporations or 15
other entities. 16
(B) If an individual or corporate donor desires to make a 17
contribution to an individual rural hospital organization that has received 18
the maximum amount of contributions for that taxable year under this section, 19
the Department of Health shall provide the individual or corporate donor with 20
a list, ranked in order of financial need, as determined by the Department of 21
Health, of rural hospital organizations still eligible to receive 22
contributions under this section for the taxable year. 23
(C) If an individual or corporate donor desires to make a 24
contribution to an unspecified or undesignated rural hospital organization, 25
either directly to the Department of Health or through a third party that 26
participates in soliciting, administering, or managing contributions, the 27
contribution shall be attributed to the rural hospital organization ranked 28
with the highest financial need by the Department of Health that has not yet 29
received the maximum amount of contributions for that taxable year, 30
regardless of whether a third party has a contractual relationship or 31
agreement with the rural hospital organization. 32
(D) A third party that participates in soliciting, 33
advertising, or managing contributions to rural hospital organizations shall 34
provide the complete list of rural hospital organizations eligible to receive 35
the credit provided under this section, including their ranking in order of 36 HB1674
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financial need as determined by the Department of Health under the Helping 1
Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq., to any 2
potential donor regardless of whether the third party has a contractual 3
relationship or agreement with the rural hospital organization. 4
(3)(A) For purposes of subdivisions (e)(1) and (e)(2) of this 5
section, a rural hospital organization shall notify a potential donor of the 6
requirements of this section. 7
(B)(i) Before making a contribution to a rural hospital 8
organization, a taxpayer shall electronically notify the Department of 9
Finance and Administration, in a manner specified by the Department of 10
Finance and Administration, of the total amount of contribution that the 11
taxpayer intends to make to the rural hospital organization under this 12
section. 13
(ii) The secretary shall preapprove or deny the 14
requested amount within thirty (30) days after receiving the request from the 15
taxpayer and shall provide written notice to the taxpayer and rural hospital 16
organization of the preapproval or denial, which shall not require a signed 17
release or notarized approval by the taxpayer. 18
(iii) To receive a credit under this section, the 19
taxpayer shall make the preapproved contribution to the rural hospital 20
organization within one hundred eighty (180) days after receiving notice from 21
the secretary that the requested amount was preapproved. 22
(iv) If a taxpayer does not comply with this 23
subdivision (e)(3), the secretary shall not include the preapproved 24
contribution amount when calculating the limits prescribed in subdivision 25
(e)(1) and (e)(2) of this section. 26
(4)(A) Preapproval of contributions by the secretary shall be 27
based solely on the availability of credits under this section. 28
(B) A taxpayer that is preapproved by the secretary under 29
this subsection shall retain its preapproval in the event the credit 30
percentage in this section is modified for the year in which the taxpayer was 31
preapproved. 32
(C) Upon the rural hospital organization’s confirmation of 33
receipt of contributions that have been preapproved by the secretary, a 34
taxpayer preapproved by the secretary under subdivision (e)(3) of this 35
section shall receive the full benefit of the credit established by this 36 HB1674
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section even if the rural hospital organization to which the taxpayer made a 1
contribution does not properly comply with the reports or filings required 2
under this section. 3
(5) Notwithstanding any laws to the contrary, the Department of 4
Finance and Administration shall not take any adverse action against donors 5
to rural hospital organizations under this section if the secretary 6
preapproved a contribution for a credit under this section before the date 7
the rural hospital organization is removed from the Department of Health list 8
under the Helping Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 9
et seq., and all such contributions shall remain as preapproved credits 10
subject only to the donor’s compliance with subdivision (e)(3) of this 11
section. 12
(f)(1) For a taxpayer to claim a credit under this section, a letter 13
of confirmation of contribution issued by the rural hospital organization to 14
which the contribution was made shall be attached to the taxpayer’s tax 15
return. 16
(2)(A) If the taxpayer files an electronic return, the 17
confirmation required under subdivision (f)(1) of this section shall be 18
required to be electronically attached to the return only if the Internal 19
Revenue Service allows such attachments when the return is transmitted to the 20
Department of Finance and Administration. 21
(B) If a taxpayer files an electronic return and the 22
confirmation required under subdivision (f)(1) of this section is not 23
attached because the Internal Revenue Service does not, at the time of the 24
electronic filing, allow electronic attachments to an Arkansas return, the 25
confirmation required under subdivision (f)(1) of this section shall be 26
maintained by the taxpayer and made available upon request by the secretary. 27
(3) The letter of confirmation of contribution required under 28
subdivision (f)(1) of this section shall contain the: 29
(A) Taxpayer’s name; 30
(B) Taxpayer's address; 31
(C) Taxpayer's tax identification number; 32
(D) Amount of the contribution; 33
(E) Date of the contribution; and 34
(F) Amount of the credit allowed under this section. 35
(g) A credit shall not be allowed under this section with respect to 36 HB1674
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any amount deducted from taxable net income by the taxpayer as a charitable 1
contribution to a bona fide charitable organization qualified under 26 U.S.C. 2
§ 501(c)(3). 3
(h) The Department of Finance and Administration shall post the 4
following information in a prominent location on its website: 5
(1) All pertinent timelines relating to the credit allowed under 6
this section, including without limitation the: 7
(A) Beginning date when contributions can be submitted for 8
preapproval by donors for the January 1 to June 30 period; 9
(B) Ending date when contributions can be submitted for 10
preapproval by donors for the January 1 to June 30 period; 11
(C) Beginning date when contributions can be submitted for 12
preapproval by donors for the July 1 to December 31 period; 13
(D) Ending date when contributions can be submitted for 14
preapproval by donors for the July 1 to December 31 period; and 15
(E) Date by which preapproved contributions are required 16
to be sent to the rural hospital organization; 17
(2) The list and ranking order of rural hospital organizations 18
eligible to receive contributions established under the Helping Enhance 19
Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq.; 20
(3) A monthly progress report, including without limitation the: 21
(A) Total preapproved contributions under this section to 22
date by each rural hospital organization; 23
(B) Total contributions received under this section to 24
date by each rural hospital organization; 25
(C) Total aggregate amount of preapproved contributions 26
made under this section to date; and 27
(D) Aggregate amount of credits available under this 28
section; and 29
(4) A list of all preapproved contributions that were made to an 30
unspecified or undesignated rural hospital organization and the rural 31
hospital organizations that received the preapproved contributions. 32
(i) The Department of Inspector General shall conduct annually an 33
audit of the tax credit program established under this section, including 34
without limitation: 35
(1) The amount and the name of the recipient rural hospital 36 HB1674
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organization for each contribution made under this section; 1
(2) All credits received by individual and corporate taxpayers 2
under this section; and 3
(3) All amounts received by third parties that solicited, 4
administered, or managed contributions related to this section and the 5
Helping Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq. 6
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SECTION 3. EFFECTIVE DATE. Section 2 of this act is effective for tax 8
years beginning on or after January 1, 2025. 9
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