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Arkansas House Bill HB1674

Arkansas 2025 Regular Session

Arkansas House Bill HB1674 Compare Versions

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11 Stricken language would be deleted from and underlined language would be added to present law.
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33 State of Arkansas 1
44 95th General Assembly A Bill 2
55 Regular Session, 2025 HOUSE BILL 1674 3
66 4
77 By: Representative L. Johnson 5
88 6
99 7
1010 For An Act To Be Entitled 8
1111 AN ACT TO PROVIDE FOR AN INCOME TAX INCENTIVE FOR 9
1212 DONATIONS TO A RURAL HOSPITAL ORGANIZATION; TO CREATE 10
1313 AN INCOME TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN 11
1414 RURAL HOSPITAL ORGANIZATIONS; TO CREATE THE HELPING 12
1515 ENHANCE ACCESS TO RURAL TREATMENT (HEART) ACT; AND 13
1616 FOR OTHER PURPOSES. 14
1717 15
1818 16
1919 Subtitle 17
2020 TO CREATE AN INCOME TAX CREDIT FOR 18
2121 CONTRIBUTIONS TO CERTAIN RURAL HOSPITAL 19
2222 ORGANIZATIONS; AND TO CREATE THE HELPING 20
2323 ENHANCE ACCESS TO RURAL TREATMENT 21
2424 (HEART) ACT. 22
2525 23
2626 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 24
2727 25
2828 SECTION 1. Arkansas Code Title 20, Chapter 12, is amended to add an 26
2929 additional subchapter to read as follows: 27
3030 28
3131 Subchapter 7 — Helping Enhance Access to Rural Treatment (HEART) Act 29
3232 30
3333 20-12-701. Title. 31
3434 This subchapter shall be known and may be cited as the "Helping Enhance 32
3535 Access to Rural Treatment (HEART) Act". 33
3636 34
3737 20-12-702. Definitions. 35
3838 As used in this subchapter: 36 HB1674
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4141 (1) “Critical access hospital” means a hospital that is 1
4242 designated by the Centers for Medicare and Medicaid Services as a critical 2
4343 access hospital and that is recognized by the Department of Health as a 3
4444 critical access hospital for purposes of Medicaid; 4
4545 (2) “Rural county” means a county having a population of less 5
4646 than fifty thousand (50,000) according to the most recent federal decennial 6
4747 census, excluding any military personnel and their dependents living in a 7
4848 county that contains a military base or installation; and 8
4949 (3) “Rural hospital organization” means a licensed acute care 9
5050 hospital that: 10
5151 (A) Either provides inpatient hospital services at a 11
5252 facility located in a rural county or is a critical access hospital; 12
5353 (B) Participates in both Medicaid and Medicare and accepts 13
5454 both Medicaid and Medicare patients; 14
5555 (C) Provides healthcare services to indigent patients; 15
5656 (D) Has at least ten percent (10%) of its annual net 16
5757 revenue categorized as indigent care, charity care, or bad debt; 17
5858 (E) Annually files either: 18
5959 (i) IRS Form 990, Return of Organization Exempt From 19
6060 Income Tax, with the department; or 20
6161 (ii) For any hospital not required to file IRS Form 21
6262 990, the form prescribed by the department that collects the same information 22
6363 as the IRS Form 990; 23
6464 (F) Is operated by a county or municipal authority or is 24
6565 designated as a tax-exempt organization under 26 U.S.C. § 501(c)(3), as it 25
6666 existed on January 1, 2025; and 26
6767 (G) Is current with all audits and reports required by 27
6868 law. 28
6969 29
7070 20-12-703. Powers and duties of Department of Health — List of 30
7171 approved rural hospital organizations. 31
7272 (a) The Department of Health may accept and expend any donations and 32
7373 contributions received under this subchapter. 33
7474 (b) The Department of Health shall: 34
7575 (1) By December 1 of each year, approve a list of rural hospital 35
7676 organizations eligible to receive contributions from the income tax credit 36 HB1674
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7979 provided under § 26-51-518 and transmit the list to the Department of Finance 1
8080 and Administration; 2
8181 (2)(A) Create an operations manual for identifying rural 3
8282 hospital organizations and ranking rural hospital organizations in order of 4
8383 financial need. 5
8484 (B) The operations manual required under subdivision 6
8585 (b)(2)(A) of this section shall include without limitation: 7
8686 (i) All deadlines for rural hospital organizations 8
8787 to submit the required information to the Department of Health; 9
8888 (ii) The criteria to be included in the five-year 10
8989 plan required under § 20-12-704 for rural hospital organizations; and 11
9090 (iii) The formula applied to rank rural hospital 12
9191 organizations in order of financial need; 13
9292 (3) Prepare an annual report compiling the information received 14
9393 under § 20-12-704 and submit it to the Chair of the House Committee on Public 15
9494 Health, Welfare, and Labor and the Chair of the Senate Committee on Public 16
9595 Health, Welfare, and Labor; and 17
9696 (4) Post the following information in a prominent location on 18
9797 the Department of Health's website: 19
9898 (A) The list of rural hospital organizations eligible to 20
9999 receive contributions as approved under subdivision (b)(1) of this section; 21
100100 (B) The operations manual required under subdivision 22
101101 (b)(2) of this section; 23
102102 (C) The annual report required under subdivision (b)(3) of 24
103103 this section; 25
104104 (D) The total amount received by each third party that 26
105105 participated in soliciting, administering, or managing contributions under 27
106106 this subchapter; and 28
107107 (E) A link to the Department of Finance and 29
108108 Administration's website containing the information required under § 26-51-30
109109 518(h). 31
110110 32
111111 20-12-704. Requirements for rural hospital organizations. 33
112112 (a)(1) Before a rural hospital organization is included on the list 34
113113 required under § 20-12-703 and is eligible to receive contributions from the 35
114114 income tax credit provided under § 26-51-518, the rural hospital organization 36 HB1674
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117117 shall submit to the Department of Health a five-year plan detailing the 1
118118 financial viability and stability of the rural hospital organization. 2
119119 (2) The criteria to be included in the five-year plan required 3
120120 under subdivision (a)(1) of this section shall be established by the 4
121121 department under § 20-12-703. 5
122122 (b)(1) A rural hospital organization that receives contributions under 6
123123 § 26-51-518 shall: 7
124124 (A) Use the contributions received under § 26-51-518 for 8
125125 the provision of healthcare-related services for residents of a rural county 9
126126 or for residents of the area served by a critical access hospital; and 10
127127 (B) Report on a form provided by the department: 11
128128 (i) All contributions received from individual and 12
129129 corporate donors under § 26-51-518 detailing the manner in which the 13
130130 contributions received were expended by the rural hospital organization; and 14
131131 (ii)(a) Any payments made to a third party to 15
132132 solicit, administer, or manage the contributions received by the rural 16
133133 hospital organization under this subchapter or § 26-51-518. 17
134134 (b) Payments made to a third party to solicit, 18
135135 administer, or manage the contributions received under this subchapter shall 19
136136 not exceed three percent (3%) of the total amount of the contributions 20
137137 received by a rural hospital organization. 21
138138 22
139139 SECTION 2. Arkansas Code Title 26, Chapter 51, Subchapter 5, is 23
140140 amended to add an additional section to read as follows: 24
141141 26-51-518. Contributions to rural hospital organizations. 25
142142 (a) As used in this section, “rural hospital organization” means an 26
143143 organization that is approved by the Department of Health under the Helping 27
144144 Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq. 28
145145 (b)(1)(A) There is allowed an income tax credit against the income tax 29
146146 imposed by this chapter in the amount determined under subdivision (b)(1)(B) 30
147147 of this section for contributions made to a rural hospital organization. 31
148148 (B) Except as otherwise provided in this section, the 32
149149 credit allowed under this subdivision (b)(1) shall be in the following 33
150150 amounts: 34
151151 (i) For an individual or a head of household, the 35
152152 actual amount contributed; 36 HB1674
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155155 (ii) For a married couple filing a joint return, the 1
156156 actual amount contributed; or 2
157157 (iii) For an individual who is a member of a limited 3
158158 liability company formed under state law, a shareholder of a Subchapter S 4
159159 corporation, or a partner in a partnership, the amount contributed using 5
160160 income on which tax was actually paid by the individual under this chapter or 6
161161 under the Elective Pass-Through Entity Tax Act, § 26-65-101 et seq. 7
162162 (2) There is allowed an income tax credit against the income tax 8
163163 imposed by this chapter for contributions made to a rural hospital 9
164164 organization by a corporation or other entity in an amount not to exceed the 10
165165 lesser of the actual amount expended or seventy-five percent (75%) of the 11
166166 liability of the corporation or other entity under this chapter. 12
167167 (c)(1) From January 1 to June 30 each taxable year, an individual 13
168168 taxpayer is limited in the rural hospital organization contributions that are 14
169169 allowable for credit under this section. 15
170170 (2) The rural hospital organization contributions approved by 16
171171 the Secretary of the Department of Finance and Administration for the period 17
172172 of January 1 to June 30 of a taxable year shall not exceed the following 18
173173 limits: 19
174174 (A) For an individual or a head of household, five 20
175175 thousand dollars ($5,000); 21
176176 (B) For a married couple filing a joint return, ten 22
177177 thousand dollars ($10,000); or 23
178178 (C) For an individual who is a member of a limited 24
179179 liability company formed under state law, a shareholder of a Subchapter S 25
180180 corporation, or a partner in a partnership, ten thousand dollars ($10,000). 26
181181 (d)(1) The amount of the income tax credit under this section that may 27
182182 be claimed by the taxpayer in a tax year shall not exceed the amount of 28
183183 income tax due by the taxpayer. 29
184184 (2) Any unused income tax credit under this section may be 30
185185 carried forward for five (5) consecutive tax years following the tax year in 31
186186 which the income tax credit was earned. 32
187187 (3) A taxpayer shall not claim the credit allowed under this 33
188188 section against prior years’ tax liability. 34
189189 (e)(1) The aggregate amount of credits allowed under this section 35
190190 shall not exceed seventy-five million dollars ($75,000,000) in a taxable 36 HB1674
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193193 year. 1
194194 (2)(A)(i) Total contributions to an individual rural hospital 2
195195 organization shall not exceed four million dollars ($4,000,000) in a taxable 3
196196 year. 4
197197 (ii) From January 1 to June 30 each taxable year, 5
198198 the secretary shall not preapprove contributions submitted by: 6
199199 (a) Individual taxpayers in an amount that 7
200200 exceeds two million dollars ($2,000,000) to an individual rural hospital 8
201201 organization; and 9
202202 (b) Corporate donors in an amount that exceeds 10
203203 two million dollars ($2,000,000) to an individual rural hospital 11
204204 organization. 12
205205 (iii) Subject to the limits otherwise stated in this 13
206206 subsection, from July 1 to December 31 each taxable year, the secretary shall 14
207207 approve contributions submitted by individual taxpayers and corporations or 15
208208 other entities. 16
209209 (B) If an individual or corporate donor desires to make a 17
210210 contribution to an individual rural hospital organization that has received 18
211211 the maximum amount of contributions for that taxable year under this section, 19
212212 the Department of Health shall provide the individual or corporate donor with 20
213213 a list, ranked in order of financial need, as determined by the Department of 21
214214 Health, of rural hospital organizations still eligible to receive 22
215215 contributions under this section for the taxable year. 23
216216 (C) If an individual or corporate donor desires to make a 24
217217 contribution to an unspecified or undesignated rural hospital organization, 25
218218 either directly to the Department of Health or through a third party that 26
219219 participates in soliciting, administering, or managing contributions, the 27
220220 contribution shall be attributed to the rural hospital organization ranked 28
221221 with the highest financial need by the Department of Health that has not yet 29
222222 received the maximum amount of contributions for that taxable year, 30
223223 regardless of whether a third party has a contractual relationship or 31
224224 agreement with the rural hospital organization. 32
225225 (D) A third party that participates in soliciting, 33
226226 advertising, or managing contributions to rural hospital organizations shall 34
227227 provide the complete list of rural hospital organizations eligible to receive 35
228228 the credit provided under this section, including their ranking in order of 36 HB1674
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231231 financial need as determined by the Department of Health under the Helping 1
232232 Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq., to any 2
233233 potential donor regardless of whether the third party has a contractual 3
234234 relationship or agreement with the rural hospital organization. 4
235235 (3)(A) For purposes of subdivisions (e)(1) and (e)(2) of this 5
236236 section, a rural hospital organization shall notify a potential donor of the 6
237237 requirements of this section. 7
238238 (B)(i) Before making a contribution to a rural hospital 8
239239 organization, a taxpayer shall electronically notify the Department of 9
240240 Finance and Administration, in a manner specified by the Department of 10
241241 Finance and Administration, of the total amount of contribution that the 11
242242 taxpayer intends to make to the rural hospital organization under this 12
243243 section. 13
244244 (ii) The secretary shall preapprove or deny the 14
245245 requested amount within thirty (30) days after receiving the request from the 15
246246 taxpayer and shall provide written notice to the taxpayer and rural hospital 16
247247 organization of the preapproval or denial, which shall not require a signed 17
248248 release or notarized approval by the taxpayer. 18
249249 (iii) To receive a credit under this section, the 19
250250 taxpayer shall make the preapproved contribution to the rural hospital 20
251251 organization within one hundred eighty (180) days after receiving notice from 21
252252 the secretary that the requested amount was preapproved. 22
253253 (iv) If a taxpayer does not comply with this 23
254254 subdivision (e)(3), the secretary shall not include the preapproved 24
255255 contribution amount when calculating the limits prescribed in subdivision 25
256256 (e)(1) and (e)(2) of this section. 26
257257 (4)(A) Preapproval of contributions by the secretary shall be 27
258258 based solely on the availability of credits under this section. 28
259259 (B) A taxpayer that is preapproved by the secretary under 29
260260 this subsection shall retain its preapproval in the event the credit 30
261261 percentage in this section is modified for the year in which the taxpayer was 31
262262 preapproved. 32
263263 (C) Upon the rural hospital organization’s confirmation of 33
264264 receipt of contributions that have been preapproved by the secretary, a 34
265265 taxpayer preapproved by the secretary under subdivision (e)(3) of this 35
266266 section shall receive the full benefit of the credit established by this 36 HB1674
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269269 section even if the rural hospital organization to which the taxpayer made a 1
270270 contribution does not properly comply with the reports or filings required 2
271271 under this section. 3
272272 (5) Notwithstanding any laws to the contrary, the Department of 4
273273 Finance and Administration shall not take any adverse action against donors 5
274274 to rural hospital organizations under this section if the secretary 6
275275 preapproved a contribution for a credit under this section before the date 7
276276 the rural hospital organization is removed from the Department of Health list 8
277277 under the Helping Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 9
278278 et seq., and all such contributions shall remain as preapproved credits 10
279279 subject only to the donor’s compliance with subdivision (e)(3) of this 11
280280 section. 12
281281 (f)(1) For a taxpayer to claim a credit under this section, a letter 13
282282 of confirmation of contribution issued by the rural hospital organization to 14
283283 which the contribution was made shall be attached to the taxpayer’s tax 15
284284 return. 16
285285 (2)(A) If the taxpayer files an electronic return, the 17
286286 confirmation required under subdivision (f)(1) of this section shall be 18
287287 required to be electronically attached to the return only if the Internal 19
288288 Revenue Service allows such attachments when the return is transmitted to the 20
289289 Department of Finance and Administration. 21
290290 (B) If a taxpayer files an electronic return and the 22
291291 confirmation required under subdivision (f)(1) of this section is not 23
292292 attached because the Internal Revenue Service does not, at the time of the 24
293293 electronic filing, allow electronic attachments to an Arkansas return, the 25
294294 confirmation required under subdivision (f)(1) of this section shall be 26
295295 maintained by the taxpayer and made available upon request by the secretary. 27
296296 (3) The letter of confirmation of contribution required under 28
297297 subdivision (f)(1) of this section shall contain the: 29
298298 (A) Taxpayer’s name; 30
299299 (B) Taxpayer's address; 31
300300 (C) Taxpayer's tax identification number; 32
301301 (D) Amount of the contribution; 33
302302 (E) Date of the contribution; and 34
303303 (F) Amount of the credit allowed under this section. 35
304304 (g) A credit shall not be allowed under this section with respect to 36 HB1674
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307307 any amount deducted from taxable net income by the taxpayer as a charitable 1
308308 contribution to a bona fide charitable organization qualified under 26 U.S.C. 2
309309 § 501(c)(3). 3
310310 (h) The Department of Finance and Administration shall post the 4
311311 following information in a prominent location on its website: 5
312312 (1) All pertinent timelines relating to the credit allowed under 6
313313 this section, including without limitation the: 7
314314 (A) Beginning date when contributions can be submitted for 8
315315 preapproval by donors for the January 1 to June 30 period; 9
316316 (B) Ending date when contributions can be submitted for 10
317317 preapproval by donors for the January 1 to June 30 period; 11
318318 (C) Beginning date when contributions can be submitted for 12
319319 preapproval by donors for the July 1 to December 31 period; 13
320320 (D) Ending date when contributions can be submitted for 14
321321 preapproval by donors for the July 1 to December 31 period; and 15
322322 (E) Date by which preapproved contributions are required 16
323323 to be sent to the rural hospital organization; 17
324324 (2) The list and ranking order of rural hospital organizations 18
325325 eligible to receive contributions established under the Helping Enhance 19
326326 Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq.; 20
327327 (3) A monthly progress report, including without limitation the: 21
328328 (A) Total preapproved contributions under this section to 22
329329 date by each rural hospital organization; 23
330330 (B) Total contributions received under this section to 24
331331 date by each rural hospital organization; 25
332332 (C) Total aggregate amount of preapproved contributions 26
333333 made under this section to date; and 27
334334 (D) Aggregate amount of credits available under this 28
335335 section; and 29
336336 (4) A list of all preapproved contributions that were made to an 30
337337 unspecified or undesignated rural hospital organization and the rural 31
338338 hospital organizations that received the preapproved contributions. 32
339339 (i) The Department of Inspector General shall conduct annually an 33
340340 audit of the tax credit program established under this section, including 34
341341 without limitation: 35
342342 (1) The amount and the name of the recipient rural hospital 36 HB1674
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345345 organization for each contribution made under this section; 1
346346 (2) All credits received by individual and corporate taxpayers 2
347347 under this section; and 3
348348 (3) All amounts received by third parties that solicited, 4
349349 administered, or managed contributions related to this section and the 5
350350 Helping Enhance Access to Rural Treatment (HEART) Act, § 20 -12-701 et seq. 6
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352352 SECTION 3. EFFECTIVE DATE. Section 2 of this act is effective for tax 8
353353 years beginning on or after January 1, 2025. 9
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