Arkansas Code of 1987 (2023) › Title 26 - TAXATION (§§ 26-1-101 — 26-82-119) › Subtitle 5 - STATE TAXES (§§ 26-50-101 — 26-65-108) › Chapter 51 - INCOME TAXES (§§ 26-51-101 — 26-51-2804) › Subchapter 5 - TAX CREDITS GENERALLY (§§ 26-51-501 — 26-51-517) › Section 26-51-506 - Tax credit for waste reduction, reuse, or recycling equipment - Eligibility - Definitions

(a)
The intent and purpose of this section is to increase capacity in the State of Arkansas for the use of recovered materials.
(b)
As used in this section:
(1)
"Cost", in the case of a transfer of title or a finance lease, means the amount of the purchase price, and, in the case of a lease which is not a finance lease but which otherwise qualifies as a purchase under this section, means the amount of the lease payments due to be paid during the term of the lease after deducting any portion of the lease payments attributable to interest, insurance, and taxes;
(2)
"Equipment used to service waste reduction, reuse, or recycling equipment" means expenditures, machinery, or equipment that keeps existing machinery or equipment in running order by providing repair, maintenance, adjustment, inspection, or supplies;
(3)
"Finance lease" means a lease agreement which is treated as a purchase by a lessee for Arkansas income tax purposes;
(4)
"Home scrap" means materials or by-products generated from and commonly reused within an original manufacturing process;
(5)
"Maintenance" means expenditures, machinery, or equipment used to keep existing machinery or equipment in a condition that approaches or equates to its original condition;
(6)
"Motor vehicle" means a vehicle or trailer that is licensed, or that normally would be licensed, for use on highways in Arkansas;
(7)
"Postconsumer waste" means products or other materials generated by a business, governmental entity, or consumer which have served their intended end use and have been recovered from or otherwise diverted from the solid waste stream for the purpose of recycling;
(8)
"Preconsumer material" means material generated during any step in the production of a product and recovered or otherwise diverted from the solid waste stream for the purpose of recycling but does not include home scrap;
(9)
"Purchase" means a transaction under which title to an item is transferred for consideration or a lease contract for a period of at least three (3) years regardless of whether title to the item is transferred at the end of such period;
(10)
"Qualified expansion project" means an expansion of a taxpayer's facility that:
(A)
Is commenced on or after January 1, 2017;
(B)
Is conducted on the site of a qualified manufacturer of steel, as defined in §
26-51-1211
, §
26-52-901
, §
26-52-911
, Acts 2013, No. 1084, or Acts 2013, No. 1476;
(C)
Has a total investment of at least one billion dollars ($1,000,000,000);
(D)
Is undertaken by a taxpayer that has entered into an agreement with the State of Arkansas in which the taxpayer made a commitment to create at least five hundred (500) net new direct positions and independent direct positions as those terms are defined in Acts 2013, No. 1084, § 8, with an average annual wage of at least seventy-five thousand dollars ($75,000);
(E)
Provides a positive cost-benefit analysis to the state as determined by the Arkansas Economic Development Commission and the Office of Economic Analysis and Tax Research before an incentive agreement between the state and the taxpayer is executed;
(F)
Is certified as having a closing date before July 1, 2018, by which the taxpayer has certified and the state has verified that necessary capital acquisition and borrowing for the qualified expansion project has occurred to:
(i)
Secure a site;
(ii)
Obtain engineering services;
(iii)
Purchase equipment; and
(iv)
Commence initial construction; and
(G)
Is undertaken by a taxpayer that has elected by agreement with the State of Arkansas for the expansion of the taxpayer's facility to be classified as a qualified expansion project under this section;
(11)
"Qualified steel specialty products manufacturing facility" means a facility:
(A)
For which the taxpayer commenced construction on or after January 1, 2021;
(B)
That is located in Arkansas;
(C)
That melts scrap steel in an electric arc or similar furnace to produce one (1) or more specialty steel products, including without limitation billets, structural shapes, reinforcing bars, coiled reinforcing bars, wire rods, and merchant bars;
(D)
In which the taxpayer has a total investment in excess of two hundred million dollars ($200,000,000);
(E)
That is undertaken by a taxpayer that has entered into an agreement with the State of Arkansas in which the taxpayer made a commitment to create at least one hundred fifty (150) net new direct positions and independent direct positions as those terms are defined in Acts 2013, No. 1084, § 8, with an average annual wage of at least seventy-five thousand dollars ($75,000);
(F)
That provides a positive cost-benefit analysis to the state as determined by the Arkansas Economic Development Commission and the Office of Economic Analysis and Tax Research before an incentive agreement between the state and the taxpayer is executed;
(G)
That is certified as having a closing date before October 1, 2023, by which the taxpayer has certified and the state has verified that necessary capital acquisition and borrowing for the qualified steel specialty products manufacturing facility has occurred to:
(i)
Secure a site;
(ii)
Obtain engineering services;
(iii)
Purchase equipment; and
(iv)
Commence initial construction; and
(H)
That is undertaken by a taxpayer that has elected by agreement with the State of Arkansas for the facility to be classified as a qualified steel specialty products manufacturing facility under this section;
(12)
"Recovered materials" means those materials which have been separated, diverted, or removed from the waste stream for the purpose of recycling and includes preconsumer material and postconsumer waste but not home scrap;
(13)
"Recycling" means the systematic collecting, sorting, decontaminating, and returning of waste materials to commerce as commodities for use or exchange;
(14)
"Repair" means expenditures, machinery, or equipment used to restore existing machinery or equipment to its original or similar condition and capacity after damage or after deterioration from use;
(15)
"Solid waste" means all putrescible and nonputrescible wastes in solid or semisolid form, including, but not limited to, yard or food waste, waste glass, waste metals, waste plastics, wastepapers, waste paperboard, and all other solid or semisolid wastes resulting from industrial, commercial, agricultural, community, and residential activities;
(16)
(A)
(i)
"Waste reduction, reuse, or recycling equipment" means new or used machinery or equipment located in Arkansas on the last day of the taxable year which is operated or used exclusively in Arkansas to collect, separate, process, modify, convert, or treat solid waste so that the resulting product may be used as a raw material or for productive use or to manufacture products containing recovered materials.
(ii)
"Waste reduction, reuse, or recycling equipment" also includes devices which are directly connected with or are an integral and necessary part of such machinery or equipment and are necessary for such collection, separation, processing, modification, conversion, treatment, or manufacturing.
(B)
"Waste reduction, reuse, or recycling equipment" does not include motor vehicles; and
(17)
"Qualified growth project" means a steel mill facility that:
(A)
Has a common controlling ownership interest with a qualified manufacturer of steel as defined in §
26-51-1211
, §
26-52-911
, Acts 2013, No. 1084, or Acts 2013, No. 1476, at the time the facility commenced operation;
(B)
Is commenced on or after January 1, 2021;
(C)
Is conducted on the site of or adjacent to a qualified manufacturer of steel, as defined in §
26-51-1211
, §
26-52-911
, Acts 2013, No. 1084, or Acts 2013, No. 1476;
(D)
Has a total investment of at least two billion dollars ($2,000,000,000);
(E)
(i)
Is undertaken by a taxpayer that has entered into an agreement with the State of Arkansas in which the taxpayer made a commitment to create at least seven hundred (700) net new direct positions with an average annual wage of at least one hundred twenty thousand dollars ($120,000) and two hundred (200) net new independent direct positions with an average annual wage of at least sixty thousand dollars ($60,000).
(ii)
As used in subdivision (b)(17)(E)(i) of this section, "direct positions" and "independent direct positions" mean the same as defined in Acts 2013, No. 1084, § 8;
(F)
Provides a positive cost-benefit analysis to the State of Arkansas as determined by the Arkansas Economic Development Commission and the Office of Economic Analysis and Tax Research before an incentive agreement between the state and the taxpayer is executed;
(G)
Is certified as having a closing date before July 1, 2023, by which the taxpayer has certified and the state has verified that necessary capital acquisition and borrowing for the qualified growth project have occurred to:
(i)
Secure a site;
(ii)
Obtain engineering services;
(iii)
Purchase equipment; and
(iv)
Commence initial construction; and
(H)
Is undertaken by a taxpayer that has elected by agreement with the State of Arkansas for the taxpayer's facility to be classified as a qualified growth project under this section.
(c)
(1)
There shall be allowed a tax credit against the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq., in an amount as determined in subsection (e) of this section for any taxpayer engaged in the business of reducing, reusing, or recycling solid waste for commercial purposes who purchases waste reduction, reuse, or recycling equipment used exclusively for the purpose of reducing, reusing, or recycling solid waste.
(2)
(A)
(i)
If the tax credits are allowed with respect to a taxpayer pursuant to a qualified Amendment 82 project under the Arkansas Amendment 82 Implementation Act, §
15-4-3201
et seq., that, as of the end of the taxable year in which such tax credits are first allowed, does not have a public retirement system of the State of Arkansas as a proprietor, partner, member, or shareholder, no more than twenty million dollars ($20,000,000) of credit against tax or an amount equal to the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq., whichever is less, issued to the taxpayer making the purchases of waste reduction, reuse, or recycling equipment under subdivision (c)(1) of this section may be claimed each tax year.
(ii)
Any unused tax credit that cannot be claimed in a tax year by operation of subdivision (c)(2)(A)(i) of this section may be carried forward as allowed by law. If a tax credit amount disallowed by operation of subdivision (c)(2)(A)(i) of this section would otherwise expire, the carry forward period for such unused tax credit shall instead be extended each year, for one (1) additional year at a time, to preserve the ability of the taxpayer to apply the unused tax credit to future tax liability.
(B)
(i)
If tax credits are allowed under this section with respect to a qualified Amendment 82 project under the Arkansas Amendment 82 Implementation Act, §
15-4-3201
et seq., and any portion of the tax credits under this section would be apportioned to a public retirement system of the State of Arkansas as a proprietor, partner, member, or shareholder of the taxpayer, the public retirement system shall have the possession and control of all tax credits, including any such tax credits otherwise apportioned to the other proprietors, partners, members, shareholders, or beneficiaries allowed under this section.
(ii)
The possession and control of the tax credits by the public retirement system under this subdivision (c)(2)(B) shall be confirmed in writing by a legal opinion issued by the Department of Finance and Administration under the department's promulgated rules.
(iii)
The public retirement system shall sell or transfer for value the tax credits allowed under this section to the State of Arkansas for eighty percent (80%) of the face value, in lieu of the right of a proprietor, partner, member, shareholder, or beneficiary of the qualified Amendment 82 project to claim the tax credits as allowed pursuant to applicable state law. No more than twenty million dollars ($20,000,000) of the tax credits in possession and control of the public retirement system with respect to a qualified Amendment 82 project pursuant to subdivision (c)(2)(B)(i) of this section may be sold or transferred each year.
(iv)
Any unused tax credit that cannot be sold or transferred in a tax year by the operation of subdivision (c)(2)(B)(iii) of this section may be carried forward as allowed by law. If a tax credit amount disallowed by operation of subdivision (c)(2)(B)(iii) of this section would otherwise expire, the carry forward period for such unused tax credit shall instead be extended each year, for one (1) additional year at a time, to preserve the ability of the public retirement system to sell or transfer all unused tax credits in future years.
(v)
Repayment provisions in the applicable Amendment 82 agreement shall continue to apply to tax credits carried forward under subdivision (c)(2)(B)(iv) of this section and in the possession and control of a public retirement system of the State of Arkansas.
(vi)
Beginning July 1, 2016, by July 15 of each year, the public retirement system with possession and control of the tax credits under this subdivision (c)(2)(B) shall provide notice to the department of the amount of tax credits, including tax credits pending certification by the Division of Environmental Quality, subject to the limitations in subdivision (c)(2)(B)(iii) of this section, to be sold or transferred for value.
(vii)
The State of Arkansas shall pay the purchase price equal to eighty percent (80%) of the face value of all of the tax credits included in the notice required in subdivision (c)(2)(B)(vi) of this section on or before June 30 of the year following the year in which the notice was provided for all tax credits certified by the Division of Environmental Quality by June 30 of the year following the year in which the notice was provided by warrant from the Economic Development Incentive Fund funded by a transfer from general revenue.
(viii)
(a)
Tax credits under this section sold or transferred for value to the State of Arkansas are extinguished upon payment of the purchase price as if claimed against the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq.
(b)
(1)
In the event the State of Arkansas fails to timely pay the purchase price, as required in subdivision (c)(2)(B)(vii) of this section, for the tax credits included in the notice required in subdivision (c)(2)(B)(vi) of this section, the public retirement system may, before the end of the taxable year following the taxable year in which a failure to pay occurs, sell or transfer for value such tax credits to one (1) or more persons. Such person or persons may claim such tax credits in accordance with applicable law, provided however, any tax credits sold or transferred for value to such person or persons under this subdivision (c)(2)(B)(viii)
(b)
shall not expire before the later of the end of:
(A)
The carry forward period for such tax credits under applicable law; or
(B)
The third taxable year following the year in which such tax credits were sold or transferred for value pursuant to this section.
(2)
The sale or transfer of tax credits under this subdivision (c)(2)(B)(viii)
(b)
shall be confirmed in writing by a legal opinion issued by the department under the department's promulgated rules.
(3)
(A)
Up to eleven million dollars ($11,000,000) of credit against tax or an amount equal to the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq., whichever is less, issued to the taxpayer making the purchases of waste reduction, reuse, or recycling equipment under subdivision (c)(1) of this section may be claimed each tax year if the tax credits are allowed with respect to a qualified expansion project:
(i)
Of a taxpayer that at the time of the agreement described in subdivision (b)(10)(D) of this section is a proprietorship, partnership, limited liability company, or other business organization treated as a proprietorship or partnership for tax purposes; and
(ii)
That, as of the end of the taxable year in which such tax credits are first allowed, does not have a public retirement system of the State of Arkansas as a proprietor, partner, member, or shareholder.
(B)
Up to the following amounts of credit against tax or an amount equal to the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq., whichever is less, issued to the taxpayer making the purchases of waste reduction, reuse, or recycling equipment under subdivision (c)(1) of this section may be claimed each tax year if the tax credits are allowed with respect to a qualified steel specialty products manufacturing facility that is owned by a taxpayer that, at the time of the agreement described in subdivision (b)(11)(E) of this section or a qualified growth project that is owned by a taxpayer that, at the time of the agreement described in subdivision (b)(17)(E) of this section, is a proprietorship, partnership, limited liability company, or other business organization treated as a proprietorship or partnership for tax purposes, and that, as of the end of the taxable year in which such tax credits are first allowed, does not have a public retirement system of the State of Arkansas as a proprietor, partner, member, or shareholder:
(i)
For a total investment in the qualified steel specialty products manufacturing facility of at least two hundred million dollars ($200,000,000) but less than two hundred seventy-five million dollars ($275,000,000), four million dollars ($4,000,000);
(ii)
For a total investment in the qualified steel specialty products manufacturing facility of at least two hundred seventy-five million dollars ($275,000,000) but less than three hundred fifty million dollars ($350,000,000), five million dollars ($5,000,000);
(iii)
For a total investment in the qualified steel specialty products manufacturing facility of at least three hundred fifty million dollars ($350,000,000), six million five hundred thousand dollars ($6,500,000); and
(iv)
For a qualified growth project, the lesser of the amount allowed under the incentive agreement between the taxpayer and the state or eleven million dollars ($11,000,000).
(C)
Any unused tax credit that cannot be claimed in a tax year by operation of subdivision (c)(3)(A) or subdivision (c)(3)(B) of this section may be carried forward as allowed by law. If a tax credit amount disallowed by operation of subdivision (c)(3)(A) or subdivision (c)(3)(B) of this section would otherwise expire, the carry-forward period for such unused tax credit shall instead be extended each year, for one (1) additional year at a time, to preserve the ability of the taxpayer to apply the unused tax credit to future tax liability.
(D)
(i)
If tax credits are allowed under this section with respect to a qualified expansion project, a qualified steel specialty products manufacturing facility, or a qualified growth project of a taxpayer that, at the time of the agreement described in subdivision (b)(10)(D) of this section for a qualified expansion project, subdivision (b)(11)(E) of this section for a qualified specialty steel products manufacturing facility, or subdivision (b)(17)(E) of this section for a qualified growth project, is a proprietorship, partnership, limited liability company, or other business organization treated as a proprietorship or partnership for tax purposes, and any portion of the tax credits under this section would be apportioned to a public retirement system of the State of Arkansas as a proprietor, partner, member, or shareholder of the taxpayer, the public retirement system shall have the possession and control of all tax credits that are subject to subdivision (c)(3)(F)(i)
(b)
of this section, including any such tax credits otherwise apportioned to the other proprietors, partners, members, shareholders, or beneficiaries allowed under this section.
(ii)
The possession and control of the tax credits by the public retirement system under this subdivision (c)(3)(D) shall be confirmed in writing by a legal opinion issued by the department under the rules promulgated by the department.
(iii)
(a)
The public retirement system shall sell or transfer for value the tax credits allowed under this subdivision (c)(3)(D) to the State of Arkansas for eighty percent (80%) of the face value, in lieu of the right of a proprietor, partner, member, shareholder, or beneficiary of the qualified expansion project, the qualified steel specialty products manufacturing facility, or the qualified growth project to claim the tax credits under this subdivision (c)(3)(D) as allowed pursuant to applicable state law.
(b)
Subject to the total recycling tax credit certification for a qualified expansion project, the maximum amount of tax credits allowed under the agreement between the taxpayer and the state, and the annual transfer by the Arkansas Economic Development Commission as agreed by the state and the taxpayer, no more than eleven million dollars ($11,000,000) of the tax credits in possession and control of the public retirement system with respect to a qualified expansion project under subdivision (c)(3)(D)(i) of this section may be sold or transferred each year.
(c)
No more than the following amounts of the tax credits in possession and control of the public retirement system pursuant to this subdivision (c)(3)(D) with respect to a qualified steel specialty products manufacturing facility pursuant to subdivision (c)(3)(D)(i) of this section may be sold or transferred each year:
(1)
For a total investment in the qualified steel specialty products manufacturing facility of at least two hundred million dollars ($200,000,000) but less than two hundred seventy-five million dollars ($275,000,000), four million dollars ($4,000,000);
(2)
For a total investment in the qualified steel specialty products manufacturing facility of at least two hundred seventy-five million dollars ($275,000,000) but less than three hundred fifty million dollars ($350,000,000), five million dollars ($5,000,000);
(3)
For a total investment in the qualified steel specialty products manufacturing facility of at least three hundred fifty million dollars ($350,000,000), six million five hundred thousand dollars ($6,500,000); and
(4)
Subject to the maximum amount of tax credits allowed to be sold under the agreement between the taxpayer and the state, and the annual transfer by the Arkansas Economic Development Commission as agreed by the state and the taxpayer, eleven million dollars ($11,000,000) of the tax credits to be sold or transferred that are in the possession and control of the public retirement system, with respect to a qualified growth project under subdivision (c)(3)(D)(i) of this section.
(iv)
Any unused tax credit that cannot be sold or transferred in a tax year by the operation of subdivision (c)(3)(D)(iii) of this section may be carried forward as allowed by law. If a tax credit amount disallowed by operation of subdivision (c)(3)(D)(iii) of this section would otherwise expire, the carry-forward period for such unused tax credit shall instead be extended each year, for one (1) additional year at a time, to preserve the ability of the public retirement system to sell or transfer all unused tax credits in future years.
(v)
Between July 1 and July 15 of each year, the public retirement system with possession and control of the tax credits under this subdivision (c)(3)(D) shall provide notice to the department of the amount of tax credits, including tax credits expected to receive certification during the fiscal year by the Division of Environmental Quality, subject to the limitations in subdivision (c)(3)(D)(iii) of this section, to be sold or transferred for value.
(vi)
The State of Arkansas shall pay the purchase price equal to eighty percent (80%) of the face value of all of the tax credits included in the notice required in subdivision (c)(3)(D)(v) of this section on or before June 30 of the calendar year following the calendar year in which the notice was provided for all tax credits certified by the Division of Environmental Quality by warrant from the Economic Development Incentive Fund funded by a transfer from general revenue.
(vii)
(a)
Tax credits under this section sold or transferred for value to the State of Arkansas are extinguished upon payment of the purchase price as if claimed against the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq.
(b)
(1)
In the event the State of Arkansas fails to timely pay the purchase price, as required in subdivision (c)(3)(D)(vi) of this section, for the tax credits included in the notice required in subdivision (c)(3)(D)(v) of this section, the public retirement system may, before the end of the taxable year following the taxable year in which a failure to pay occurs, sell or transfer for value such tax credits to one (1) or more persons. Such person or persons may claim such tax credits in accordance with applicable law, provided however, any tax credits sold or transferred for value to such person or persons under this subdivision (c)(3)(D)(vii)
(b)
shall not expire before the later of the end of:
(A)
The carry-forward period for such tax credits under applicable law; or
(B)
The third taxable year following the year in which such tax credits were sold or transferred for value pursuant to this section.
(2)
The sale or transfer of tax credits under this subdivision (c)(3)(D)(vii)
(b)
shall be confirmed in writing by a legal opinion issued by the department under the rules promulgated by the department.
(E)
An expansion project or a manufacturing facility that does not meet the requirements to be a qualified expansion project, a qualified steel specialty products manufacturing facility, or a qualified growth project is not subject to this subdivision (c)(3) and is eligible to receive the tax credits otherwise provided in this section and §
26-51-1215
.
(F)
(i)
(a)
A tax credit under this subdivision (c)(3) shall not be authorized without:
(1)
A cost-benefit analysis, including an analysis of any other incentives offered by the State of Arkansas with request to the project subject to the tax credit, as certified by the Director of the Arkansas Economic Development Commission in consultation with the Chief Fiscal Officer of the State; and
(2)
The performance and claw back agreement required under subdivision (c)(3)(F)(ii) of this section.
(b)
The total amount of tax credits that may be authorized under this subdivision (c)(3) shall not exceed the amount determined by the cost-benefit analysis required under this section.
(ii)
(a)
(1)
A tax credit authorized under this subdivision (c)(3) shall be subject to a performance and claw back agreement between the taxpayer and the Arkansas Economic Development Commission.
(2)
(A)
The performance and claw back agreement required under this subdivision (c)(3)(F)(ii) shall be subject to the approval of the Chief Fiscal Officer of the State to ensure that the cost-benefit analysis required under this section is met and maintained for a test period of the longer of the life of the tax credits or fourteen (14) years.
(B)
However, the test period described in this subdivision (c)(3)(F)(ii) shall not be longer than fifteen (15) years.
(b)
The performance and claw back agreement required under this subdivision (c)(3)(F)(ii) shall include without limitation the:
(1)
Capital investment for the project;
(2)
New full-time direct positions and independent direct positions as those terms are defined in Acts 2013, No. 1084, § 8, created by the project;
(3)
Annual salary requirements for the new full-time direct positions and independent direct positions as those terms are defined in Acts 2013, No. 1084, § 8, created by the project;
(4)
Timeline for fulfilling the investment of job creation targets stated in the performance and claw back agreement; and
(5)
Conditions for the claw back provisions, which shall be triggered if, during the test period stated in this subdivision (c)(3)(F)(ii), the taxpayer:
(A)
Does not meet the required targets of the project related to capital investment, job creation, timeline, or annual salary amounts; or
(B)
Fails to maintain a positive cost-benefit analysis.
(iii)
(a)
If a qualified growth project that, at the time of the agreement described in subdivision (b)(17)(E) of this section, is a proprietorship, partnership, limited liability company, or other business organization treated as a proprietorship or partnership for tax purposes, and that has any portion of the tax credits under this subdivision (c)(3) that would be apportioned to a public retirement system of the State of Arkansas as a proprietor, partner, member, or shareholder of the taxpayer, would qualify for an amount of recycling tax credit under subsection (e) of this section in excess of the amount authorized in subdivision (c)(3)(F)(i)
(b)
of this section, the amount of credits in excess of the amount authorized in subdivision (c)(3)(F)(i)
(b)
of this section shall be:
(1)
Acknowledged as part of the incentive agreement executed between the taxpayer and the State of Arkansas;
(2)
In the possession and control of the taxpayer making the purchases of waste reduction, reuse, or recycling equipment notwithstanding subdivision (c)(3)(D)(i) of this section; and
(3)
Claimed by the taxpayer making the purchases of waste reduction, reuse, or recycling equipment as a credit against each tax year in the lesser of twenty-seven million five hundred thousand dollars ($27,500,000) or the amount equal to the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq.
(b)
Any unused tax credit that cannot be claimed in a tax year by operation of subdivision (c)(3)(F)(iii)
(a)(3)
of this section may be carried forward as allowed by law. If the tax credit amount disallowed by operation of subdivision (c)(3)(F)(iii)
(a)(3)
of this section would otherwise expire, the carry-forward period for such unused tax credit shall be extended each year, for one (1) additional year at a time, to preserve the ability of the taxpayer to apply the unused tax credit to future tax liability.
(d)
To claim the benefits of this section, a taxpayer must obtain a certification from the Director of the Division of Environmental Quality certifying to the Revenue Division that:
(1)
The taxpayer is engaged in the business of reducing, reusing, or recycling solid waste material for commercial purposes, whether or not for profit;
(2)
The machinery or equipment purchased is waste reduction, reuse, or recycling equipment;
(3)
The machinery or equipment is being used in the collection, separation, processing, modification, conversion, treatment, or manufacturing of products containing at least fifty percent (50%) recovered materials, provided that at least ten percent (10%) of the recovered materials shall be post-consumer waste; and
(4)
The taxpayer has filed a statement with the Director of Environmental Quality acknowledging that the taxpayer will make a good faith effort to utilize post-consumer waste generated in Arkansas as at least ten percent (10%) of the post-consumer waste being used in the equipment, to the extent available at a competitive price.
(e)
(1)
The amount of the credit allowed under subsection (c) of this section shall be equal to thirty percent (30%) of the cost of waste reduction, reuse, or recycling equipment, including the cost of installation.
(2)
The cost of installation shall not include the cost of:
(A)
Feasibility studies;
(B)
Engineering costs of a building to house the equipment and related machinery; or
(C)
Equipment used to service the waste reduction, reuse, or recycling equipment.
(3)
(A)
The cost of replacement parts which serve only to keep existing waste reduction, reuse, or recycling equipment in its ordinary efficient operating condition shall not be included in determining the amount of the credit.
(B)
The cost of replacement of existing waste reduction, reuse, or recycling equipment shall not be included in determining the amount of the credit unless the replacement provides greater capacity for recycling or provides the capability to collect, separate, process, modify, convert, treat, or manufacture additional or a different type of solid waste.
(4)
The cost of service contracts, sales tax, maintenance, and repairs shall not be included in determining the amount of the credit.
(f)
(1)
The taxpayer shall refund the amount of the tax credit determined by subdivision (f)(2) of this section if, within three (3) years of the taxable year for which a credit is allowed:
(A)
The waste reduction, reuse, or recycling equipment is removed from Arkansas, is disposed of, is transferred to another person, or the taxpayer otherwise ceases to use the required materials or operate in the manner required by this section; or
(B)
The Director of Environmental Quality finds that the taxpayer has demonstrated a pattern of intentional failure to comply with final administrative or judicial orders which clearly indicates a disregard for environmental regulation or a pattern of prohibited conduct which could reasonably be expected to result in adverse environmental impact.
(2)
If the provisions of subdivision (f)(1) of this section apply, the taxpayer shall refund the amount of the tax credit which was deducted from income tax liability which exceeds the following amounts:
(A)
Within the first year, zero dollars ($0.00);
(B)
Within the second year, an amount equal to thirty-three percent (33%) of the amount of credit allowed; and
(C)
Within the third year, an amount equal to sixty-seven percent (67%) of the credit allowed.
(3)
Any refund required by subdivision (f)(1)(A) of this section shall apply only to the credit given for the particular waste reduction, reuse, or recycling equipment to which subdivision (f)(1)(A) of this section applies.
(4)
Any taxpayer who is required to refund part of a credit pursuant to this subsection shall no longer be eligible to carry forward any amount of that credit which had not been used as of the date such refund is required.
(5)
This subsection shall apply to all credits which are certified as a result of applications for certification filed with the Division of Environmental Quality on or after July 1, 1993.
(g)
(1)
Waste reduction, reuse, or recycling equipment shall only be eligible for one (1) tax credit.
(2)
The sale or transfer of waste reduction, reuse, or recycling equipment shall not recreate the eligibility for a tax credit.
(h)
(1)
In the case of a proprietorship or partnership engaged in the business of waste reduction, reuse, or recycling of solid waste, the amount of the credit determined under this section for any taxable year shall be apportioned to each proprietor or partner in proportion to the amount of income from the entity which the proprietor or partner is required to include as gross income.
(2)
In the case of a Subchapter S corporation, as allowed by §
26-51-409
, the amount of the credit determined under this section for any taxable year shall be apportioned among the persons who are shareholders of the corporation on the last day of the taxable year based on each person's percentage of ownership.
(3)
In the case of an estate or trust:
(A)
The amount of the credit determined under this section for any taxable year shall be apportioned between the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each; and
(B)
Any beneficiary to whom any amount has been apportioned under this subsection shall be allowed, subject to limitations contained in this section, a credit under this section for the amount.
(i)
(1)
The amount of the credit that may be used by a taxpayer for a taxable year may not exceed the amount of state, individual, or corporate income tax otherwise due.
(2)
Any unused credit may be carried over for a maximum of three (3) consecutive years following the taxable year in which the credit originated.
(j)
A taxpayer who receives a credit under this section shall not be entitled to claim any other state or local tax credit or deduction based on the purchase of the machinery or equipment, except for the deduction for normal depreciation.
(k)
(1)
(A)
The Division of Environmental Quality and the Revenue Division shall promulgate rules as are necessary to administer this section.
(B)
These rules may include, but are not limited to, the establishment of technical specifications and of requirements for information and documentation for taxpayers seeking a credit under this section and shall encourage, but not require, the use of Arkansas contractors and post-consumer waste generated in Arkansas in recycling projects which qualify for credits provided by this section.
(2)
In order to determine eligibility for the credit or to ensure that the machinery or equipment is being utilized in the required manner, each agency shall have the right to inspect facilities and records of a taxpayer requesting or receiving a credit under this section.
(l)
Any person or legal entity aggrieved by a decision of the Director of Environmental Quality under subsection (d) of this section or subdivision (f)(1)(B) of this section may appeal to the Arkansas Pollution Control and Ecology Commission through administrative procedures adopted by the Arkansas Pollution Control and Ecology Commission and to the courts in the manner provided in §§
8-4-222
-
8-4-229
.
Amended by Act 2023, No. 181,§ 3, eff. 8/1/2023.
Amended by Act 2023, No. 624,§ 1, eff. 4/11/2023, app. for tax years beginning on or after January 1, 2023.
Amended by Act 2021EX2, No. 4,§ 6, eff. 3/10/2022.
Amended by Act 2021EX2, No. 4,§ 5, eff. 3/10/2022.
Amended by Act 2021EX2, No. 4,§ 4, eff. 3/10/2022.
Amended by Act 2021EX2, No. 4,§ 3, eff. 3/10/2022.
Amended by Act 2021EX2, No. 4,§ 2, eff. 3/10/2022.
Amended by Act 2021EX2, No. 3,§ 6, eff. 3/10/2022.
Amended by Act 2021EX2, No. 3,§ 5, eff. 3/10/2022.
Amended by Act 2021EX2, No. 3,§ 4, eff. 3/10/2022.
Amended by Act 2021EX2, No. 3,§ 3, eff. 3/10/2022.
Amended by Act 2021EX2, No. 3,§ 2, eff. 3/10/2022.
Amended by Act 2021, No. 483,§ 8, eff. 7/28/2021.
Amended by Act 2021, No. 895,§ 2, eff. for tax years beginning on or after January 1, 2021.
Amended by Act 2021, No. 895,§ 1, eff. for tax years beginning on or after January 1, 2021.
Amended by Act 2019, No. 315,§ 2968, eff. 7/24/2019.
Amended by Act 2019, No. 910,§ 3257, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 3256, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 3255, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 3254, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 3253, eff. 7/1/2019.
Amended by Act 2017, No. 1046,§ 3, eff. 4/6/2017.
Amended by Act 2017, No. 1046,§ 2, eff. 4/6/2017.
Amended by Act 2015, No. 862,§ 2, eff. 3/31/2015.
Acts 1991, No. 748, § 1; 1993, No. 654, § 1; 1999, No. 1164, §§ 185-188; 2007, No. 827, § 218.