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 26-51-505 - Establishment or expansion of manufacturing enterprise - Definitions

(a)
There shall be allowed a credit against the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq., §
26-51-205
, and §
26-51-303
, an amount as determined in subsection (c) of this section, for any taxpayer who establishes or expands a manufacturing enterprise in the State of Arkansas which results in the creation of new additional full-time or part-time jobs within this state.
(b)
(1)
As used in this section, "manufacturing" refers to and includes those operations commonly understood within their ordinary meaning and shall also include mining, quarrying, refining, extracting oil and gas, cotton ginning, the drying of rice, soybeans, and other grains, the manufacturing of feed, processing of poultry or eggs and livestock, and the hatching of poultry.
(2)
(A)
A "new employee" shall be a person residing and domiciled in this state, hired by the taxpayer to fill a new additional job in this state which previously did not exist in the manufacturing enterprise during the taxable year for which the credit allowed by this section is claimed.
(B)
To qualify for the credit provided in this section, the employment of a new employee by the manufacturer must increase the total number of employees who are employed by the manufacturer. In no case shall the new employees allowed for the purpose of the credit exceed the total increase in employment.
(C)
A person shall be deemed to be so engaged if that person performs duties in connection with the operation of the business enterprise on:
(i)
A regular full-time basis; or
(ii)
A part-time basis if the person is customarily performing such duties at least twenty (20) hours per week for at least six (6) months during the taxable year.
(c)
(1)
The credit shall be a portion of the state individual or corporate income tax paid by the taxpayer but not in excess of fifty percent (50%) of the tax. The portion shall be an amount determined by multiplying the number of new employees, as defined in subdivision (b)(2) of this section, by one hundred dollars ($100) per eligible new employee per taxable year.
(2)
The amount of the credit allowed under subdivision (c)(1) of this section for the taxable year shall be an amount equal to the sum of:
(A)
A carryover of prior unused credits arising from the taxable years beginning on or after January 1, 1983, carried to the taxable year; plus
(B)
The amount of the credit allowed by subdivision (c)(1) of this section for the taxable year.
(3)
If the sum of the amount of the credits under subdivisions (c)(2)(A) and (B) of this section for the taxable year exceeds the limitation imposed by subdivision (c)(1) of this section, the excess shall be treated as a carryover credit and may be carried over for a maximum of three (3) consecutive years following the taxable year in which the credit originated.
(d)
(1)
In the case of a proprietorship or partnership, 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 manufacturing entity which the proprietor or partner is required to include in his or her 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 pro rata among the persons who are shareholders of the corporation on the last day of the taxable year.
(3)
No credit shall be allowed under this section to any organization which is exempt from state income tax.
(4)
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 subdivision (d)(4)(A) of this section shall be allowed, subject to the limitations contained in this section, a credit under this section for the amount.
(e)
(1)
The Revenue Division of the Department of Finance and Administration shall promulgate such rules as may be deemed necessary to carry out the purposes of this section.
(2)
The Revenue Division of the Department of Finance and Administration shall consult with the Division of Workforce Services and the Arkansas Economic Development Council during the promulgation of the rules.
(f)
The tax credit provided by this section shall expire on June 30, 1988. Any unused credits may be carried over beyond this date in accordance with subdivision (c)(3) of this section.
Amended by Act 2019, No. 315,§ 2967, eff. 7/24/2019.
Amended by Act 2019, No. 910,§ 631, eff. 7/1/2019.
Acts 1983, No. 785, §§ 1-6; A.S.A. 1947, §§ 84-2021.18 -- 84-2021.23; Acts 1997, No. 540, § 54.