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 27 - ARKANSAS WOOD ENERGY PRODUCTS AND FOREST MAINTENANCE INCOME TAX CREDIT (§§ 26-51-2701 — 26-51-2704) › Section 26-51-2703 - Definitions

As used in this subchapter:
(1)
"Cost" means:
(A)
In the case of a transfer of title or a lease agreement that is treated as a purchase by a lessee for Arkansas income tax purposes, the amount of the purchase price; and
(B)
In the case of a lease that is not a lease agreement that is treated as a purchase by a lessee for Arkansas income tax purposes but that otherwise qualifies as a purchase under this section, the amount of 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)
"Incentive agreement" means an agreement entered into by a business and the Arkansas Economic Development Commission to provide the business an incentive to locate a new qualified wood energy products and forest maintenance project or a qualified wood energy products and forest maintenance expansion project in Arkansas;
(3)
(A)
"New full-time permanent employee" means a position or job that:
(i)
Is created pursuant to an executed incentive agreement;
(ii)
Is filled by one (1) or more employees or contractual employees who:
(a)
Were Arkansas taxpayers during the year in which the tax credits or incentives were earned;
(b)
(1)
Work at or fill a position dedicated to the facility identified in the incentive agreement.
(2)
New employees of the taxpayer that enters into the incentive agreement who do not work at the facility may be counted if they:
(A)
Otherwise meet the definition of a new full-time permanent employee;
(B)
Are subject to the Arkansas Income Tax Withholding Act of 1965, §
26-51-901
et seq.;
(C)
Meet an average hourly wage threshold equal to or greater than the state average hourly wage for the preceding calendar year; and
(D)
Are verified by reports and methods established as required by the incentive agreement; and
(c)
(1)
Are not employees hired by a business before the date the incentive agreement was executed unless:
(A)
The position or job filled by the existing employee was created in accordance with the incentive agreement; and
(B)
The position vacated by the existing employee was either filled by a subsequent employee or no subsequent employee will be hired because the business no longer conducts the particular business activity requiring that classification.
(2)
If the Director of the Arkansas Economic Development Commission and the Secretary of the Department of Finance and Administration find that a significant impairment of Arkansas job opportunities for existing employees will otherwise occur, they may jointly authorize the counting of existing employees as new full-time permanent employees; and
(iii)
Has been filled for at least twenty-six (26) consecutive weeks with an average of at least thirty (30) hours worked per week.
(B)
"New full-time permanent employee" includes a contractual employee who works at the facility identified in the incentive agreement only if the contractual employee is offered a benefits package comparable to a direct employee of the business seeking incentives under this subchapter;
(4)
"Purchase" means:
(A)
A transaction under which title to an item is transferred for consideration; or
(B)
A lease contract that is entered into for a period of at least three (3) years regardless of whether title to the item is transferred at the end of the period;
(5)
"Qualified wood energy products and forest maintenance expansion project" means a project specified in the incentive agreement to include one (1) or more Arkansas facilities in the same ownership group:
(A)
For which the taxpayer commenced construction by the date specified in the incentive agreement, but no earlier than January 1, 2023;
(B)
That supports the Arkansas timber industry by using low-value wood, including without limitation sawmill residuals, unwanted treetops, forest thinnings, and damaged or diseased trees, to produce high-efficiency, high-energy wood energy products;
(C)
In which the taxpayer has a total investment in excess of fifty million dollars ($50,000,000);
(D)
That is undertaken by a taxpayer who has entered into an incentive agreement with the State of Arkansas in which the taxpayer commits to creating at least one hundred (100) net new full-time permanent employees with an average annual wage of at least sixty thousand dollars ($60,000);
(E)
That will provide a positive cost-benefit analysis to the state as determined by the commission and the Office of Economic Analysis and Tax Research;
(F)
That is certified as having a closing date before December 31, 2025, for all facilities, by which the taxpayer has certified and the state has verified that necessary capital acquisition and borrowing for the facilities has occurred to ensure that funds will be available to:
(i)
Secure a site for the facilities;
(ii)
Obtain engineering services for the facilities;
(iii)
Purchase equipment for the facilities; and
(iv)
Commence construction on the facilities; and
(G)
That is undertaken by a taxpayer that has elected by agreement with the State of Arkansas for the taxpayer's facilities to be classified as a qualified wood energy products and forest maintenance expansion project;
(6)
"Qualified wood energy products and forest maintenance project" means a project specified in the incentive agreement to include one (1) or more Arkansas facilities in the same ownership group:
(A)
For which the taxpayer commenced construction by the date specified in the incentive agreement, but no earlier than January 1, 2020;
(B)
That supports the Arkansas timber industry by using low-value wood, including without limitation sawmill residuals, forest thinnings, unwanted treetops, and damaged or diseased trees, to produce high-efficiency, high-energy wood energy products;
(C)
In which the taxpayer has a total investment in excess of fifty million dollars ($50,000,000);
(D)
That is undertaken by a taxpayer who has entered into an incentive agreement with the State of Arkansas in which the taxpayer commits to creating at least one hundred (100) net new full-time permanent employees with an average annual wage of at least sixty thousand dollars ($60,000);
(E)
That will provide a positive cost-benefit analysis to the state as determined by the commission and the Office of Economic Analysis and Tax Research;
(F)
That is certified as having a closing date before December 31, 2023, for all facilities, by which the taxpayer has certified and the state has verified that necessary capital acquisition and borrowing for the facilities has occurred to ensure that funds will be available to:
(i)
Secure a site for the facilities;
(ii)
Obtain engineering services for the facilities;
(iii)
Purchase equipment for the facilities; and
(iv)
Commence construction on the facilities; and
(G)
That is undertaken by a taxpayer that has elected by agreement with the State of Arkansas for the taxpayer's facilities to be classified as a qualified wood energy products and forest maintenance project; and
(7)
(A)
"Wood energy products equipment" means:
(i)
New or used machinery or equipment located in Arkansas on the last day of the taxable year that is operated or used exclusively in Arkansas to collect, separate, treat, pulverize, dry, modify, or convert wood fiber so the resulting product may be used as a raw material, for productive energy use, or to manufacture other materials;
(ii)
Devices that are directly connected with or are an integral and necessary part of machinery or equipment operated or used exclusively in Arkansas to collect, separate, treat, pulverize, dry, modify, or convert wood fiber and are necessary for the collection, separation, treatment, pulverization, drying, modification, or manufacturing of wood fiber;
(iii)
Equipment that produces energy with wood power; and
(iv)
A device that is directly connected with or is an integral and necessary part of machinery or equipment operated or used exclusively in Arkansas to produce energy with wood power.
(B)
"Wood energy products equipment" does not include a vehicle or trailer that is licensed or that normally would be licensed for use on highways in Arkansas.
Amended by Act 2023, No. 845,§ 5, eff. 1/1/2023, app. for tax years beginning on or after January 1, 2023.
Amended by Act 2023, No. 845,§ 4, eff. 1/1/2023, app. for tax years beginning on or after January 1, 2023.
Amended by Act 2023, No. 845,§ 3, eff. 1/1/2023, app. for tax years beginning on or after January 1, 2023.
Amended by Act 2023, No. 845,§ 2, eff. 1/1/2023, app. for tax years beginning on or after January 1, 2023.
Added by Act 2021, No. 594,§ 4, eff. for tax years beginning on or after January 1, 2021.