Arkansas Administrative Code › Agency 238 - DEPARTMENT OF AGRICULTURE › Division 01 - Natural Resources Division › Rule 238.01.22-003 - Arkansas Natural Resources Commission Rules Governing the Tax Credit Program for the Creation, Restoration, and Conservation of Private Wetland and Riparian Zones Title 13

Current through Register Vol. 49, No. 6, June, 2024
Subtitle I.
General provisions
Section 1301.1
Purpose.
Wetlands and riparian zones provide the state with significant
				benefits in the areas of flood control, water quality enhancement, sediment
				reduction, fish and wildlife habitat, recreation, and recharging of
				groundwater. The state continues to experience significant loss of wetlands.
				Since the majority of lands suitable for wetlands and riparian zones are held
				by private owners, the state has developed this program to encourage these
				owners to restore and enhance existing wetlands and riparian zones, create new
				wetlands and riparian zones, or donate wetland and riparian zone qualified real
				property interests.
Section
			 1301.2
Legislation.
A. Arkansas Code Annotated §
										26-51-1501
et
			 seq,
the "Arkansas Wetland and Riparian Zone Creation, Restoration,
			 and Conservation Tax Credits Act," allows a wetlands and riparian zone creation
			 and restoration tax credit against the tax imposed by the Arkansas Income Tax
			 Act (Arkansas Code Annotated §
										26-51-101
et
			 seq
.) for any taxpayer engaged in the development or restoration of
			 wetlands and riparian zones.
B. The
			 same act also allows a wetland and riparian zone conservation tax credit
			 against the tax imposed by the Arkansas Income Tax Act for any eligible donor
			 who donates a qualified real property interest for a qualified conservation
			 purpose to an eligible donee.
Section
			 1301.3
Definitions.
As used herein, unless the context otherwise requires:
A. "Act" means the Arkansas Wetland and
			 Riparian Zone Creation, Restoration, and Conservation Tax Credits Act, Ark.
			 Code Ann. §
										26-51-1501 et seq.
B. "Commission" means the Arkansas Natural
			 Resources Commission.
C.
			 "Committee" means the Private Wetlands and Riparian Zone Creation, Restoration,
			 and Conservation Committee.
D.
			 "Conservation application" means an application submitted by a taxpayer seeking
			 tax credit for donation of a qualified real property interest.
E. "Developing wetlands" means to establish a
			 wetland or other aquatic resource.
F. "Eligible donee" means a qualified
			 organization under 26 U.S.C.
			 §
											170(h)(3), as in
			 effect on January 1, 2009, and corresponding regulations in
			 26 C.F.R. §
											1.170 A-14(c), as in
			 effect on January 1, 2009. A nongovernmental qualified organization must have
			 adopted the Land Trust Alliance's Land Trust Standards and Practices, as in
			 effect on January 1, 2009, in order to qualify as an "eligible
			 donee".
G. "Eligible donor" means
			 any person or entity, including without limitation an individual, corporation,
			 trust, estate, and partnership or other pass-through legal entity, that owns a
			 qualified real property interest.
I. "Director" means the Director of the
			 Arkansas Department of Agriculture's Natural Resources Division.
J. "Project" means wetlands or riparian zones
			 created or restored by activities for which tax credits are claimed.
K. "Project application" means a written plan
			 for development and operation of the project, including all requirements as the
			 commission may adopt by rule.
L.
			 "Project cost" means the actual expenditure for a project less any
			 reimbursement received by the taxpayer from cost-share programs or any other
			 funding.
M. "Qualified appraisal"
			 means an appraisal in accordance with
			 26 C.F.R. §
											1.170 A-
			 13(c)(3), as in
			 effect on January 1, 2009, and the Uniform Standards of Professional Appraisal
			 Practice, as in effect on January 1, 2009.
N. "Qualified conservation purpose" means a
			 conservation purpose as defined by
			 26 U.S.C. §
											170(h)(4), as in effect on
			 January 1, 2009, and corresponding regulations in
			 26 C.F.R. §
											1.170 A-14(d), as in
			 effect on January 1, 2009.
O.
			 "Qualified real property interest" means an interest in real property located
			 completely in this state and containing wetlands or riparian zones, which also
			 meets the definition of a qualified real property interest under
			 26 U.S.C. §
											170(h)(2), as in effect on
			 January 1, 2009, and the corresponding regulations in
			 26 C.F.R. §
											1.170 A-14(b), as in
			 effect on January 1, 2009.
P.
			 "Restoring wetlands" means to return wetland values and functions to a former
			 wetland or degraded wetland where human or natural activities have diminished
			 or destroyed such values and functions thereby returning the land to wetland
			 status.
Q. "Riparian zone" means an
			 area of land along the bank of a natural water course or contiguous to a body
			 of water that is set aside to reduce impacts of adjoining land use on the
			 stream or water body or any other definition promulgated by the
			 commission.
R. "Tax credits" means
			 the authorized amount that may be applied against Arkansas corporate income tax
			 or Arkansas individual income tax, whether earned by an individual,
			 partnership, limited liability company, S Corporation, or
			 corporation.
S. "Taxpayer" means
			 the entity that is certified to earn tax credits for an approved project,
			 whether an individual, partnership, limited liability company, S Corporation,
			 or corporation.
T. "Wetlands" means
			 an area that has water at or near the surface of the ground at some time during
			 the growing season (wetland hydrology). It contains plants that are adapted to
			 wet habitats (hydrophytic vegetation) and is made up of soil that has developed
			 under wet conditions (hydric soils) or any other definition promulgated by the
			 commission.
Section 1301.4
Tax credit amount allowed.
A. The amount of wetland and riparian zone
			 creation and restoration credit allowed shall be equal to the project cost
			 incurred in the development, creation, or restoration of wetlands and riparian
			 zones but shall not exceed fifty thousand dollars ($50,000). Only the actual
			 costs to the taxpayer will be considered for tax credit.
B. The amount of the wetland and riparian
			 zone conservation tax credit allowed shall equal fifty percent (50%) of the
			 fair market value of the qualified real property interest donation calculated
			 to exclude any short-term capital gain under
			 26 U.S.C. §
											170(e)(1)(A), as in effect
			 on January 1, 2009, and shall not exceed fifty thousand dollars
			 ($50,000).
C. The amount of credit
			 that may be used by a taxpayer for a taxable year may not exceed the lesser of
			 the amount of individual or corporate income tax otherwise due or five thousand
			 dollars ($5,000.00) per taxpayer.
D. Any unused credit may be carried over for
			 a maximum of nine consecutive taxable years following the taxable year in which
			 the tax credit originated.
Section
			 1301.5
Application fee.
A. The commission may charge a reasonable
			 application fee for the processing of tax credit applications.
B. Applicant shall pay to the Department of
			 Agriculture a fee in an amount equal to three percent (3%) of the total tax
			 credit submitted for approval to the commission. The minimum fee shall be one
			 hundred dollars ($100.00).
C. All
			 fees shall be paid to the Department of Agriculture when an application for tax
			 credit approval is filed.
D. When
			 an application is rejected by the director, the full application fee will be
			 refunded.
E. All fees collected
			 shall be deposited in the Water Development Fund.
Section 1301.6
Delegation of
			 authority.
The director is delegated all powers necessary and convenient
				to carry out the responsibilities contained in these rules.
Section 1301.7
Department of
			 Agriculture reports to Department of Finance and Administration.
The Department of Agriculture shall provide reports quarterly
				to the Department of Finance and Administration of the total number of tax
				credit applications approved and the total number of creation and restoration
				projects receiving final certification.
Section 1301.8
Appeals.
A. Except as otherwise provided herein, a
			 taxpayer may appeal, pursuant to Title I, Subtitle V of the Commission's Rules,
			 any decision or action of the director.
B. All decisions related to recapture of tax
			 credits shall be appealed in accordance with the Department of Finance and
			 Administration's established procedures contained in A.C.A. §
										26-18-101
et seq.