Arkansas Administrative Code › Agency 168 - Arkansas Economic Development Commission › Rule 168.00.13-001 - New Markets Jobs Act of 2013

Current through Register Vol. 49, No. 6, June, 2024
I.
Introduction
Overview
The New Markets Jobs Act of 2013, Act 1474 of 2013,
			 §15-4-3601 et seq., creates a state New Market Tax Credit program to be
			 administered by the Arkansas Economic Development Commission (AEDC). New Market
			 Tax Credits, against state premium tax liability, may be earned by
			 corporations, limited liability companies, associations, partnerships, or other
			 business entities (hereafter referred to as entities) that make qualified
			 equity investments in qualified community development entities (QCDEs) that
			 invest capital and equity in eligible qualified active low-income community
			 businesses. The AEDC shall begin accepting applications requesting
			 certification of equity investments or long-term debt securities for New Market
			 Tax Credits on July 15, 2013.
Process
1.
		  A QCDE submits a completed application and requisite fees to the AEDC seeking
		  certification of an equity investment or long-term debt security for New Market
		  Tax Credits.
2. Within thirty (30)
		  days after receipt of a completed application, the AEDC grants or denies the
		  application in full or in part.
A. If any part
		  of the application is denied, the AEDC informs the applicant of the grounds for
		  denial.
B.
(i) If the application is denied as
		  incomplete, and the applicant provides the additional information or
		  documentation required by the AEDC, or otherwise completes its application
		  within fifteen (15) days of the notice of denial, the application shall be
		  considered completed as of the original date of submission.
(ii) If the applicant fails to provide the
		  requested information or complete its application within the fifteen (15) day
		  period, the application remains denied and must be resubmitted in full with a
		  new submission date.
3. If the AEDC determines that the
		  application is complete and meets all application requirements, the AEDC
		  provides written notice to the applicant certifying that the proposed equity
		  investment or long-term debt security is eligible for a New Market Tax Credit
		  subject to any limitations in §15-4-3605(d).
4. Within thirty (30) days of receiving the
		  AEDC notice of certification, the QCDE or any transferee issues the qualified
		  equity investment and receives cash in the amount certified by the AEDC.
A. The QCDE provides the AEDC with:
(i) Evidence of the receipt of the cash
		  investment within ten (10) business days after receipt.
(ii) Identifying information for each entity
		  that will utilize the tax credits earned.
(iii) The allocation agreement between the
		  QCDE and the equity investors setting out each investor's allocated share of
		  total credits earned.
B.
		  If the QCDE or any transferee does not receive the cash investment and issue
		  the qualified equity investment within thirty (30) days following receipt of
		  the certification notice, the certification shall lapse, and qualified equity
		  investments may not be issued without reapplying to the AEDC for
		  certification.
5. For
		  each qualified low-income community investment, and reinvestments whenever job
		  creation and retention projections with respect to the initial investments were
		  not met; the QCDE submits to the AEDC an information summary sheet. The AEDC
		  will review the information summary sheet and issue a non-binding conditional
		  Letter to Proceed to the QCDE acknowledging that the business meets the
		  criteria established under these rules as set out in Eligible Business
		  Definition section, and the project is eligible to generate a stated dollar
		  value amount of tax credits, subject to all the restrictions, terms and
		  conditions set out herein. The conditional Letter to Proceed will not be an
		  approval of the project, and will contain provisions that expressly exclude any
		  legal opinion by AEDC as to SBA size criteria or US Treasury or IRS rules and
		  qualifications.
6. The QCDE will
		  submit to AEDC requisite documentation, including a project closing date and a
		  revenue impact assessment, prepared by a nationally-recognized, third-party
		  independent economic forecasting firm, demonstrating that the qualified
		  low-income community investment will have a revenue positive impact on the
		  state over ten (10) years against the aggregate tax credit utilized over the
		  same time period.
7. Within ten
		  (10) business days from the receipt of a revenue impact assessment, the AEDC
		  reviews the assessment and notifies the QCDE of its review. Investments shall
		  be deemed revenue positive if the AEDC does not notify a QCDE of its review
		  within ten (10) business days of receipt of a revenue impact
		  assessment.
8. The QCDE makes
		  investments in corporations, limited liability companies, associations,
		  partnerships or other business entities meeting the definitions of "qualified
		  active low-income community business" and "eligible businesses" as defined
		  herein.
9. Once the AEDC has
		  received:
a) confirmation of closing,
		  including documents evidencing that the project has been funded and that the 85
		  percent test has been met; and,
b)
		  designation of the tax credit recipient(s) (i.e., the equity investor(s), use
		  Federal IRS Form 8874) from the QCDE/Sub-QCDE, the AEDC will issue a premium
		  tax credit certificate on paper for the appropriate amount in the name(s) that
		  are assigned by the QCDE/Sub-QCDE. The tax credit will have identifying numbers
		  to reflect the QCDE and Sub-QCDE, if applicable, and project identifier. The
		  AEDC will send the original certificate to the QCDE and copies to the Arkansas
		  Department of Finance and Administration and the Arkansas Insurance
		  Department.
10. A QCDE
		  that issues a qualified equity investment under §15-4-3601 et seq.,
		  submits a report to the AEDC within five (5) business days after the first
		  anniversary of the initial credit allowance date and subsequent annual reports
		  within five (5) business days after each of the next six anniversaries of the
		  credit allowance date thereafter.
Tax Credit* Allowances
Credit Allowance Date
Applicable Percentage
Date of Initial Qualified Equity Investment
0%
1st Anniversary Date of Equity
						Investment
0%
2nd Anniversary Date of Equity
						Investment
12%
3rd Anniversary Date of Equity
						Investment
12%
4th Anniversary Date of Equity
						Investment
12%
5th Anniversary Date of Equity
						Investment
11%
6th Anniversary Date of Equity
						Investment
11%
Total Credits (Percentage)
58%
*The tax credit amount shall be equal to the applicable
			 percentage for the credit allowance date multiplied by the purchase price paid
			 to the issuer of the qualified equity investment, not to exceed the state
			 premium tax liability owed by the taxpayer for the tax year in which the tax
			 credit is claimed.
Unused credits may be carried forward for nine (9) consecutive
			 tax years and shall not be refundable or saleable on the open market.
Rulemaking Authority
The AEDC has authority, at §15-4-3614, to promulgate rules
			 to implement the New Markets Jobs Act of 2013.