§ 15-4-2705 - Arkansas Statutes

LexisNexis Practice Insights

1. Arkansas Taxpayers Should Consider EZ Benefits Offered by Other States

2. Credits and Incentives ("Advantage Arkansas" Program) for Eligible Businesses Operating in Arkansas

3. Location-Based Tax Benefits for Arkansas Taxpayers

15-4-2705. Job-creation tax credit.

(a) There is established a job-creation tax credit to encourage:

(1) The creation of new jobs; and

(2) Business growth and expansion.

(b) An application for the income tax credit under this section shall be submitted to the Arkansas Economic Development Commission.

(c) To qualify for this credit, an eligible business shall have an annual payroll for new full-time permanent employees in excess of the payroll threshold for the county tier in which the project is located, as follows:

(1) For tier 1 counties, the annual payroll threshold is one hundred twenty-five thousand dollars ($125,000);

(2) For tier 2 counties, the annual payroll threshold is one hundred thousand dollars ($100,000);

(3) For tier 3 counties, the annual payroll threshold is seventy-five thousand dollars ($75,000); and

(4) For tier 4 counties, the annual payroll threshold is fifty thousand dollars ($50,000).

(d) (1) The credit earned under this section is a percentage of the payroll of the new full-time permanent employees hired following the date of the approved financial incentive agreement.

(2) The percentage shall be determined by the county tier in which the project is located, as follows:

(A) For tier 1 counties, the credit is one percent (1%) of the payroll for the new full-time permanent employees of the business;

(B) For tier 2 counties, the credit is two percent (2%) of the payroll for the new full-time permanent employees of the business;

(C) For tier 3 counties, the credit is three percent (3%) of the payroll for the new full-time permanent employees of the business; and

(D) For tier 4 counties, the credit is four percent (4%) of the payroll for the new full-time permanent employees of the business.

(3) To qualify for a credit under this subsection, the proposed average hourly wage of a company applying for the benefit shall equal or be greater than the lowest county average hourly wage as calculated by the commission based on the most recent calendar year data published by the Department of Workforce Services.

(e) The term of the financial incentive agreement shall be for a period of sixty (60) months, beginning on the date of the approved financial incentive agreement.

(f) (1) After receiving an approved financial incentive agreement from the Arkansas Economic Development Commission, the qualified business shall certify to the Revenue Division of the Department of Finance and Administration the payroll of the new full-time permanent employees annually at the end of each tax year during the term of the agreement.

(2) Upon verification of the reported payroll amounts, the Revenue Division shall authorize the appropriate income tax credit.

(g) (1) The tax credits earned under this section may offset fifty percent (50%) of the business's tax liability in any one (1) year.

(2) Any unused tax credits may be carried forward for nine (9) years after the year in which the credit was first earned or until exhausted, whichever event occurs first.

(h) (1) If a business fails to meet the payroll threshold within two (2) years after the signing of the financial incentive agreement or within the time period established by an extension approved by the Director of the Department of Finance and Administration and the Director of the Arkansas Economic Development Commission, that business will be liable for repayment of all benefits previously received by the business.

(2) After a business has failed to reach the payroll threshold of this section in a timely manner, the Department of Finance and Administration shall have two (2) years to collect benefits previously received by the business or file a lawsuit to enforce the repayment provisions.