§ 26-52-705 - Qualification and determination of credit. - Arkansas Statutes

26-52-705. Qualification and determination of credit.

(a) (1) In order to qualify for and receive the credits afforded by this subchapter, any eligible business undertaking a project shall submit a project plan to the Director of the Arkansas Economic Development Commission thirty (30) days prior to the start of construction.

(2) The plan submitted to the Arkansas Economic Development Commission shall contain such information as may be required by the Director of the Arkansas Economic Development Commission to determine eligibility.

(b) (1) Upon determination by the Director of the Arkansas Economic Development Commission that the project qualifies for credit under this subchapter, the Director of the Arkansas Economic Development Commission shall certify to the Director of the Department of Finance and Administration that the project is qualified and transmit with his or her certification the documents upon which the certification was based or copies of the documents.

(2) Upon receipt by the Director of the Department of Finance and Administration of a certification from the Director of the Arkansas Economic Development Commission that an eligible business as defined by 26-52-702 is entitled to credit under this subchapter, the Director of the Department of Finance and Administration shall provide forms to the eligible business on which to claim the credit.

(c) (1) At the end of the calendar year in which the application was made to the Director of the Arkansas Economic Development Commission and at the end of each calendar year thereafter until the project is completed, the eligible business shall certify, on the form provided by the Director of the Department of Finance and Administration, the amount of expenditures on the project during the preceding calendar year.

(2) (A) Upon receipt of the form certifying expenditures, the Director of the Department of Finance and Administration shall determine the amount due as a credit for the preceding calendar year and issue a memorandum of credit to the eligible business in the amount of seven percent (7%) of the expenditure.

(B) (i) (a) (1) The credit shall then be applied against the eligible business' state sales or use tax liability in the year following the year of the expenditure.

(2) However, if the credit is not used in the calendar year following the expenditure, it may be carried over to the next succeeding calendar year for a total period of six (6) years following the year in which the credit was first available for use or until the credit is exhausted, whichever occurs first.

(b) For eligible defense projects, if the credit is not used in the calendar year following the expenditure, the credit may be carried over to the next succeeding calendar year for a total of nine (9) years following the year in which the credit was first available for use or until the credit is exhausted, whichever occurs first.

(ii) (a) The credit shall be used by the eligible business as a credit against the regular direct-pay sales or use tax return of the business.

(b) In no event shall the credit used on any regular return be more than fifty percent (50%) of the eligible business' total state sales or use tax liability for the reporting period, except that a company with an eligible defense industry project may claim a credit for one hundred percent (100%) of the sales and use tax liability for the reporting period.

(iii) The Director of the Department of Finance and Administration may require proof of these expenditures.

(iv) (a) The Director of the Department of Finance and Administration may examine those records necessary and specific to the project to determine credit eligibility.

(b) Any credits disallowed will be subject to payment in full.

(d) For all projects approved after July 1, 1997, in order to receive credit for project costs, the project costs must be incurred within five (5) years from the date of certification of the project plan by the Director of the Arkansas Economic Development Commission.

(e) (1) If project costs exceed the initial project cost estimate included in the financial incentive plan, the business shall amend the financial incentive plan to include updated cost figures.

(2) Amendments that exceed fifty percent (50%) of the original financial incentive plan estimate shall be submitted as a new project.

(3) An amendment shall not change the start date of the original project.