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006.05.202-1. AUTHORIZATION

AR ADC 006.05.202-1Arkansas Administrative Code

West's Arkansas Administrative Code
Title 006. Department of Finance and Administration
Division 05. Division of Revenues
Rule 202. 1989-1 Gross Receipts and Use Tax/Enterprise Zones
Ark. Admin. Code 006.05.202-1
006.05.202-1. AUTHORIZATION
Currentness
(a) The Revenue Division of the Department of Finance and Administration shall authorize a refund of sales and use tax imposed by the State, and upon approval of the governing authority of the enterprise zone, from sales tax imposed by it, on the purchases of the material used in the construction of a building or buildings, or any addition or improvement thereon, for housing any legitimate business enterprise, and machinery and equipment (except motor vehicles) to be located in or in connection with such building.
(b) A sales and use tax refund as provided in Section 1(a) shall be authorized provided that
(1) The qualified business is an industry that fits into the Standard Industrial Classification (SIC) numbers 20 through 39, 7375 or 7376, or is a distribution center located within Arkansas. The term “Distribution Center” shall mean a facility for the reception, storage or shipping of a businesses own products or products which the business wholesales to retail businesses or ships to its own retail outlets. For a distribution center to qualify for the benefits provided in this Section, it must meet the following requirements:
(A) The distribution center must not make direct retail sales to the general public; and
(B) The distribution center must employ 100 or more employees. These employees must be employed by the distribution center within 18 months of the date distribution actually begins.
(C) If a distribution center does not meet the requirements of subparagraphs (A) and (B) above, then the distribution center will automatically be disqualified from receiving any benefits under this Section and will be required to repay any tax benefits already received under this Act, plus penalty and interest as allowed by law.
(2) The firm and its contractors give preference and priority to Arkansas manufacturers, suppliers, contractors and labor, except where it is not reasonably possible to do so without added expense, substantial inconvenience or sacrifice in operation efficiency, and
(3) The firm is physically located within an enterprise zone, and
(4) The firm certifies that at least 35 percent of its net new employees will be:
(A) Residents of the same county as the location of the business or counties adjacent (having a common border) thereto,
(B) (i) Are or were receiving some form of public assistance immediately prior to employment; or
(ii) Are or were considered unemployable by traditional standards or lacking in basic skills at the time of employment with the business;
(5) The request for such refund is accompanied by an endorsement resolution approved by the governing body of a municipality or county in whose jurisdiction the facility is located; and
(6) A notarized Contractor's Waiver of Refund Form (EZP form 1100) is presented to the Department of Finance and Administration, Revenue Division, from the contractor waiving any and all rights to claim refunds of sales and use taxes. This Waiver of Refund form must accompany the Enterprise Zone Business Sales and Use Tax Refund Request Form (Form EZP 1000) and the Schedule A listing of qualified Enterprise Zone purchases.
(7) In the event it is found that any business receiving the benefits contained in subsection (a) of this section has failed to comply with the conditions contained in subsection (b) of this section, that business will be liable for the payment of all sales and use tax which were refunded under subsection (a) of this section.
(c) The Revenue Division of the Department of Finance and Administration shall authorize a two thousand dollar ($2,000.00) income tax credit per net new employee of a business qualifying under this regulation as determined by the company's average annual employment as reported to the Employment Security Division. This tax credit shall be used for the taxable year in which the increase in average annual employment occurred. However, if the entire credit cannot be used in the year earned, the remained may be applied against the income tax for the succeeding two years, or until the credit is entirely used, whichever occur first.
(d) An income tax credit as provided for in subsection (c) of this section shall be authorized provided that:
(1) The request for such credit is accompanied by an endorsement resolution approved by the governing body of the appropriate municipality or county in whose jurisdiction the establishment is to be located; and
(2) The facility is located with the boundaries of an enterprise zone;
(3) All of the net new employees are employed at the facility, and
(4) The business certifies that at least thirty-five percent of its employees:
(A) Are residents of the same county as the location of the business or counties adjacent (having a common border) thereto, and
(B) (i) Are or were receiving some form of public assistance immediately prior to employment; or
(ii) Are or were considered unemployable by traditional standards or lacking in basic skills at the time of employment with the business:
(4) In the event it is found that any business receiving the benefits contained in subsection (c) of this section has failed to comply with the conditions contained in subsection (d) of this section, that business shall be liable for the payment of such additional income taxes as may be due after the income tax credits provided for in subsection (c) are disallowed, plus penalty and interest.
(5) In the event the company has a short tax year its average annual employment shall be calculated using the number of months the firm was in operation during that tax year.
Current with amendments received through August 15, 2023. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.05.202-1, AR ADC 006.05.202-1
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