1. (a) State income tax credits — Not eligible for lodging facilities.

   1. (1) Upon notification from the Director of the Arkansas Economic Development Commission that an approved company has entered into a tourism attraction project financial incentive agreement, the Secretary of the Department of Finance and Administration shall provide the approved company with such forms and instruction as are necessary to claim those credits.
   2. (2) The approved company shall certify the number and the payroll of the new full-time permanent employees to the Revenue Division of the Department of Finance and Administration.
   3. (3) Upon certification by the company, the division shall authorize an income tax credit equal to four percent (4%) of the payroll of the new full-time permanent employees of the approved tourism attraction project qualifying for benefits.

   4. (4) As used herein, the term “new full-time permanent employee” shall mean a person who:

      1. (A) Is an Arkansas taxpayer in the year the credits are claimed;
      2. (B) Is employed in a position or job created by virtue of the project; and
      3. (C) Has worked an average of not less than thirty (30) hours per week.
   5. (5) The income tax credits may be earned for a period of five (5) years from the effective date of the financial incentive agreement.
   6. (6) The income tax credits earned may be applied against the company’s Arkansas state income tax liability for the succeeding nine (9) years or until the credit is entirely used, whichever occurs first.
   7. (7) The director shall provide a copy of each financial incentive agreement entered into with an approved company to the secretary.

   8. (8) If any approved company receiving income tax credits allowed under Arkansas Code § 15-11-509 has failed to comply with the conditions outlined in this part, the company shall be:

      1. (A) Disqualified from receiving any further benefits under the Arkansas Tourism Development Act, Arkansas Code § 15-11-501 et seq.; and
      2. (B) Liable for payment of such additional income taxes as may be due after the income tax credits provided for in this section are disallowed, plus interest.
   9. (9) If the Department of Finance and Administration determines that an approved company is no longer qualified under the Arkansas Tourism Development Act, it shall decertify the company, and the decertified company shall not receive any benefits allowed under the act.

2. (b) Sales and use tax credits.

   1. (1) Upon receiving notification from the director that an approved company has entered into a tourism attraction project financial incentive agreement and is entitled to the sales tax credits provided by this part, the secretary shall provide the approved company with such forms and instructions as are necessary to claim the credits.

   2. (2)

      1. (A) An approved company shall be entitled to a sales and use tax credit upon certifying to the secretary that it has met the investment threshold for the county in which it is located.
      2. (B) The secretary shall then issue a sales tax credit memorandum for the appropriate amount, twenty-five percent (25%) for projects located in high-unemployment counties and projects qualified under Arkansas Code § 15-11-511 and fifteen percent (15%) for all other projects, to the approved company.
      3. (C) Subsequent requests for credit for additional certified approved costs in excess of the investment threshold shall be submitted annually for the term of the financial incentive agreement or until the project is completed, whichever occurs first.

   3. (3)

      1. (A) The secretary may require proof of expenditures.
      2. (B) Additional credit memorandums may be issued as the approved company certifies additional expenditures of approved costs.

   4. (4)

      1. (A) No sales tax credit memorandum shall be issued for any approved costs expended after the expiration of two (2) years from the date the financial incentive agreement was signed by the director and the approved company.
      2. (B) However, the director, with the advice and consent of the secretary, may authorize sales tax credits for approved costs expended up to four (4) years from the date the financial incentive agreement was signed if the director determines that the failure to complete the project within two (2) years resulted from:

3. (i) Unanticipated and unavoidable delay in the construction of the project;

   1. (ii) The project, as originally planned, will require more than two (2) years to complete; or

      1. (iii) A change in business ownership or business structure resulting from a merger or acquisition.
      2. (C) The reasons listed above shall be brought to the attention of the director prior to the expiration of the initial two-year period, and a request shall be made to the director during the two (2) years for an extension of time.

   2. (5)

      1. (A) The credit memorandum issued may be used to offset a portion of the reported state sales (gross receipts) tax liability of the approved company for all sales tax reporting periods following the issuance of the credit memorandum.
      2. (B) One hundred percent (100%) of the credit may be used to offset increased sales tax liability during the first year, with any unused credits carried forward for nine (9) additional years.

      3. (C) The credits are also subject to the following limitations:

         1. (i) Only increased state sales tax liability resulting from sales by the approved company may be offset by the issued credit;
         2. (ii) All issued credit memorandums shall expire at the end of the month following expiration of the financial incentive agreement;
         3. (iii) The approved company shall have no obligation to refund or otherwise return any amount of this credit to the person from whom the sales tax was collected;
         4. (iv) By April 1 of each year, the secretary shall certify to the director the state sales and the amount of state sales and income tax credits taken during the preceding calendar year;
         5. (v) The secretary:
4. (a) (a) May promulgate administrative rules as are necessary for the proper administration of the Arkansas Tourism Development Act;

5. (b) (b) May also develop such forms and instructions as are necessary for an approved company to claim the sales and income tax credits provided by the Arkansas Tourism Development Act;

   1. (c) (c) Shall have the authority to obtain any information necessary from the approved company and the director to verify that approved companies have received the proper amounts of sales tax credits as authorized by the Arkansas Tourism Development Act; and

      1. (d) (d) Shall demand the repayment of any credits taken in excess of the credit allowed by the Arkansas Tourism Development Act;

         1. (vi)
6. (a) (a) Qualified amusement parks entering into a financial incentive agreement on or after January 1, 2006, for an approved project that will exceed one million dollars ($1,000,000) are eligible for a sales tax credit equal to twenty-five percent (25%) of the approved costs.

7. (b) (b) Qualified amusement parks entering into a financial incentive agreement on or after January 1, 2006, may use the credit to offset one hundred percent (100%) of its tax liability following the issuance of the credit; and

   1. (vii)
8. (a) (a) The credit may be used to offset the qualified amusement park’s sales tax liability for the gross receipts tax levied under the Arkansas Gross Receipts Act of 1941, Arkansas Code § 26-52-101 et seq., and the tourism gross receipts tax levied under Arkansas Code § 26-52-1001 et seq. [repealed].

9. (b) (b) Any unused credit may be carried forward for a period of nine (9) years.

   1. (c) (c) The special provisions for qualified amusement parks provided in subdivision (b)(5)(C)(vi) of this section above shall apply retroactively to July 1, 2006.

      1. (c) Calculation of Arkansas income tax credits.
   2. (1) This program provides an Arkansas income tax credit equal to four percent (4%) of the payroll of each new full-time permanent employee for a period of five (5) years from the effective date of the financial incentive agreement.

   3. (2) The calculation of the income tax credit is as follows: Payroll of New Full-Time Permanent Employees x 4% = Total Credits

      1. (d) Calculation of sales tax credit.
   4. (1) This program offers a sales tax credit in the amount of twenty-five percent (25%) of total project costs if the approved tourism attraction is located in a high-unemployment area.
   5. (2) If the approved tourism attraction is located in any other county the program offers a sales tax credit in the amount of fifteen percent (15%) of the total project cost.
   6. (3) The calculation of the sales tax credit is as follows: Approved Costs x Appropriate Percentage = Total Credits

Codification Notes: Code § 26-52-1001 et seq., was repealed by Acts 2007, No. 182, §§ 6 – 11.