(a) Overview.

1. (1) The New Markets Jobs Act of 2013, Acts 2013, No. 1474, Arkansas Code § 15-4-3601 et seq., creates a state new market tax credit program to be administered by the Arkansas Economic Development Commission.
2. (2) 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.
3. (3) The commission shall begin accepting applications requesting certification of equity investments or long-term debt securities for new market tax credits on July 15, 2013.

(b) Process.

1. (1) A QCDE submits a completed application and requisite fees to the commission seeking certification of an equity investment or long-term debt security for new market tax credits.

2. (2)

   1. (A) Within thirty (30) days after receipt of a completed application, the commission grants or denies the application in full or in part.
   2. (B) If any part of the application is denied, the commission informs the applicant of the grounds for denial.
   3. (C)

(i) If the application is denied as incomplete and the applicant provides the additional information or documentation required by the commission 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.

1. (ii) If the applicant fails to provide the requested information or complete its application within the fifteen-day period, the application remains denied and must be resubmitted in full with a new submission date.
2. (3) If the commission determines that the application is complete and meets all application requirements, the commission 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 Arkansas Code § 15-4-3605(d).

3. (4)

   1. (A) Within thirty (30) days of receiving the commission’s notice of certification, the QCDE or any transferee:

      1. (i) Issues the qualified equity investment; and
      2. (ii) Receives cash in the amount certified by the commission.

   2. (B) The QCDE provides the commission with:

      1. (i) Evidence of the receipt of the cash investment within ten (10) business days after receipt;
      2. (ii) Identifying information for each entity that will utilize the tax credits earned; and
      3. (iii) The allocation agreement between the QCDE and the equity investors setting out each investor’s allocated share of total credits earned.

   3. (C) 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:

      1. (i) Certification shall lapse; and
      2. (ii) Qualified equity investments may not be issued without reapplying to the commission for certification.

4. (5)

   1. (A) 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 commission an information summary sheet.

   2. (B) The commission will review the information summary sheet and issue a nonbinding conditional Letter to Proceed to the QCDE acknowledging that the:

      1. (i) Business meets the criteria established under this part as set out in 15 CAR § 150-102(5); and
      2. (ii) Project is eligible to generate a stated dollar value amount of tax credits, subject to all the restrictions, terms, and conditions set out herein.
   3. (C) The conditional Letter to Proceed will not be an approval of the project and will contain provisions that expressly exclude any legal opinion by the commission as to United States Small Business Administration size criteria or United States Department of the Treasury or Internal Revenue Service rules and qualifications.
5. (6) The QCDE will submit to the commission 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.

6. (7)

   1. (A) Within ten (10) business days from the receipt of a revenue impact assessment, the commission reviews the assessment and notifies the QCDE of its review.
   2. (B) Investments shall be deemed revenue positive if the commission does not notify a QCDE of its review within ten (10) business days of receipt of a revenue impact assessment.
7. (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.

8. (9)

   1. (A) Once the commission has received confirmation of closing, including documents evidencing that the project has been funded and that the eighty-five percent (85%) test has been met, and designation of the tax credit recipient or recipients (i.e., the equity investor or investors, use federal IRS Form 8874) from the QCDE/Sub-QCDE, the commission will issue a premium tax credit certificate on paper for the appropriate amount in the name or names that are assigned by the QCDE/Sub-QCDE.
   2. (B) The tax credit will have identifying numbers to reflect the QCDE and Sub-QCDE, if applicable, and project identifier.

   3. (C) The commission will send:

      1. (i) The original certificate to the QCDE; and
      2. (ii) Copies to the Department of Finance and Administration and the State Insurance Department.

9. (10) A QCDE that issues a qualified equity investment under the New Markets Jobs Act of 2013, Arkansas Code § 15-4-3601 et seq., submits a report to the commission 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 (6) anniversaries of the credit allowance date thereafter.

   1. (c) 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%

10. (1) 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.
11. (2) Unused credits may be carried forward for nine (9) consecutive tax years and shall not be refundable or saleable on the open market.