1. (a) Certification.

   1. (1) To claim the credit authorized under this act, a taxpayer must certify to the Department of Finance and Administration that the taxpayer has satisfied all of the requirements for the credit.
   2. (2) The certification shall be obtained from the United States Office of Apprenticeship if the apprentice is employed to learn an apprenticeable occupation under 29 C.F.R. § 29.1 et seq., as it existed on January 1, 1995.

   3. (3) The certification shall be obtained from the Division of Career and Technical Information if the apprentice is employed in an apprenticeship or work-based learning program that meets:

      1. (A) Either the standards of program design for a nationally recognized curriculum or business, industry, or trade association standards; and
      2. (B) The criteria for vocationally approved youth apprentice or work-based learning programs.

2. (b) Amount of credit.

   1. (1)

      1. (A) The taxpayer shall be allowed a credit equal to ten percent (10%) of the certified wages earned by an apprentice or two thousand dollars ($2,000), whichever is less.
      2. (B) The Department of Finance and Administration shall issue the taxpayer an income tax credit memorandum based on the certified wages.
   2. (2) Separate credit memos will be issued for each tax year in which the taxpayer has paid certified wages, but in no event will more than a cumulative total of two thousand dollars ($2,000) be allowed per apprentice per tax year.
   3. (3) The total amount of the income tax credit that a taxpayer may claim under this act for a tax year cannot exceed ten thousand dollars ($10,000).

3. (c) Use of credit.

   1. (1)

      1. (A) In order for the taxpayer to use the credit, the income tax credit memorandum must be attached to the income tax return in which the credit is first claimed.
      2. (B) The amount of credit that may be used by a taxpayer for any tax year shall not exceed the amount of individual or corporation income tax otherwise due.
      3. (C) Regardless of whether or not the credit is used for the tax year in which it was earned, any unused credit may be carried over only for a maximum of two (2) consecutive tax years.
   2. (2) If the taxpayer is a Subchapter S corporation, the pass-through provisions of Arkansas Code § 26-51-409, as in effect for the tax year the credit is earned, shall be applicable.

   3. (3)

      1. (A) A partner's or member's distributive share of the credit shall be determined by the partnership or limited liability company agreement unless the agreement does not:

4. (i) Have substantial economic effect; or

   1. (ii) Provide for the allocation of credits.

      1. (B) If the agreement does not have substantial economic effect or does not provide for the allocation of the credit, the credit shall be allocated according to the partner's or member's interest in the partnership, pursuant to federal Internal Revenue Code § 704(b), as in effect on January 1, 1995.

   2. (4) The tax credit provided under Acts 2017, No. 1042, shall apply to:

      1. (A) Tax years beginning January 1, 2018; and
      2. (B) All tax years thereafter.

Codification Notes: Internal Revenue Code § 704(b) can be found codified at 26 U.S.C. § 704(b).