Arkansas Enterprise Zone Program of 1993
ENTERPRISE ZONE PROGRAM OF 1993
A STEP-BY-STEP GUIDE
Step 1. To be eligible to qualify for the program, the company or
business must either be a;
o Manufacturer with Standard Industrial Classification codes
(SIC) 20 to 39 adding at least one new employee
o Warehouse operation with no retail sales and 25 or more new
employees
o Computer firm defined as SIC 7375 (Information Retrieval
Services) and 7376 (Computer Facilities Management Services)
adding at least one new employee
o Office sector business or control center (also referred to
as back office industry) with no retail sales and 100 or
more new employees
o Corporate headquarters with no retail sales and 50 or more
new employees
o Trucking sector business defined as SIC 4231 (Terminal and
Joint Terminal Maintenance Facilities for Motor Freight
Transportation) with no retail sales and 100 or more new
employees.
Step 2. To be eligible to apply for tax benefits, a company or business must have
an expansion (or new plant) project which will result in a net increase in
employment.
Step 3. To apply, the company must fill out an application form and
project plan (refer to Exhibit B. Instructions for Preparing a
Project Plan).
Step 4. Company must file the filled out application form and project
plan with the local governing body of municipality or county in whose
jurisdiction the facility is located.
Step 5. If the local governing body approves, they must pass a
resolution (refer to Exhibit A. Sample Resolution) endorsing the
project.
Step 6. The date on this resolution;
o earliest date purchases on the expansion or construction
project can be made and be eligible for sales and use tax
refunds
o earliest date hiring of employee (s) can be made and be
eligible for income tax credits.
Step 7. The application form, project plan and the resolution must be
forwarded to the Arkansas Department of Economic Development
where it will be reviewed and, if approved, AIDC will prepare a tax
certificate which authorizes the company to start claiming sales and
use tax refunds. A copy of the certificate and approval letter will
be sent to the company contact person and the Revenue Division of the
Arkansas Department of Finance and Administration.
Step 8. Note: The rest of the step-by-step guide will be completed
when the business application has been approved.
Regulations for the Administration of the
1993 Arkansas Enterprise Zone Program
PLEASE NOTE: These regulations apply to Act 947 of 1993.
The provisions of this Act sunset on June 30, 1999.
Applicants for enterprise zone benefits will be required to
determine which Act, Act 462 of 1989 or Act 947 of 1993, is most applicable to
their particular project. Act 462 will sunset in 1995.
Businesses with expansions involving investments of $5 million or more
will also have the option of qualifying for benefits provided by Act 529, the
Investment Tax Credit Act of 1985. Applicants cannot receive benefits from more
than one of these programs for the same project.
For additional copies, contact:
Enterprise Zone Program Coordinator
Arkansas Department of Economic Development
One State Capitol Mall
Little Rock, Arkansas 72201
Telephone: 682-7310
FAX: 682-7341
Part 1. General Framework
1.01 Authority. These regulations are issued by the Arkansas
Industrial Development Commission as authorized by Act 947 of 1993, as amended.
1.01.01 It will be the responsibility of the Arkansas Industrial
Development Commission to provide final approval of applications for benefits
provided by this Act.
1.02 Scope and Applicability. These regulations describe the
procedures and requirements that are applicable to the Arkansas Enterprise Zone
Program (AEZP), authorized by Act 947 of 1993 of the Arkansas General Assembly.
1.02.01 Until June 30, 1995 a business may qualify for enterprise zone
benefits under either Act 462 of 1989 (Arkansas Enterprise Zone Act of 1989) or
Act 947 of 1993 (Arkansas Enterprise Zone Act of 1993). A business applying for
enterprise zone benefits prior to June 30, 1995, must designate in writing which
enterprise zone it elects to qualify under. The business can only receive the
benefits of one Act for a project, even if the project would qualify under both
Acts.
1.02.02 After June 30, 1995, businesses will no longer be able to
elect between the Acts. All projects must qualify under the Enterprise Zone Act
of 1993.
1.02.03 No business may file for benefits under the Enterprise Zone
Act of 1993 if an application for benefits has been filed and approved under the
Manufacturers Investments Sales & Use Tax Credit Act of 1985, Section 26-52-701
et seq., for the same project. However, an application for benefits under
Section 26-52-701 et seq. may be withdrawn if no tax credits have been taken
under that Subchapter.
1.02.04 When a project has been approved under the Manufacturers
Investments Sales & Use Tax Credit Act of 1985, Section 26-52-701 et seq.,
no application for a project under the Enterprise Zone Act of 1993 will be
accepted until the expiration of one year after the date of approval of
the
application under Section 26-52-701 et seq.
1.02.05 When a project has been approved under the Enterprise Zone Act
of 1993, no application for projects under the Manufacturers Investments Sales &
Use Tax Credit Act of 1985, Section 26-52-701 et seq., shall be accepted until
the expiration of one year after the date of approval of the application under
the Enterprise Zone Act of 1993.
1.03 Purpose of Program. The purpose of the Arkansas Enterprise Zone
Program is to stimulate business and industrial growth in all areas of the state
by providing assistance to business and industries and by providing tax
incentives to create employment opportunities. The program provides additional
benefits to employers located in counties with unemployment rates of 10% or more
and those counties with rates of three (3) percent or more above the state
average for the preceding year.
1.04 Compliance with the Arkansas Administrative Procedures Act and
Arkansas Tax Procedure Act. The provisions of the Arkansas Administrative
Procedures Act, as amended Stat. 25-15-201 et seq. (Act 434 of 1967, as amended)
and the Arkansas Tax Procedures Act (Act 401 of 1979, as amended), shall govern
the issuance and administration of these regulations. These regulations shall
become effective on July 1, 1993.
1.05 Severability. If any provision of these regulations should be
declared to be invalid or to be inapplicable, such determination shall not affect
the validity of applicability of the other provisions.
1.06 Definitions
1.06.01 Commission means the Arkansas Industrial Development
Commission.
1.06.02 Department means the Department of Industrial Development.
1.06.03 Director means the director of the department.
1.06.04 Program means the Arkansas Enterprise Zone Act of 1993.
1.06.05 Governing Body means the Quorum Court of a county or the
City Council of a municipality in which the qualifying business is located.
1.06.06 Project means all activities and costs associated with the
construction of a new plant or facility; or, the expansion of an established
plant or facility by adding to the building or production equipment and/or
support infrastructure; or, the replacement of production or processing equipment
and/or support infrastructure.
1.06.07 Plant or facility means the land, buildings, machinery,
apparatus and fixtures employed in carrying on an integrated trade, service, or
industrial business of an individual site location.
1.06.08 Corporate headquarters means the home or center of operations,
including research and development, of a national or multi-national corporation.
1.06.09 Office sector business means control centers that
influence the environment in which data processing, customer service, credit
accounting, telemarketing, claims processing, and other administrative functions
that act as production centers. Also referred to as "back office industry".
1.06.10 Distribution center means a facility for the reception,
storage, or shipping of a business' own products or products which the business
wholesales to retail businesses or ships to its own retail outlets and does not
make retail sales to the general public.
1.06.11 Trucking sector business means a business that comes within
the Standard Industrial Classification (SIC) number 4231.
1.06.12 Standard Industrial Classification Numbers means the numbers
used to classify businesses in the STANDARD INDUSTRIAL CLASSIFICATION MANUAL
published by the Office of Management and Budget, Executive Office of the
President.
1.06.13 New permanent employee means a employee who is an Arkansas
resident when hired and who was hired as a result of the project and has worked
an average of at least thirty (30) hours per week for at least twenty-six (26)
consecutive weeks. To be counted as a new permanent employee for the purpose of
qualifying for the tax credits and incentives, the employee must have been an
Arkansas resident during the year in which the tax credits or incentives were
earned.
1.06.14 Net new permanent employee means a new permanent employee who
was not employed by the taxpayer during the preceding taxable year.
However, if during the year in which the new permanent employee was
hired the employee did not work the requisite number of weeks to qualify
as a new permanent employee for that year, then that employee may be
counted as a net new permanent employee for the year in which he or she
meets the requirement. Example: an employee hired August 1, 1993,
could not qualify as a new permanent employee for 1993 because he could
not have worked 26 consecutive weeks in 1993. However, if in 1994 that
employee completes his 26th consecutive week of work with an average of
30 hours of work per week since the date he was hired, that employee
will qualify as a net new permanent employee for the 1994 tax year. The
number of net new permanent employees shall be equal to the total number
of new permanent employees for the current year minus the total number
of new permanent employees for the previous tax year.
1.06.15 Average hourly wage means the average wage of the net new
permanent employees based on payroll for the most recent quarter reported to the
Employment Security Department, and is computed by using the total of the net new
permanent employees' reported taxable earnings, including overtime pay, divided
by the number of weeks worked, divided by the average hours worked per week per
net new permanent employee.
1.07 Substantial Administrative Hardship. Should any non-
statutory provision of these regulations pose a severe hardship for either a city
or county of the state, and detract from the efficient administration of the
program, the provision may be waived by the Department Director.
Part II Criteria and Procedures for Applying for Benefits
2.01 This Act does not require a business to locate within an
Enterprise Zone.
2.02 Eligible applicants include truck terminals (SIC 4231)
employing 100 or more, distribution centers employing 25 or more, corporate
headquarters employing 50 or more, and office sector businesses employing 100 or
more. Eligible applicants also include manufacturers (SIC 20 through 39) and
certain computer service firms (SIC codes 7375 and 7376) which hire at least one
(1) new permanent employee.
2.02.01 Applicants are required to submit an application to the
pertinent local governmental body (city council or county quorum court)
on forms provided by the enterprise zone program coordinator of the
Arkansas Industrial Development Commission. Approval must be given by
the local government in the form of a resolution. A copy of the
resolution must be attached to the application and submitted by the
local government representative to the enterprise zone program
coordinator of the Arkansas Department of Economic Development.
Final approval must be given by the enterprise zone program
coordinator of the Arkansas Department of Economic Development and
copies of the documents forwarded to the Tax Credit Section of the
Revenue Division of the Arkansas Department of Finance and
Administration.
2.02.02 The requisite number of New Permanent Employees must be
employed by the business within 24 months of the date the endorsement
resolution was adopted or passed by the governing body approving the
business' participation in the program.
2.02.03 If the business is unable to hire the requisite number of New
Permanent Employees within the 24 month period, the business can file a written
application with the Department explaining why additional time is necessary. The
business can be afforded up to 24 more months to hire the requisite number of
employees if the Director and Chief Fiscal Officer of the State determine that
the need for additional time is due to:
(a) unanticipated and unavoidable delay in the construction of a
facility that must be completed before the employees can be hired
(b) the project as originally planned will require more than 24
months to complete; or
(c) a change in the business ownership or business structure due
to a merger or acquisition.
Part III. Benefits
3.01 A qualified enterprise zone business will be entitled an
income tax credit equal to 100 times the average hourly wage paid the Net New
Permanent Employees. The maximum credit allowed is $2,000.00 per Net New
Permanent Employee. The tax credit shall be used for the taxable year in which
the Net New Permanent Employee was hired. If the entire credit cannot be used in
the year earned, the remainder may be applied against the income tax for the
succeeding four years, or until the credit is entirely used, which ever occurs
first.
3.02 The income tax credit allowed shall be increased by a factor of two
with the maximum credit of $2,000.00 per Net New Permanent Employee if the
business is located in a county that had an unemployment rate in excess of 10%,
or an unemployment rate more than 3% above the State's average unemployment rate,
for the preceding calendar year. The annual unemployment figures used will be
those published by the Arkansas Employment Security Department.
3.03 A business qualified for enterprise zone benefits may receive a
refund of sales and use tax imposed by the State and municipality or county, if
the municipality or county authorized the refund of its local tax, on the
purchases of 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 to be located in or in connection with such
building.
3.04 In the event that a project is completed by a party (lessor) which
in turn leases the facility to a second party (lessee), the lessor should receive
the benefits of the enterprise zone program, as long as the benefits are passed
on to the lessee.
3.05 In the event it is found that any business receiving enterprise
zone benefits has failed to comply with the conditions, or meet the requisite
qualification, that business shall be liable for the payment of all tax credits,
benefits, and incentives received by the business under this Act plus penalty and
interest.
PLEASE NOTE: Procedures for filing for tax benefits are covered by
regulations promulgated by the Arkansas Department of Finance and
Administration, Revenue Division. A copy of those regulations may be obtained by
calling (501) 682-7106 or writing:
Mr. Tom Rugger, Manager
Tax Credit Section, Room 203
Revenue Division, DF&A
P. O. Box 1272
Little Rock, Arkansas 72203
Certification
We hereby certify that the foregoing is a true and correct copy of the
Rules and Regulations for the Arkansas Enterprise Zone Act or 1993 as promulgated
by the Arkansas Economic Development Commission. These regulations shall be
effective immediately upon filing.
Witness our hands this 29th day of November, 1993.
Del Boyette, Executive Director
Arkansas Department of Economic Development
State of Arkansas
NOTE: These regulations were approved by the Administrative Rules and
Regulations Committee of the Arkansas Legislative Council on September 7, 1993.
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