SECTION I -
DEFINITIONS
(1) "Department" means the
Arkansas Department of Finance and Administration,
(2) "Wages" are the gross taxable wages paid
to an apprentice.
(3) "Apprentice"
means a worker who is at least sixteen (16) years of age and is employed (A) to
learn an apprenticeable occupation under
29 CFR §
29.1
et seq. as it existed on January 1, 1995 or (B) in an apprenticeship or
work-based learning program that meets (i) either the standards of program
design for a nationally recognized curriculum or business, industry, or trade
association standards and (ii) the criteria for vocationally approved youth
apprentice or work-based learning programs.
(4) "Apprenticeship or work-based learning
program" includes non-registered apprenticeship, pre-apprenticeship, and youth
apprenticeship programs.
a) "Non-registered
apprenticeship" programs are not registered and are not approved by the U.S.
Department of Labor and may include a variety of possible outcomes; academic
and work-related competencies are integrated into the youth or adult program;
and may or may not lead to a certification or credential.
b) "Pre-apprenticeship" programs are designed
to prepare individuals to enter and succeed in registered apprenticeship
programs. These programs are not registered but have a documented partnership
with at least one registered apprenticeship program sponsor and are aligned
with the registered apprenticeship programs, and together, they expand the
participant's career pathway opportunities with industry-based training coupled
with classroom instruction.
c)
"Youth apprenticeship" programs consist of academic and technical classroom
instruction combined with on-the-job learning experiences for individuals
between the ages of sixteen (16) and twenty-one (21) years who are enrolled in
a public or private secondary school.
(5) "Taxpayer" means an employer who employs
an apprentice and seeks to qualify for the state income tax credit authorized
under this Act.
(6) "Act" means Act
1042 of 2017 as enacted by the Arkansas General Assembly.
SECTION II - APPROVAL INTO PROGRAM
a) A taxpayer seeking benefits under this Act
must apply to the Department for approval into this program. Application must
be made on forms prescribed and approved by the Department,
b) The Arkansas Office of Apprenticeship of
the United States Department of Labor shall determine if an employer's training
program meets the qualifications pursuant to federal regulations governing
labor standards for the registration of apprenticeable occupations under
29 CFR §
29.1
et seq. as it existed on January 1, 1995.
c) The Arkansas Apprenticeship Coordinating
Committee and the Arkansas Department of Career Education shall determine if an
employer's training program meets the qualifications as outlined above in
Section I(3)(B) pursuant to an apprenticeship or work-based learning
program.
d) When an apprenticeship
agreement has been reached in which an employer is to employ one or more
apprentices, the Arkansas Office of Apprenticeship of the United States
Department of Labor shall forward to the Department copies of the
apprenticeship agreement and other pertinent documentation regarding the
qualification of the registered apprenticeship.
When an apprenticeship or work-based learning agreement has
been reached in which an employer is to employ one or more apprentices, the
Arkansas Department of Career Education shall forward to the Department copies
of the apprenticeship agreement and other pertinent documentation regarding the
qualification of an apprenticeship or work-based learning program.
e) After the Department has been
notified that the employer's training program meets the qualifications for a
registered apprenticeship or an apprenticeship or work-based learning program,
the necessary forms and instructions to be used in reporting annual wages paid
to a qualified apprentice will be provided to the taxpayer.
SECTION III - INCOME TAX CREDITS
a) Certification.
To claim the credit authorized under this act, a taxpayer must
certify to the Department that the taxpayer has satisfied all of the
requirements for the credit. The certification shall be obtained from the
Office of Apprenticeship of the United States Department of Labor if the
apprentice is employed to learn an apprenticeable occupation under
29 CFR §
29.1
et seq. as it existed on January 1,1995. The certification shall be obtained
from the Arkansas Department of Career Education if the apprentice is employed
in an apprenticeship or work-based learning program that meets (1) either the
standards of program design for a nationally recognized curriculum or business,
industry, or trade association standards and (2) the criteria for vocationally
approved youth apprentice or work-based learning programs.
b) Amount of Credit.
(1) 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. The Department shall issue
the taxpayer an Income Tax Credit Memorandum based on the certified
wages.
(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 $2,000 be allowed
per apprentice per tax year.
(3)
The total amount of the income tax credit that a taxpayer may claim under this
act for a tax year camiot exceed ten thousand dollars ($10,000).
c) Use of Credit.
(1) 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. 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. 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) If the taxpayer is an S corporation, the
pass-through provisions of Ark. Code Ann. §
26-51-409, as in effect for the
tax year the credit is earned, shall be applicable.
(3) 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 have substantial economic
effect or does not provide for the allocation of credits. 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 I, 1995.
(4) The tax credit
provided under this act shall apply to tax years beginning January 1,2018 and
all tax years thereafter.
SECTION IV
This rule shall amend and supercede Rule 1996-1 with respect to
the apprenticeship program income tax credit for tax years beginning on or
after January 1, 2018.
