SECTION 1. PURPOSE.
These regulations are promulgated pursuant to the authority-granted to
the Commissioner of Revenues by Ark. Code Ann. §§
26-18-301 and
26-51-104 for the
implementation of Act 748 of 1991.
SECTION 2. DEFINITIONS:
For the purpose of this regulation, the following definitions shall
apply:
(a) Taxable year - means the
calendar year or the fiscal year, upon the basis of which the net income is
computed under the Arkansas Income Tax Act.
(b) Recycling - means the systematic
collection, sorting, decontaminating and returning of waste materials to
commerce as commodities for use or exchange.
(c) Waste reduction, reuse or recycling
equipment - means machinery and equipment located in Arkansas on the last day
of the taxable year, designed to separate, process, modify, convert, or treat
solid waste so that the resulting product may be used as a raw material or for
productive use. "Waste reduction, reuse or recycling equipment" does not
include motor vehicles, buildings, or real property of any kind.
SECTION 3. ALLOWANCE OF CREDIT.
An income tax credit shall be allowed for any taxpayer engaged in the
business of reducing, reusing or recycling solid waste material for commercial
purposes who purchases waste reduction, reuse or recycling equipment for the
purpose of reducing, reusing or recycling solid waste. To qualify for the
credit the machinery and equipment must be used exclusively for reducing,
reusing or recycling solid waste.
SECTION 4. CERTIFICATION.
Before a claim for income tax credit may be submitted to the Department
of Finance and Administration, a certification must be obtained from the
Director of the Arkansas Department of Pollution Control and Ecology. The
certification statement must include:
(a) a statement that the taxpayer is engaged
in the business of reducing, reusing or recycling solid waste material for
commercial purposes, whether or not for profit;
(b) the equipment purchased is waste
reduction, reuse or recycling equipment; and
(c) the equipment is being used in the
collection, processing, separation or manufacturing of products containing at
least fifty percent (50%) recovered waste materials, of which ten percent (10%)
of the recovered waste materials is from post-consumer waste.
Any credit taken without the necessary certification will be
disallowed.
SECTION
5. AMOUNT OF CREDIT.
(a) The
amount of the credit allowed shall be equal to thirty percent (30%) of the cost
of waste reduction, reuse or recycling equipment including the cost of
installation. Costs not eligible for the credit include feasibility studies,
engineering costs of a building to house the equipment, machinery and equipment
used to service the waste reduction, reuse or recycling equipment and real
property of any kind.
(b) Any
taxpayer who receives the income tax credit on waste reduction, reuse or
recycling equipment under Act 748 of 1991 may not claim any other credit or
deduction based on the purchase of the equipment, including the Manufacturer's
Investment Credit or the Enterprise Zone Sales and Use Tax Refund.
SECTION 6. CLAIM OF CREDIT
Upon allowance of a credit the taxpayer will be issued a credit
certificate by the Revenue Division, Office of Tax Administration, Tax Credits
Section. The credit certificate is to be attached to the income tax return upon
which the credit is claimed. A form AR-1020 must also be attached to the
return. If a credit is carried over the AR-1020 will provide the necessary
documentation to claim the carryover credit for the subsequent years.
Information regarding the credits may be obtained from the Division of Revenue,
Tax Credits Section, Joel Ledbetter Building, 7th and Wolfe, Little Rock,
Arkansas 72201, (501) 682-7106.
SECTION
7. DISTRIBUTION OF CREDIT.
If the entity seeking the tax credit is:
(a) a proprietorship or partnership, the
amount of the credit determined for any taxable year shall be apportioned to
each proprietor or partner in proportion to the amount of income from the
entity which the proprietor or partner is required to include as gross
income.
(b) a subchapter S
corporation, the amount of credit determined for any taxable year shall be
apportioned among the persons who are shareholders of the corporation on the
last day of the taxable year based on each person's percentage of
ownership.
(c) an estate or trust -
the amount of the credit for any taxable year shall be apportioned between the
estate or trust and the beneficiaries on the basis of the income of the estate
or trust allocable to each.
SECTION
8. APPLICABILITY.
The provisions of this regulation shall apply to waste reduction, reuse
or recycling equipment purchases made after January 1, 1991.
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