15-4-2705. Job-creation tax credit.

15-4-2705. Job-creation tax credit. (a) There is established a job-creation tax credit to encourage: (1) The creation of new jobs; and (2) Business growth and expansion. (b) An application for the income tax credit under this section shall be submitted to the Arkansas Economic Development Commission. (c) To receive this credit, a qualified business shall meet minimum annual payroll thresholds for new full-time permanent employees for the county tier in which the project is located, as follows: (1) For tier 1 counties, the annual payroll threshold is at least one hundred twenty-five thousand dollars ($125,000); (2) For tier 2 counties, the annual payroll threshold is at least one hundred thousand dollars ($100,000); (3) For tier 3 counties, the annual payroll threshold is at least seventy-five thousand dollars ($75,000); and (4) For tier 4 counties, the annual payroll threshold is at least fifty thousand dollars ($50,000). (d)(1) The credit earned under this section is a percentage of the payroll of the new full-time permanent employees hired following the date of the approved financial incentive agreement. (2) The percentage shall be determined by the county tier in which the project is located, as follows: (A) For tier 1 counties, the credit is one percent (1%) of the payroll for the new full-time permanent employees of the business; (B) For tier 2 counties, the credit is two percent (2%) of the payroll for the new full-time permanent employees of the business; (C) For tier 3 counties, the credit is three percent (3%) of the payroll for the new full-time permanent employees of the business; and (D) For tier 4 counties, the credit is four percent (4%) of the payroll for the new full-time permanent employees of the business. (3) To qualify for a credit under this subsection, the average hourly wage paid to employees whose payroll is subject to incentives under this subchapter shall be at least equal to the greater of the lowest county average hourly wage as calculated by the commission based on the most recent calendar year data published by the Division of Workforce Services, or twelve dollars and fifty cents ($12.50). (4) A qualified business shall receive an additional tax credit of one percent (1%) of the payroll of new full-time permanent employees if the average hourly wage paid to employees subject to incentives under this subchapter exceeds one hundred twenty-five percent (125%) of the lesser of the county or state average hourly wage for the county in which the qualified business locates or expands. (e) The term of the financial incentive agreement shall be for a period of five (5) years, beginning on the date of the approved financial incentive agreement. (f)(1) After receiving an approved financial incentive agreement from the commission, a qualified business shall certify to the Department of Finance and Administration the payroll of the new full-time permanent employees annually at the end of each tax year during the term of the financial incentive agreement. (2) Upon verification of the reported payroll amounts, the department shall authorize the appropriate income tax credit. (g)(1) The tax credits earned under this section may offset up to fifty percent (50%) of the business's tax liability annually. (2) Any unused tax credits may be carried forward for up to nine (9) years after the year in which the credit was first earned or until exhausted, whichever occurs first. (h)(1) If a qualified business fails to meet the payroll threshold within two (2) years after the date of the approved financial incentive agreement or within the time period established by an extension approved by the Secretary of the Department of Finance and Administration and the Director of the Arkansas Economic Development Commission, the qualified business is liable for repayment of all incentives previously received under § 15-4-2706(d) that were conditioned on an approved financial incentive agreement under this section for which the payroll threshold has not been met. (2) If a qualified business fails to reach the payroll threshold of this section in a timely manner, the department shall have two (2) years to collect incentives previously received by the qualified business or file a lawsuit to enforce the repayment provisions.