Current through Register Vol. 49, No. 9, September, 2024
A. The gross
receipts or gross proceeds derived from the sale of pollution control machinery
and equipment are exempt from the tax if:
1.
The machinery and equipment is utilized, either directly or indirectly, by
manufacturing or processing plants or facilities, or cities or towns in
Arkansas to prevent or reduce air or water pollution or contamination which
might otherwise result from the operation of the plant or facility;
and,
2. The machinery and equipment
is required by Arkansas or federal law or regulations to be installed and
utilized to control pollution or contamination as evidenced by written
documentation from the Arkansas Department of Environmental Quality or the
United States Environmental Protection Agency.
B. Supplies and chemicals used by pollution
control machinery and equipment are taxable.
C. Replacement and repair parts for pollution
control machinery and equipment are exempt from tax if the machinery or
equipment to be repaired or refurbished was initially exempt under this
rule.
D. CHEMICALS.
1. The gross receipts or gross proceeds
derived from the sale of catalysts, chemicals, reagents or solutions which are
consumed or used by manufacturing or processing plants or facilities, or cities
or towns, in this state to prevent or reduce air or water pollution or
contamination which might otherwise result from the operation of the facility
are exempt from gross receipts tax.
2.
a.
A substance prevents or reduces air or water pollution if it
acts directly on the air or water to remove or alter an impurity in the air or
water.
Example: Chlorine used to kill bacteria in wastewater is
exempt.
b. Chemicals,
catalysts, reagents and solutions used to test the quality of the air or water
are exempt.
3.
Definitions.
a. "Catalyst" means a substance
that initiates or provokes a chemical reaction allowing such reaction to
proceed under milder conditions, such as lower temperatures or with less
resistance to reaction.
b.
"Chemical" means an element, combination of elements or compound obtained by a
chemical process.
c. "Reagent"
means any substance which by reason of its capacity for taking part in certain
reactions is used for various purposes, including detecting, examining, or
measuring other substances or in preparing materials. A reagent is also a
substance used to convert one substance into another by means of the reaction
which it causes. To be a reagent for purposes of this exemption, a substance
must be primarily used as a reagent.
d. "Solution" means a chemical in a liquid
form which contains a dissolved substance.
E. WASTEWATER TREATMENT PLANTS.
1. Machinery and equipment used in a city or
county wastewater treatment plant are exempt if the machinery and equipment is
used to remove contaminants from wastewater. The treatment process begins when
solids are first removed from the wastewater and ends when all solids and other
contaminants are removed from wastewater.
2. The water treatment process does not
include:
a. Collecting wastewater from
locations outside of the treatment plant and delivering wastewater to the
treatment plant; or
b. Disposing of
solids or other contaminants removed from wastewater.
3. The following items are examples of exempt
machinery and equipment provided that the machinery and equipment is used
during the water treatment process as described in GR-66(E)(1) above:
Examples: pipes, pumps, valves, screens, screen baskets,
gates, blowers, fans, skimmers, aerators, diffusers, equalization basins,
concrete flumes, conveyor belts, flow meters, grit separators, grit removal
equipment, back flow preventers, chlorination equipment, digester equipment,
vacuators, and air eductors.
4. The following items are examples of
taxable items: materials used in constructing improvements to real estate,
housing for machinery, handrails, ladders, paint, lighting equipment, pump
stations, lift stations, pipes and equipment utilized in sewage collection
outside of the treatment area, machinery and equipment which control the flow
of wastewater into the treatment facility, sludge de-watering equipment,
machinery and equipment used for measuring, controlling, or testing the
treatment process, sludge pumping equipment, and sludge application
system.
Ark. Code Ann. §§
26-52-402;
26-52-401(36)
