Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
Rule 006.05.07-008 - Rule 2007-9: The Delta Geotourism Incentive Act of 2007(ACT 518 of 2007)
Universal Citation: AR Admin Rules 006.05.07-008
Current through Register Vol. 49, No. 2, February 2024
Pursuant to the authority granted by Ark. Code Ann. §§ 26-18-301 and Act 518 of 2007, the Director of the Arkansas Department of Finance and Administration, in consultation with the Arkansas Department of Parks and Tourism, promulgates the following rule for the purpose of facilitating implementation, administration, and enforcement of the income tax credit for geotourism development authorized by Act 518 of 2007.
Act 518 of 2007, "The Delta Geotourism Incentive Act of 2007," Ark. Code Ann. § __________ et seq., creates new financial incentives to promote economic development in "economically distressed areas" of the Lower Mississippi River Delta through geotourism. This incentive program provides a limited rural income tax credit to persons and entities that invest in geotourism-supporting businesses that attract and accommodate out of state visitors and that serve to preserve, perpetuate, interpret, and present the rich culture, history, and natural resources of the Lower Mississippi River Delta community.
A. DEFINITIONS
1. "Economically distressed
area" means a county-wide area in Arkansas in which the percentage of families
that earn income below poverty level exceeds twenty-three percent (23%), based
on year 2000 income levels as compiled by the Bureau of the Census, United
States Department of Commerce demographic profiles; The following Arkansas
counties qualify as "economically distressed areas:"
a. Chicot
b. Desha
c. Lee
d. Phillips
e. St. Francis
2. "Geotourism" means tourism that sustains
or enhances the geographical character of an area including without limitation,
its environment, heritage, aesthetics, culture, natural resources, and
well-being of its residents.
3.
"Geotourism attraction" means an environmental, aesthetic, cultural, or natural
point of interest in an area of natural phenomena or scenic beauty that
attracts tourists to experience and appreciate the environmental, aesthetic,
cultural, or natural point of interest including without limitation:
a. A geological monument;
b. A lake;
c. A mountain;
d. A park;
e. A river;
f. A species of animal abundant or unique to
a particular area;
g. A species of
bird abundant or unique to a particular area;
h. A species of insect abundant or unique to
a particular area;
i. A wetland or
aquatic resources area; and
j. An
historic site;
4.
a.
"Geotourism-supporting business" means a business necessary to support a geotourism attraction by constructing, expanding or remodeling a retail facility including without limitation, cultural or education centers, indoor or outdoor plays or music shows, recreational or entertainment facilities, sporting goods retail and rental establishments, guide services, transient lodging facilities including RV parks, arts and antique shops, campgrounds, bed and breakfasts, dining establishments and agri-tourism facilities including but not limited to pumpkin patches, crop mazes or other agricultural attractions.
b.
"Geotourism-supporting business" does not include:
(i) Facilities that are not open to the
general public; or
(ii) Facilities
owned by the State of Arkansas or a political subdivision of the
state.
5.
"Geotourist" means a person who travels to an area to enjoy the area's natural
habitats, heritage sites, scenic appeals, and local culture;
6. "Invest" means capital expenditure in real
or personal property used predominantly for geotourism;
7. "Lower Mississippi River Delta" means a
county in Arkansas or portion of a county in Arkansas whose land area includes
an alluvial plain created by the Mississippi River;
8. "Person or entity" means a sole
proprietorship, partnership, LLC, or corporation.
9. "RV Parks" means retail businesses engaged
in the service of furnishing temporary parking spaces for mobile, motorized
recreational vehicles or travel trailers to transient guests.
10. "Transient lodging facilities" means
retail businesses engaged in the business of furnishing rooms, suites,
condominiums, townhouses, rental houses, or other accommodations to transient
guests.
11. "Transient guests"
means those who rent accommodations other than their regular place of abode on
less than a month-to-month basis.
B. APPROVAL INTO PROGRAM
1. A person or entity seeking benefits under
this Act must apply to the Arkansas Department of Finance and Administration,
Revenue Division. ("DFA") Application must be made on the prescribed
Application For Delta Geotourism Incentives form approved by
DFA and included on page 5 below.
2. DFA will forward the application to the
Arkansas Department of Parks and Tourism who shall determine whether the
investment made by the person or entity qualifies for the income tax credit
based upon the following requirements:
a. The
investment must be in a minimum amount of twenty-five thousand dollars
($25,000).
b. The funds must be
invested in a "geotourism-supporting business" located in the Lower Mississippi
River Delta that meets the following criteria:
i. In an economically distressed area
(Chicot, Desha, Lee, Phillips, or St. Francis counties) or a county that
borders two (2) counties defined as economically distressed (Crittenden, Drew,
Arkansas, or Monroe counties);
ii.
In an unincorporated area or a city with a population of less than
sixteen-thousand (16,000) as determined by the U.S. Census Report of
2000;
iii. Within five (5) miles of
a National Scenic Byway; and
iv.
Within fifteen (15) miles of:
A. Public access
to a navigable river; or
B. An
Arkansas State Park; or
C. An
Arkansas State Game and Fish Commission Wildlife Management Area; or
D. A National Wildlife Refuge.
3. When
Parks and Tourism determines that a business qualifies as a
geotourism-supporting business, and meets all other criteria pursuant to the
Act, it shall provide written certification to DFA that the business qualifies
and that investments in the qualified business are eligible for the credit.
Parks and Tourism shall forward to DFA copies of the application, certification
and other pertinent documentation regarding the person or entity's
qualification into the program.
4.
If the entity requesting the credit is a "pass through entity" such as a
Subchapter S corporation or an LLC, the entity must provide Parks and Tourism
and DFA the names and addresses of all members and their respective percentage
ownership in the entity.
5. DFA and
Parks and Tourism may inspect facilities and audit records of a person or an
entity requesting or receiving an income tax credit under this act as necessary
to determine qualification or to verify a claim.
C. INCOME TAX CREDITS
1. To qualify for an income tax credit under
this act, a person or entity shall invest a minimum of twenty-five thousand
dollars ($25,000) in a qualified geotourism-supporting business.
2. A person or entity is eligible to receive
an income tax credit under this act equal to twenty-five percent (25%) of the
amount of a qualified investment for the year that the investment is made
provided that the geotourism-supporting business is currently operating as a
business. Any income tax credit resulting from a qualified investment made
during a year prior to the year the geotourism supporting business begins
operation may be carried forward and used to offset income tax liability to the
state of Arkansas in accordance with paragraph C.10 of this rule.
3. For any tax year, the maximum amount of
investment to be considered in determining the income tax credit under this act
is one hundred thousand dollars ($100,000).
4. In order to claim a credit, at the end of
each tax year, the approved geotourism-supporting business shall submit to DFA
on prescribed forms the amount invested by the approved geotourism-supporting
business. The amount invested must be substantiated by adequate documentary
proof. Examples of adequate proof include, but are not limited to invoices,
contracts, receipts, cancelled checks, bank statements, loan documents and
other documents generated in the ordinary course of business. DFA shall verify
that the investment is a "qualified" investment pursuant to the Act and upon
verification, shall issue the taxpayer an Income Tax Credit Memorandum based on
the investment. In addition to reviewing the documentary proof submitted by
taxpayer, DFA may exercise its duly authorized audit procedures, in order to
verify whether an investment is a qualified investment.
5. Separate Income Tax Credit Memorandums
will be issued for each tax year in which the taxpayer has made a qualified
investment.
6. In order for the
taxpayer to claim 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 taxable year shall not exceed
twenty-five thousand dollars ($25,000).
7. If the business is a subchapter S
corporation, the pass-through provisions of Ark. Code Ann. §
26-51-409,
as in effect for the taxable year the credit is earned, shall be
applicable.
8. 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. I f 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 section IRC 704(b), as in effect on January 1,
1995.
9. The tax credit provided
under this act may be claimed for investments made in geotourism supporting
businesses that are approved into the program during taxable years beginning
January 1, 2007 and continuing through tax year 2011, at which time the act
expires. So long as a geotourism-supporting business is qualified and approved
into the program by Parks and Tourism prior to December 31, 2011, an investment
in the business may be made after December 31, 2011 and the person making the
investment may be eligible for the income tax credit if all other eligibility
requirements for claiming the tax credit are met. The investment itself does
not have to be made prior to December 31, 2011.
10. If the geotourism-supporting business is
currently operating as a business, an unused income tax credit under this act
may be carried forward on an income tax return for five (5) years after the
year in which the income tax credit was first earned or until exhausted,
whichever event occurs first.
Executed this _____ day of ________________, 2007.
________________________________
Richard A. Weiss, Director
Arkansas Department of
Finance and Administration
___________________________________
Tim Leathers, Deputy Director/
Commissioner of Revenue
Arkansas Department of Finance and Administration
Arkansas Department of Finance and Administration
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