Current through Register Vol. 49, No. 2, February 2024
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 cannot 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
1,1995.
(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.
