AEDC Proposes Railroad Maintenance Credit Emergency Rule and Amendments to Motion Picture and Digital Product Credit Rule

Note: The Dover Dixon Horne SALT practice has joined Wright Lindsey Jennings! We will migrate the Arkansas Tax & Incentives Update to the WLJ website soon.

The Arkansas Economic Development Commission, part of the Department of Commerce, has been diligently updating its rules to reflect credits and incentives legislation from the 2021 legislative session. Two rulemakings are underway for specific industry credits:

  • An emergency rule for the Railroad Modernization Act of 2021, which created a transferrable income tax credit for 50% of qualifying track maintenance costs on regional and short line (Class II and Class III) railroads.
  • A proposed rulemaking for the amendments to the Digital Product and Motion Picture Industry Development Act, which expanded the incentives in certain instances and also allowed transferrable tax credits.

Interested businesses and their advisers should review and may wish to comment on these proposals.

Railroad Maintenance Tax Credits

Act 967, the Railroad Modernization Act of 2021, established an income tax credit of 50% of railroad track maintenance expenditures for class II and class III railroads, capped at $5,000 times a railroad's total track mileage. The credit is nonrefundable but it is transferrable. The credit is effective for tax years beginning on or after January 1, 2021, and so the 2021 calendar year claims are potentially coming up. The proposed emergency rules, among other things, set out a process for eligible taxpayers to apply for credit certificates and also provide an optional preapproval procedure. The emergency rules are set for a hearing before the Arkansas Legislative Council Executive Subcommittee on January 12.

Digital Product and Motion Picture Credits

Arkansas continued its trend of expanding incentives for the film industry with Act 797 of 2021, which generally enhanced the incentives available for using veterans or Arkansas residents and which also allowed transferable tax credits as an incentive, as well as other changes. The proposed amendments to AEDC's existing rule generally implement these changes. The public comment for this period runs through February 5th, and there will be a public hearing on January 28th at 9:30AM. Written comments can be sent to AEDC.Film.Rules@ARkansasedc.com.

 


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