172.00.97 Ark. Code R. 004

Current through Register Vol. 49, No. 9, September, 2024

Rule 172.00.97-004 - Rules and Regulations Associated with Employer Income Tax Credits for Youth Apprecenticeships/Work - Based Learning Programs

1.00 REGULATORY AUTHORITY

1.01 These regulations shall be known as the rules and regulations pertaining to tax credits for youth apprenticeship/work-based learning programs that are not registered with the Bureau of Apprenticeship and Training.

1.02 Sections 2.00 through 5.00 of these regulations are promulgated pursuant to the State Board of Workforce Education and Career Opportunities' authority under Arkansas Code Annotated 6-51-213 and Section 1 of Act 1168 of 1997 to set forth the criteria by which the Department of Workforce Education may qualify/certify eligible programs.

1.03 Sections 6.00 through 9.00 are promulgated by the Department of Finance and Administration pursuant to Section 6 of Act 1168 of 1997 in order to carry out the purposes of this act.

2.00 PURPOSE

2.01 It is the purpose of these regulations to establish the rules and criteria for approving programs/occupations that meet the intent of Act 1168 of 1997 and to set forth the procedure that employers must follow to be eligible for the tax credit. Only those youth apprenticeship/work-based learning programs not in occupations that are covered by Title 29, Subtitle (a), Part 29 of the Code of Federal Regulations shall be included in these regulations. In addition, only those youth apprenticeship/work-based learning programs desiring to be approved to allow participating taxpayers/employers to be eligible for the income tax credit shall be subject to the rules and regulations.

3.00 DEFINITIONS

3.01 "Eligible employer" means a taxpayer that employs a student in an apprenticeship/work-based learning program which meets the standards of program design for nationally recognized curriculum and/or business and industry or trade association standards; which is not in an occupation eligible for registration as provided in Title 29, Subtitle (a), Part 29 of the Code of Federal Regulations, as in effect on January 1, 1995; and which has been approved by the Arkansas Department of Workforce Education.

3.02 "Structured plan for student learning" means a written document developed by the instructor and workplace mentor that outlines the individual student's learning in the workplace with progressively higher levels of work experience accompanied by training and mentoring along with wage progression; identifies work placements by the employer that engage the student in all aspects of the industry through job rotations and in structured learning opportunities that meet program/career learning objectives; and clarifies the legal rights, responsibilities, and liabilities of the partners. This plan must be signed by the employer, instructor, and student before the student begins the apprentice position with the employer.

3.03 "Youth apprentice" means an individual between the ages of sixteen (16) and twenty-one (21) who is enrolled in a public or private secondary or postsecondary school.

4.00 APPROVAL OF APPRENTICESHIP/WORK-BASED LEARNING PROGRAMS

4.01 Educational institutions requesting a youth apprenticeship/work-based learning program to become approved under these rules and regulations must submit a written plan to the ADWE that includes the following information/documentation. Such plan shall be submitted not less than 60 days prior to the requested approval date. EXCEPTION: For institutions requesting approval for programs during the first three months of 1998, the Department shall work to ensure that those requests are approved as soon as possible without regard to the 60-day rule.

4.01.1 Assurance that the participating students will be enrolled in the appropriate related career major with a work-based learning component.

4.01.2 Documentation that the standards of the program design are nationally recognized by business and industry and/or trade associations and that the program has support by appropriate business and industry and/or trade associations in this state.

4.01.3 Description and sample of the written structured plan for the students' learning in the workplace.

4.01.4 The program and student progress evaluation process.

4.01.5 Assurance that participating students will work a minimum of 270 hours per semester (or 540 hours per school year distributed appropriately through out the year).

4.02 The appropriate program manager of the ADWE shall review the written plan/documentation and provide technical assistance if necessary.

4.03 Final approval of each tax credit eligible program shall be by the Associate Director for Instructional Programs.

5.00 APPROVAL/CERTIFICATION OF PARTICIPATING STUDENTS INTO AN APPROVED PROGRAM

5.01 For each new participating student, the following information/documentation must be submitted to the ADWE at least 30 days prior to the date that the student begins work in an apprentice position for which the eligible employer may claim a tax credit. EXCEPTION: For institutions requesting approval for participating students during the first three months of 1998, the Department shall work to ensure that those requests are approved as soon as possible without regard to the 30-day rule.

5.01.1 A copy of each participating student's four- to six-year career action plan (at least two years of secondary school preceding graduation and one or two years of postsecondary education) in the appropriate related career major with a work-based learning component and that is signed by the student, parent, and teacher.

5.01.2 A signed copy of the structured plan for student learning.

5.01.3 A Status of Apprentice Form for each student.

5.02 The instructor shall submit an Apprentice Status Form in the event an apprentice changes employers; completes or withdraws from the apprenticeship program; or for any other reason, is no longer participating in the program.

6.00 INCOME TAX CREDIT

6.01 At the end of each tax year, the eligible employer shall submit the following documentation to the ADWE:

6.01.1 The prescribed form (ADWE-YAP) which shall be sent by the Department of Workforce Education to all approved programs for distribution to eligible employers. Such form shall require information that includes the apprentice's wages and the period of time worked;

6.01.2 A copy of the W-2 for each youth apprentice for which the tax credit is claimed; and

6.01.3 A detailed schedule by pay period of wages.

6.02 Wages paid prior to approval of the program or after the end of the student's participation in the approved program shall not qualify for credit. Also, wages paid to employees after they are disqualified pursuant to the terms of the approved apprenticeship program shall not qualify for the credit.

6.03 An eligible taxpayer who trains a youth apprentice shall be entitled to the tax credit even though the apprentice receives his or her wages for training from a 501(c)(3) corporation.

6.04 The appropriate program manager and the Associate Director for Instructional Programs shall certify to the Department of Finance and Administration that the eligible taxpayer has met all the requirements and qualifications for the tax credit. The certification shall include the total amount of wages paid to each youth apprentice employed by the taxpayer during the taxable year in which the taxpayer is claiming the credit.

7.00 AMOUNT OF TAX CREDIT

7.01 The taxpayer shall be allowed a credit equal to ten percent (10%) of the certified wages earned by a youth apprentice or two thousand dollars ($2,000), whichever is less.

7.02 The Department of Finance and Administration shall issue the taxpayer an Income Tax Credit Memorandum based on the certified wages.

7.03 Separate credit memos will be issued for each tax year in which the taxpayer has paid certified wages, but in not event will more than a cumulative total of $2,000 be allowed per youth apprentice.

8.00 USE OF CREDIT

8.01 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.

8.02 The amount of credit that may be used by a taxpayer for any taxable year shall not exceed the amount of individual or corporate income tax otherwise due.

8.03 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 taxable years.

8.04 If the Business is an S corporation, the pass-through provisions of Arkansas Code Annotated § 26-51-409, as in effect for the taxable year the credit is earned, shall be applicable.

8.05 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 section 704(B), as in effect on January 1, 1995.

9.00 EFFECTIVE DATE

9.01 The tax credit provided under this act shall apply to taxable years beginning January 1, 1998, and all taxable years thereafter.

172.00.97 Ark. Code R. 004

12/19/1997