Wetlands & Riparian Zone Tax Credit Program
Wetlands and riparian zones provide significant benefits to Arkansans, including flood control, water quality enhancement, fish and wildlife habitat, recreational opportunities, and groundwater recharge. Arkansas Code Annotated §26-51-1501 et seq, the "Arkansas Wetland and Riparian Zone Creation, Restoration, and Conservation Tax Credits Act," allows a state income tax credit to be taken by taxpayers who engage in the development, restoration, or conservation of wetland and riparian zones through projects approved by the Private Lands Restoration Committee. The program promotes an increase in biological and ecological integrity through voluntary restoration or conservation of Arkansas’ important environmental landscapes.
What kind of projects & activities qualify for the tax credit program?
Projects that restore and improve riparian zones, create wetlands, or conserve riparian habitat are generally determined to be eligible for the program by the Private Lands Restoration Committee. Project applications must be approved by the Private Lands Restoration Committee before project activities occur in order to qualify for the tax credit program. Some project activities that qualify for tax credits include:
- procurement of professional services for site development & project maintenance,
- preparation of site,
- establishment of permanent vegetation,
- stabilization of stream banks and control of erosion,
- construction of berms, and
- installation of water control structures.
Specific criteria for eligibility are included in Title XIII rules governing this program. The tax credit cannot exceed actual “out-of-pocket” expenses.
Are there any restrictions on the kinds of projects eligible for the program?
Any portion of a project that is a mitigation activity required under state or federal law is not eligible for a tax credit through this program. Taxpayers claiming a tax credit in this program may not claim a credit under the Water Resources Conservation Development Incentives Act of 1985 or similar act for costs related to the same project. The tax credit is only allowed for actual out-of-pocket taxpayer costs.
Who determines which projects are eligible for this program?
The Private Lands Restoration Committee is responsible for approving all projects that qualify for tax credits under this program. The Private Lands Restoration Committee consists of designees from the Arkansas Forestry Commission, Arkansas Department of Finance & Administration, Department of Arkansas Heritage, Arkansas Department of Environmental Quality, Arkansas Game & Fish Commission, and two public members appointed by the Arkansas Natural Resources Commission.
Who is eligible to receive state tax credits in this program?
Any taxpayer, whether an individual, partnership, limited liability company, S Corporation or Corporation, whose project has been certified and approved by the Private Lands Restoration Committee is eligible for a state tax credit under this program.
What is the maximum amount of tax credit I can receive?
The total amount of tax credit that can be claimed is $50,000 per project, not to exceed $5,000 in any one tax year for up to a maximum of ten years. If less than $50,000, the maximum tax credit allowed is equal to the total cost of the approved project. Tax credit are for actual “out-of-pocket” expenses paid to complete the project.
How do I participate in this program and receive a tax credit?
To participate in the tax credit program, you must first submit a tax credit application form and an administrative fee (three percent of the estimated total project cost) to the Arkansas Natural Resources Commission for processing. Specific instructions and information regarding the application form and administrative fee can be found in Title XIII rules governing the program. You may also contact agency staff if you have questions regarding the application process.
What happens after I submit the project application form and administrative fee?
Once the completed application form and administrative fee are received, the Private Lands Restoration Committee will review the scope of the project and information contained in the application. An agency staff member will schedule a preconstruction project site visit which will provide the basis for project approval and eligibility in the program. After the preconstruction site visit is completed and project costs are determined eligible, you will receive a Certificate of Tax Credit Approval and permission to proceed with project implementation.
How long do I have to complete my project after it’s been approved for the program?
Projects must be completed within three years of the date on the Certificate of Tax Credit Approval you receive from the Arkansas Natural Resources Commission. This certificate signifies project approval and permission to proceed with project implementation.
What happens after I complete my project?
After the project is completed, you must contact the Arkansas Natural Resources Commission to schedule a final inspection. This inspection will verify the project has been constructed as originally approved by the Private Lands Restoration Committee. Any final project modification or improvement needed to comply with the approved specifications will occur before the Certificate of Project Completion is issued. You must also file this Certificate of Project Completion with the first tax return filed after receiving the certificate regardless of whether you do or do not claim a tax credit that year. In addition, you must submit receipts (your “out-of-pocket” expenses) for all work completed on the project.
How long do I have to maintain my project after it’s completed?
Projects must be maintained for a minimum of ten years from the date on the Certificate of Project Completion issued by the Arkansas Natural Resources Commission. This certificate is issued after the final inspection is conducted and the project is verified to comply with specifications approved by the Private Lands Restoration Committee.
When can I first take the tax credit?
A tax credit may be taken the same year the Certificate of Tax Credit Approval is received from the Arkansas Natural Resources Commission. If not taken the same year the certificate is received, the Certificate of Tax Credit Approval must be filed with the income tax return in the first year the tax credit is claimed through this program.
I would like an application form and the Title XIII rules governing the tax credit program?
Click on the links below to download your tax credit application form, Title XIII Rules governing this program, and examples of tax credit certificates.
For more information contact:
Ken Brazil P.E., Engineer Supervisor
Arkansas Department of Agriculture
Natural Resources Division
101 East Capitol Avenue, Suite 350
Little Rock, AR 72201
Phone: (501) 951-3830 Fax: (501) 682-3991