HB1397
To Exempt Payments Received From The Restaurant Revitalization Fund From Gross Income For Purposes Of Computing Income Tax.
Last Action (May 1, 2023): Died in House Committee at Sine Die Adjournment
Sponsors
AI-Generated Summary
House Bill 1397 seeks to amend the Arkansas Income Tax Act of 1929 to exclude payments received from the federal Restaurant Revitalization Fund (RRF) from gross income for state income tax purposes. By treating these federal grants as exempt from state taxation, the bill effectively provides a tax break to businesses that received such funding. The bill applies retroactively to tax years beginning on or after January 1, 2022. Additionally, it grants the Department of Finance and Administration the authority to waive information return requirements related to these specific payments. The primary goal of the legislation is to ensure that Arkansas tax law aligns with federal tax treatment, preventing the state from taxing funds intended for pandemic-related business recovery.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are restaurant and food service business owners in Arkansas who received grants through the federal Restaurant Revitalization Fund. These businesses benefit by not having to pay state income taxes on the relief funds they received, allowing them to retain more of that capital for operational expenses and financial recovery.
Who Might Suffer?
The primary entity negatively impacted is the State of Arkansas, which will experience a reduction in total tax revenue due to the exclusion of these payments from the state's gross income tax base. This represents a decrease in available funds for the state budget.
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