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HELPING PRESERVE THE ENVIRONMENT by "going green" is not the only benefit of the trendy business stance. Some companies can actually save on taxes by doing so.
Although legislative incentives for environmentally friendly practices are not new, Arkansas legislation isn't exactly on The New York Times' Bestsellers List, and therefore, may not be common knowledge.
The Arkansas Pollution Control & Ecology Commission's Regulation No. 16 provides an income tax credit for the purchase and installation of recycling equipment, according to Walter Wright, the environmental practice leader at Mitchell Williams Selig Gates & Woodyard PLLC.
The credit provides a refund of 30 percent of the cost of waste-reduction, reuse or recycling equipment, including the cost of installation by outside contractors, according to the regulation.
To qualify, half of the materials being processed by the equipment must be recoverable, the regulation says.
Businesses must submit an application for the tax credit no later than 90 days after the calendar year in which the equipment was purchased, final equipment expenditures are made or project startup occurs, whichever comes latest, according to the certification procedures of the regulation.
The tax credit under the regulation can be carried over for a maximum of three consecutive tax years following the tax year that the credit was certified.
For some companies, it may not be cost effective to purchase recycling equipment to get a 30 percent discount. However, for some companies, such as Davis Rubber Co. of Little Rock, recycling equipment is a necessary component of their production. And for them, a 30 percent off coupon is worthwhile.
Roger Davis, president of Davis Rubber, said the company's facility in Little Rock has about $2 million in equipment, every bit of which is eligible for the tax credit. Davis Rubber grinds discarded tires into mulch that is used to cushion playgrounds.
And Davis Rubber does use the credit, which can put hundreds of thousands of dollars back onto the company's bottom line.
The Arkansas Department of Environmental Quality also provides a loan program for businesses looking to go green.
Chris Hemann, chief of the public outreach and assistance division at the ADEQ, said the Small Business Revolving Loan Fund can offer small-business loans at an interest rate that's 80 percent of the prime interest rate.
A business can receive through the program no more than a total of $65,000 and no more than $45,000 per project category.
The loan categories are pollution control, pollution prevention and waste reduction.
The length of the loans is a maximum 10 years. For smaller loans, however, the ADEQ likes to have a shorter loan period.
Also, businesses must have no more than 100 employees to qualify for the program.
"Tight profit margins and/or reduced demand have focused many commercial and industrial facilities on ways to reduce costs," Wright said.
For information on the recycling tax credit, call (501) 682-0842. For information on the business loans, call (501) 682-0709.
By Jamie Walden
jwalden@abpg.com
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