(a) The gross receipts or gross proceeds derived from the sale of the first five hundred kilowatt hours (500 kWh) of electricity per month and the total franchise taxes billed to each residential customer whose household income is no more than twelve thousand dollars ($12,000) per year are exempt from the Arkansas gross receipts tax levied by this chapter and all other state excise taxes that would otherwise be levied on the gross receipts or gross proceeds derived from the sale and the total franchise taxes.

(b) As used in this section:

(1) "Household income" means the combined income received by members of a household during a calendar year; and

(2)

(A) "Income" means gross income as defined in the Income Tax Act of 1929, § 26-51-101 et seq., less deductions allowed under § 26-51-423.

(B) "Income" includes:

(i) Alimony;

(ii) Support money;

(iii) Cash public assistance and relief;

(iv) The gross amount of any pension or annuity, including all monetary retirement benefits from whatever source derived, including without limitation railroad retirement benefits, all payments received under the Social Security Act, 42 U.S.C. 301 et seq., and veterans' disability pensions;

(v) All dividends and interest from whatever source derived not included in gross income;

(vi) Workers' compensation benefits; and

(vii) The gross amount of "loss of time insurance".

(C) "Income" does not include:

(i) Gifts from nongovernmental sources;

(ii) Surplus food;

(iii) In-kind relief supplied by a governmental agency; or

(iv) For a World War I veteran of the United States Armed Forces or the widow of a World War I veteran of the United States Armed Forces, federal or state retirement benefits, pension benefits, disability benefits, railroad retirement benefits, or Social Security benefits.

(c) The exemption in this section applies to sales by all electric utilities operating in this state, whether investor-owned utilities, electric cooperative corporations created or existing under the Electric Cooperative Corporation Act, § 23-18-301 et seq., or municipally owned electric utilities.

(d) On forms provided by the Director of the Department of Finance and Administration, a residential customer qualifying for the exemption in this section shall notify the electric utility providing service to the residential customer of the residential customer's intention to claim the exemption in this section.

(e)

(1) After a residential customer has qualified for the exemption in this section, an additional application is not required.

(2) When a residential customer who has qualified for the exemption in this section has household income exceeding the twelve-thousand-dollar limit, the residential customer is disqualified from the exemption in this section and shall notify the electric utility on forms provided by the director. The notice form shall be mailed to the electric utility on or before March 1 of the year following the year the household income exceeds twelve thousand dollars ($12,000).

(f)

(1) If a residential customer does not notify the electric utility as provided in subsection (e) of this section and continues to receive the exemption in this section after his or her household income exceeds twelve thousand dollars ($12,000), the residential customer is liable for the amount of the tax exemption received after March 1 of the year following the year the household income exceeds twelve thousand dollars ($12,000).

(2) The electric utility shall bill a residential customer for the amount of tax due as a result of the residential customer's disqualification under this section and remit the tax to the director.