MISSISSIPPI LEGISLATURE

1997 Regular Session

To: Finance

By: Senator(s) Robertson

AN ACT TO AMEND SECTION 27-13-13, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT CERTAIN MULTISTATE CORPORATIONS MAY DETERMINE GROSS RECEIPTS BY DIRECT OR SEPARATE ACCOUNTING FOR THE PURPOSE OF COMPUTING THE CORPORATE FRANCHISE TAX; TO AMEND SECTIONS 27-65-19 AND 27-65-107, MISSISSIPPI CODE OF 1972, TO PHASE OUT OVER A THREE-YEAR PERIOD, THE SALES TAX ON GENERATING FUELS SOLD TO OR USED BY AN ELECTRIC UTILITY; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 27-13-13, Mississippi Code of 1972, is amended as follows:

27-13-13. In the case of organizations doing business both within and without Mississippi, the value of the capital employed in this state shall be determined by first computing the ratio between (1) the real and tangible personal property owned in Mississippi and gross receipts from business carried on in Mississippi, and (2) the total real and tangible personal property owned and gross receipts wherever located and from wherever received. Said ratio then shall be applied to the total capital stock, surplus, undivided profits and true reserves and the result of that application shall be the capital employed in this state. Provided, however, that the amount of the determined capital in Mississippi shall in no case be less than the assessed value of the Mississippi property of the organization for the year preceding the year in which the return is due.

For the purpose of this section, an organization which uses a formula method of apportionment in making income tax returns to this state shall determine its gross receipts from business carried on in Mississippi by applying to total unitary receipts the ratio achieved, or which would be achieved, by such formula and adding to the result of such application any nonunitary Mississippi receipts, except that an organization which can determine its gross receipts from business carried on in Mississippi by direct or separate accounting may use, in its discretion, direct or separate accounting. For purposes of using direct or separate accounting, gross receipts shall be assigned to Mississippi in accordance with the provisions of Section 27-7-23(c)(3). An organization that cannot determine all of its gross receipts from business carried on in Mississippi by direct or separate accounting shall apply to its unitary gross receipts the apportionment formula used by such organization to determine its net income and shall add the receipts apportioned to Mississippi by such formula to any nonunitary Mississippi receipts to determine total gross receipts from business carried on in Mississippi. For purposes of this section, "unitary gross receipts" shall mean that part of the gross receipts of an organization derived from multistate activities that cannot be allocated to any state by use of direct or separate accounting.

SECTION 2. Section 27-65-19, Mississippi Code of 1972, is amended as follows:

27-65-19. (1)(a) Except as otherwise provided in this subsection, upon every person selling to consumers, electricity, current, power, potable water, steam, coal, natural gas, liquefied petroleum gas or other fuel, there is hereby levied, assessed and shall be collected a tax equal to seven percent (7%) of the gross income of the business. Provided, gross income from sales to consumers of electricity, current, power, natural gas, liquefied petroleum gas or other fuel for residential heating, lighting or other residential noncommercial or nonagricultural use, and sales of potable water for residential, noncommercial or nonagricultural use shall be excluded from taxable gross income of the business. Provided further, upon every such seller using electricity, current, power, potable water, steam, coal, natural gas, liquefied petroleum gas or other fuel for nonindustrial purposes, there is hereby levied, assessed and shall be collected a tax equal to seven percent (7%) of the cost or value of the product or service used.

(b) * * * There is hereby levied, assessed and shall be collected a tax equal to one and one-half percent (1-1/2%) of the gross income of the business when the electricity, current, power, steam, coal, natural gas, liquefied petroleum gas or other fuel is sold to or used by a manufacturer, custom processor or public service company for industrial purposes, which shall include that used to generate electricity, to operate an electrical distribution or transmission system, to operate pipeline compressor or pumping stations or to operate railroad locomotives; provided, however, that:

(i) From and after July 1, 1998, through June 30, 1999, there is hereby levied, assessed and shall be collected a tax equal to one and one-fourth percent (1-1/4%) of the gross income of the business when the electricity, current, power, steam, coal, natural gas, liquefied petroleum gas, or other fuel is sold to or used by any electric utility for the generation of electricity;

(ii) From and after July 1, 1999, through June 30, 2000, there is hereby levied, assessed and shall be collected a tax equal to one percent (1%) of the gross income of the business when the electricity, current, power, steam, coal, natural gas, liquefied petroleum gas, or other fuel is sold to or used by an electric utility for the generation of electricity;

(iii) From and after July 1, 2000, through June 30, 2001, there is hereby levied, assessed and shall be collected a tax equal to three-fourths of one percent (3/4 of 1%) of the gross income of the business when the electricity, current, power, steam, coal, natural gas, liquefied petroleum gas, or other fuel is sold to or used by an electric utility for the generation of electricity;

(iv) From and after July 1, 2001, through June 30, 2002, there is hereby levied, assessed and shall be collected a tax equal to one-half of one percent (1/2 of 1%) of the gross income of the business when the electricity, current, power, steam, coal, natural gas, liquefied petroleum gas, or other fuel is sold to or used by an electric utility for the generation of electricity;

(v) From and after July 1, 2002, through June 30, 2003, there is hereby levied, assessed and shall be collected a tax equal to one-fourth of one percent (1/4 of 1%) of the gross income of the business when the electricity, current, power, steam, coal, natural gas, liquefied petroleum gas, or other fuel is sold to or used by an electric utility for the generation of electricity; and

(vi) From and after July 1, 2003, gross income from sales to or use by an electric utility of electricity, current, power, steam, coal, natural gas, liquified petroleum gas or other fuel for the generation of electricity.

(c) The one and one-half percent (1-1/2%) industrial rate provided for in this subsection shall also apply when the electricity, current, power, steam, coal, natural gas, liquefied petroleum gas or other fuel is sold to a producer or processor for use directly in the production of poultry or poultry products, the production of livestock and livestock products, the production of plants or food by commercial horticulturists, the processing of milk and milk products, the processing of poultry and livestock feed, and the irrigation of farm crops.

(d) The one and one-half percent (1-1/2%) rate provided for in this subsection shall not apply to sales of fuel for automobiles, trucks, truck-tractors, buses, farm tractors or airplanes.

(e) Upon every person operating a telegraph or telephone business for the transmission of messages or conversations between points within this state, there is hereby levied, assessed and shall be collected, a tax equal to seven percent (7%) of the gross income of such business, with no deduction or allowance for any part of an intrastate rate charge because of routing across a state line.

(2) Persons making sales to consumers of electricity, current, power, natural gas, liquefied petroleum gas or other fuel for residential heating, lighting or other residential noncommercial or nonagricultural use or sales of potable water for residential, noncommercial or nonagricultural use shall indicate on each statement rendered to customers that such charges are exempt from sales taxes.

(3) There is hereby levied, assessed and shall be paid on transportation charges on shipments moving between points within this state when paid directly by the consumer, a tax equal to the rate applicable to the sale of the property being transported. Such tax shall be reported and paid directly to the State Tax Commission by the consumer.

SECTION 3. Section 27-65-107, Mississippi Code of 1972, is amended as follows:

27-65-107. The exemptions from the provisions of this chapter which relate to utilities or which are more properly classified as utility exemptions than any other exemption classification of this chapter shall be confined to those persons or property exempted by this section or by provisions of the Constitutions of the United States or the State of Mississippi. No utility exemption as now provided by any other section shall be valid as against the tax herein levied. Any subsequent utility exemption from the tax levied hereunder shall be provided by amendment to this section.

No exemption provided in this section shall apply to taxes levied by Section 27-65-15 or 27-65-21, Mississippi Code of 1972.

The tax levied by this chapter shall not apply to the following:

(a) Sales and rentals of locomotives, rail rolling stock and materials for their repair, locomotive water, when made to a railroad whose rates are fixed by the Interstate Commerce Commission or the Mississippi Public Service Commission.

(b) Rentals of manufacturing machinery to a manufacturer or custom processor where such manufacturer or custom processor is engaged in, and such machinery is used in, the manufacture of containers made from timber or wood for sale. The tax, likewise, shall not apply to replacement or repair parts of such machinery used in such manufacture.

(c) Sales of tangible personal property and services to nonprofit water associations or corporations in which no part of the net earnings inures to the benefit of any private shareholder, group or individual. Only sales of property or services which are ordinary and necessary to the operation of such organizations are exempt from tax.

(d) * * * From and after July 1, 2003, sales to or use by an electric utility of electricity, current, power, steam, coal, natural gas, liquefied petroleum gas or other fuel for the generation of electricity.

SECTION 4. Nothing in Sections 2 and 3 of this act shall affect or defeat any claim, assessment, appeal, suit, right or cause of action for taxes due or accrued under the sales tax laws amended by this act prior to the date on which such amendments become effective whether such assessments, appeals, suits, claims, or actions have been begun before the date on which such amendments become effective or begun thereafter, and the provisions of sales tax laws are expressly continued in full force, effect and operation for the purposes of the assessment, collection and enrollment of liens for any taxes due or accrued and the execution of any warrant under such laws prior to the date on which such amendments become effective, and for the imposition of any penalties, forfeitures or claims for failure to comply with such laws.

SECTION 5. This act shall take effect and be in force from and after July 1, 1997.