MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Ways and Means

By: Representative Williams

AN ACT TO REQUIRE THE EXCLUSION FROM THE AMOUNT OF CAPITAL EMPLOYED IN THIS STATE FOR THE PURPOSE OF CALCULATING THE CORPORATION FRANCHISE TAX, CERTAIN AMOUNTS INVESTED IN MANUFACTURING FACILITIES BY A CORPORATION THAT WILL RESULT IN AN INVESTMENT OF $300,000,000.00 OR THE CREATION OF 1500 JOBS AT SUCH FACILITY WITHIN FIVE YEARS AFTER THE PROJECT IS COMMENCED; TO LIMIT SUCH DEDUCTION TO A PERIOD OF 20 YEARS AFTER THE PROJECT COMMENCES; TO AMEND SECTIONS 27-13-9 AND 27-13-13, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; AND FOR RELATED PURPOSES. 

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

SECTION 1. There shall be excluded from the amount of capital employed in this state as determined in accordance with Sections 27-13-9 and 27-13-13, Mississippi Code of 1972, the amount invested in a new manufacturing facility in this state by the taxpayer, which amount shall be limited to the investment in all real and tangible personal property, equipment, facilities, structures, components and inventory on the date the project commences, and during the period for twenty (20) years thereafter, provided that the taxpayer has met the following criteria:

(a) The taxpayer has filed with the State Tax Commission a statement of intent to claim the deduction provided for in this section containing such information as the State Tax Commission may require; and

(b) During the period commencing with the beginning of the project and ending on the date five (5) years thereafter, the amount invested in a new manufacturing facility in this state by the taxpayer shall be at least Three Hundred Million Dollars ($300,000,000.00) or the number of new employees at the new manufacturing facility in this state shall be at least fifteen hundred (1500).

SECTION 2. Section 27-13-9, Mississippi Code of 1972, is amended as follows:

27-13-9. (1) The tax imposed, levied and assessed, under the provisions of this chapter, shall be calculated on the basis of the value of the capital employed in this state for the year preceding the date of filing the return, whether a calendar year, or fiscal year, except where otherwise provided in this chapter, measured by the combined issued and outstanding capital stock, paid-in capital, surplus and retained earnings; provided, that in computing capital, paid-in capital, surplus and retained earnings, there shall be included deferred taxes, deferred gains, deferred income, contingent liabilities and all true reserves, including all reserves other than for definite known fixed liabilities which do not enhance the value of assets; and amounts designated for the payment of dividends shall not be excluded from such calculations until such amounts are definitely and irrevocably placed to the credit of stockholders, subject to withdrawal on demand; provided, however, there shall not be included in the value of the capital stock any sums representing debts, notes, bonds and mortgages due and payable, except where notes or debts due are provided by an affiliated company as a substitute for stock or paid-in capital; nor depreciation reserves, bad debt reserves, nor reserves representing valuation accounts, nor redeemable preference shares issued by a railroad pursuant to Section 506 of the Railroad Revitalization and Regulatory Reform Act of 1976, and capital shall be reduced by the cost of treasury stock of the corporation purchased with earnings of the corporation. In the case of an association or other organization, except those exempted under Section 27-13-63, that does not have a capital structure like a corporation, the tax is based on that organization's accounts that are equivalent to the aforementioned corporate accounts, or any other capital employed in Mississippi. There shall not be any exclusion of capital by a corporation relating to the stock of another corporation except as otherwise provided in subsection (2). In no case shall the franchise tax so computed be less than Twenty-five Dollars ($25.00) for the period covering which the return is filed. In no case shall the determined capital in Mississippi be less than the assessed value of the real estate and tangible personal property in Mississippi for the year preceding the year in which the return is due.

(2) In the case of a holding corporation, the value of the capital used, invested or employed in this state shall exclude that portion of the book value of the holding corporation's investment in stock or securities of its subsidiary corporation determined under the following formula: (a) the ratio between (i) the holding corporation's investment in stock or securities of its subsidiary corporation, computed using the cost method of accounting pursuant to regulations promulgated by the commissioner, and (ii) the holding corporation's total assets shall be computed; (b) such ratio then shall be applied to the total capital stock, surplus, undivided profits and true reserves of the holding corporation in order to arrive at the amount of the exclusion.

(3) There shall be excluded from the value of the capital used, invested or employed in this state by a corporation, any amount authorized to be excluded by Section 1 of House Bill No.

SECTION 3. Section 27-13-13, Mississippi Code of 1972, is amended as follows:

27-13-13. (1) 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.

(2) (a) For the purpose of this section, for tax returns for tax years ending before January 1, 1999, 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.

(b) For the purpose of this section, for tax returns for tax years ending on or after January 1, 1999, the gross receipts of an organization that is required to use a formula method of apportionment in making income tax returns to this state shall be the same (both as to gross receipts from business carried on in Mississippi and gross receipts wherever located) as the gross receipts (or sales) used for the receipts or sales factor in the applicable income tax formula. However, gross receipts from business carried on in Mississippi, for the purposes of this section, shall also include any receipts from the taxpayer's business operations which are not apportioned but rather are directly allocated or assigned to this state. If the taxpayer is required to use a formula method of apportionment in making income tax returns which does not have a receipts or sales factor, then the receipts factor for the franchise tax formula shall be determined by regulation of the commission.

(3) There shall be excluded from the value of the capital used, invested or employed in this state by a corporation, any amount authorized to be excluded by Section 1 of House Bill No.

SECTION 4. Section 1 of this act shall be codified in Chapter 13 of Title 27, Mississippi Code of 1972.

SECTION 5. This act shall take effect and be in force from and after July 1, 1998.