MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Finance

By: Senator(s) Horhn

AN ACT TO GRANT A TAX CREDIT TO CERTAIN BUSINESSES THAT ENGAGE IN OR CONTRIBUTE TO NEIGHBORHOOD ORGANIZATIONS WHICH ENGAGE IN THE ACTIVITY OF PROVIDING CERTAIN SERVICES IN IMPOVERISHED AREAS; TO PROVIDE THE MAXIMUM DOLLAR AMOUNT OF TAX CREDIT THAT MAY BE GRANTED IN ANY ONE FISCAL YEAR; TO PROVIDE THE AMOUNT OF THE TAX CREDIT THAT MAY BE CLAIMED BY ANY BUSINESS; TO AMEND SECTION 57-73-21, MISSISSIPPI CODE OF 1972, TO INCREASE THE AMOUNT OF THE JOB TAX CREDIT; AND FOR RELATED PURPOSES. 

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

SECTION 1. (1) As used in this section:

(a) "Community services" means any type of counseling and advice, emergency assistance or medical care furnished to individuals or groups in an impoverished area.

(b) "Impoverished area" means any area in Mississippi which is certified as such by the Department of Economic and Community Development and the certification is approved by the Governor. Such certification shall be made on the basis of federal census studies and current indices of social and economic conditions.

(c) "Neighborhood organization" means any organization performing community services, offering neighborhood assistance, or providing job training, education, business development assistance, or crime prevention in an impoverished area and holding a ruling from the Internal Revenue Service of the United States Department of the Treasury that the organization is exempt from income taxation under the provisions of the Internal Revenue Code.

(d) "Neighborhood assistance" means furnishing financial assistance, labor, material and technical advice to aid in the physical improvement of any part or all of an impoverished area.

(e) "Business" means any corporation authorized to do business in the State of Mississippi and subject to state corporate income tax.

(f) "Job training" means any type of instruction to an individual who resides in an impoverished area that enables him to acquire vocational skills so that he can become employable or be able to seek a higher grade of employment.

(g) "Education" means any type of scholastic instruction or scholarship assistance to an individual who resides in an impoverished area that enables him to prepare himself for better life opportunities.

(h) "Crime prevention" means any activity which aids in the reduction of crime in an impoverished area.

(i) "Business development assistance" means any technical and financial assistance provided to companies that provide jobs to residents of an impoverished area.

(2) It is hereby declared to be public policy of the State of Mississippi to encourage investment by businesses in offering neighborhood assistance and providing job training, education, business development assistance, crime prevention, and community services and to encourage contributions by businesses to neighborhood organizations which offer and provide such assistance and services.

(3) Any business which engages, or contributes to a neighborhood organization which engages, in the activities of providing neighborhood assistance, job training or education for individuals, community services, business development assistance, or crime prevention in an impoverished area shall receive a tax credit as provided in this section if the Department of Economic and Community Development annually approves the proposal of such business. The proposal shall set forth the program to be conducted, the impoverished area selected, the estimated amount to be invested in the program and the plans for implementing the program. The Department of Economic and Community Development is hereby authorized to promulgate rules and regulations for the approval or disapproval of such proposals by businesses. The total amount of tax credit granted for programs approved under this section for any fiscal year shall not exceed Three Million Dollars ($3,000,000.00).

(4) For any business there shall be allowed against the taxes imposed by this chapter, a credit in an amount equal to fifty percent (50%) of the total amount invested during the taxable year by the business in programs approved pursuant to this section. Such credit shall not exceed Two Hundred Thousand Dollars ($200,000.00) per business. Any unused portion of the credit may be carried forward for the next five (5) succeeding years.

(5) The decision of the Department of Economic and Community Development to approve or disapprove a proposal pursuant to this section shall be in writing, and if it approves the proposal, it shall state the maximum credit allowable to the business. A copy of the decision of the Department of Economic and Community Development shall be transmitted to the State Tax Commission and to the Governor.

SECTION 2. Section 57-73-21, Mississippi Code of 1972, is amended as follows:

57-73-21. (1) Annually by December 31, using the most current data available from the University Research Center, Mississippi State Employment Security Commission and the United States Department of Commerce, the State Tax Commission shall rank and designate the state's counties as provided in this section. The twenty-eight (28) counties in this state having a combination of the highest unemployment rate and lowest per capita income for the most recent thirty-six-month period, with equal weight being given to each category, are designated less developed areas. The twenty-seven (27) counties in the state with a combination of the next highest unemployment rate and next lowest per capita income for the most recent thirty-six-month period, with equal weight being given to each category, are designated moderately developed areas. The twenty-seven (27) counties in the state with a combination of the lowest unemployment rate and the highest per capita income for the most recent thirty-six-month period, with equal weight being given to each category, are designated developed areas. Counties designated by the tax commission qualify for the appropriate tax credit for jobs as provided in subsections (2), (3) and (4) of this section. The designation by the tax commission is effective for the tax years of permanent business enterprises which begin after the date of designation. For companies which plan an expansion in their labor forces, the tax commission shall prescribe certification procedures to ensure that the companies can claim credits in future years without regard to whether or not a particular county is removed from the list of less developed or moderately developed areas.

(2) Permanent business enterprises primarily engaged in manufacturing, processing, warehousing, distribution, wholesaling and research and development, or permanent business enterprises designated by rule and regulation of the Department of Economic and Community Development as air transportation and maintenance facilities, final destination or resort hotels having a minimum of one hundred fifty (150) guest rooms, recreational facilities that impact tourism, movie industry studios, or telecommunications enterprises, in counties designated by the tax commission as less developed areas are allowed a job tax credit for taxes imposed by Section 27-7-5 equal to Two Thousand Five Hundred Dollars ($2,500.00) annually for each net new full-time employee job for five (5) years beginning with years two (2) through six (6) after the creation of the job. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees subject to the Mississippi income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those permanent businesses that increase employment by ten (10) or more in a less developed area are eligible for the credit. Credit is not allowed during any of the five (5) years if the net employment increase falls below ten (10). The tax commission shall adjust the credit allowed each year for the net new employment fluctuations above the minimum level of ten (10).

(3) Permanent business enterprises primarily engaged in manufacturing, processing, warehousing, distribution, wholesaling and research and development, or permanent business enterprises designated by rule and regulation of the Department of Economic and Community Development as air transportation and maintenance facilities, final destination or resort hotels having a minimum of one hundred fifty (150) guest rooms, recreational facilities that impact tourism, movie industry studios, or telecommunications enterprises, in counties that have been designated by the tax commission as moderately developed areas are allowed a job tax credit for taxes imposed by Section 27-7-5 equal to Two Thousand Five Hundred Dollars ($2,500.00) annually for each net new full-time employee job for five (5) years beginning with years two (2) through six (6) after the creation of the job. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees subject to Mississippi income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those permanent businesses that increase employment by fifteen (15) or more in moderately developed areas * * * are eligible for the credit. The credit is not allowed during any of the five (5) years if the net employment increase falls below fifteen (15). The tax commission shall adjust the credit allowed each year for the net new employment fluctuations above the minimum level of fifteen (15).

(4) Permanent business enterprises primarily engaged in manufacturing, processing, warehousing, distribution, wholesaling and research and development, or permanent business enterprises designated by rule and regulation of the Department of Economic and Community Development as air transportation and maintenance facilities, final destination or resort hotels having a minimum of one hundred fifty (150) guest rooms, recreational facilities that impact tourism, movie industry studios, or telecommunications enterprises, in counties designated by the tax commission as developed areas are allowed a job tax credit for taxes imposed by Section 27-7-5 equal to Two Thousand Five Hundred Dollars ($2,500.00) annually for each net new full-time employee job for five (5) years beginning with years two (2) through six (6) after the creation of the job. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees subject to Mississippi income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those permanent businesses that increase employment by twenty (20) or more in developed areas are eligible for the credit. The credit is not allowed during any of the five (5) years if the net employment increase falls below twenty (20). The tax commission shall adjust the credit allowed each year for the net new employment fluctuations above the minimum level of twenty (20).

(5) In addition to the credits authorized in subsections (2), (3) and (4), an additional Five Hundred Dollars ($500.00) credit for each net new full-time employee shall be allowed for any company establishing or transferring its national or regional headquarters from within or outside the State of Mississippi. A minimum of thirty-five (35) jobs must be created to qualify for the additional credit. The State Tax Commission shall establish criteria and prescribe procedures to determine if a company qualifies as a national or regional headquarters for purposes of receiving the credit awarded in this subsection.

(6) In addition to the credits authorized in subsections (2), (3), (4) and (5), any job requiring research and development skills (chemist, engineer, etc.) shall qualify for an additional Five Hundred Dollars ($500.00) credit for each net new full-time employee.

(7) Tax credits for five (5) years for the taxes imposed by Section 27-7-5 shall be awarded for additional net new full-time jobs created by business enterprises qualified under subsections (2), (3), (4), (5) and (6) of this section. The tax commission shall adjust the credit allowed in the event of employment fluctuations during the additional five (5) years of credit.

(8) The sale, merger, acquisition, reorganization, bankruptcy or relocation from one county to another county within the state of any business enterprise may not create new eligibility in any succeeding business entity, but any unused job tax credit may be transferred and continued by any transferee of the business enterprise. The tax commission shall determine whether or not qualifying net increases or decreases have occurred or proper transfers of credit have been made and may require reports, promulgate regulations and hold hearings as needed for substantiation and qualification.

(9) Any tax credit claimed under this section but not used in any taxable year may be carried forward for five (5) years from the close of the tax year in which the qualified jobs were established but the credit established by this section taken in any one (1) tax year must be limited to an amount not greater than fifty percent (50%) of the taxpayer's state income tax liability which is attributable to income derived from operations in the state for that year.

(10) No business enterprise for the transportation, handling, storage, processing or disposal of hazardous waste is eligible to receive the tax credits provided in this section.

(11) The credits allowed under this section shall not be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credits.

(12) The tax credits provided for in this section shall be in addition to any tax credits described in Sections 57-51-13(b), 57-53-1(1)(a) and 57-54-9(b) and granted pursuant to official action by the Department of Economic Development prior to July 1, 1989, to any business enterprise determined prior to July 1, 1989, by the Department of Economic Development to be a qualified business as defined in Section 57-51-5(f) or Section 57-54-5(d) or a qualified company as described in Section 57-53-1, as the case may be; however, from and after July 1, 1989, tax credits shall be allowed only under either this section or Sections 57-51-13(b), 57-53-1(1)(a) and Section 57-54-9(b) for each net new full-time employee.

(13) As used in this section, the term "telecommunications enterprises" means entities engaged in the creation, display, management, storage, processing, transmission or distribution for compensation of images, text, voice, video or data by wire or by wireless means, or entities engaged in the construction, design, development, manufacture, maintenance or distribution for compensation of devices, products, software or structures used in the above activities. Companies organized to do business as commercial broadcast radio stations, television stations or news organizations primarily serving in-state markets shall not be included within the definition of the term "telecommunications enterprises."

SECTION 3. Section 1 of this act shall be codified in Chapter 7 of Title 27, Mississippi Code of 1972.

SECTION 4. This act shall take effect and be in force from and after July 1, 1998.