MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Finance

By: Senator(s) Frazier

AN ACT TO PROVIDE THAT CERTAIN CHARITABLE ORGANIZATIONS EXEMPT FROM FEDERAL INCOME TAXATION UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE THAT ARE SEEKING A SALES TAX EXEMPTION UNDER SECTION 27-65-111(Y), SHALL ANNUALLY APPLY FOR SUCH EXEMPTION WITH THE STATE TAX COMMISSION; TO PRESCRIBE CERTAIN REQUIREMENTS THAT MUST BE MET IN ORDER FOR SUCH AN ORGANIZATION TO BE ELIGIBLE FOR SUCH EXEMPTION; TO PROVIDE THAT UPON A FINDING BY THE STATE TAX COMMISSION THAT THE ORGANIZATION HAS MET THE NECESSARY REQUIREMENTS, THE ORGANIZATION SHALL BE ELIGIBLE FOR THE SALES TAX EXEMPTION AND THE STATE TAX COMMISSION SHALL ISSUE THE ORGANIZATION DOCUMENTATION THAT CAN BE PRESENTED TO VENDORS VERIFYING THAT IT IS ELIGIBLE FOR THE EXEMPTION; TO AMEND SECTION 27-65-111, MISSISSIPPI CODE OF 1972, TO PROVIDE A SALES TAX EXEMPTION TO CHARITABLE ORGANIZATIONS THAT QUALIFY FOR SUCH EXEMPTION PURSUANT TO THIS ACT; AND FOR RELATED PURPOSES.

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

SECTION 1. (1) Any charitable organization seeking a sales tax exemption under the provisions of Section 27-65-111(y) shall annually apply for such exemption with the State Tax Commission on forms prescribed by the State Tax Commission that shall contain the following information and such other information as the State Tax Commission may require:

(a) The name of the organization;

(b) The names and addresses of the officers, directors, trustees and chief executive officer of the organization;

(c) The addresses of the organization and any offices in this state. If the organization does not maintain a principal office, the name and address of the person having custody of its financial records;

(d) Where and when the organization was legally established, the form of its organization and its tax exempt status;

(e) The purpose for which the organization was formed; and

(f) The date on which the fiscal year of the organization ends.

(2) The form shall be signed by the president or other authorized officer and the chief fiscal officer of the organization.

(3) The organization shall provide the State Tax Commission evidence satisfactory to the commission that:

(a) The organization has been granted by the Internal Revenue Service the exemption from federal income taxation under 501(c)(3) of the Internal Revenue Code, and

(b) The organization has complied with the provisions of Sections 79-11-501 through 79-11-529.

(4) The State Tax Commission shall examine the information provided by the organization and determine whether it is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code and has complied with the provisions of Sections 79-11-501 through 79-11-529. Upon a determination by the State Tax Commission that the organization is exempt under Section 501(c)(3) of the Internal Revenue Code and has complied with the provisions of Sections 79-11-501 through 79-11-529, the organization shall be eligible for the sales tax exemption provided for in Section 27-65-111(y), and the State Tax Commission shall issue the organization documentation that can be presented to vendors that verifies the organization's eligibility for the sales tax exemption. The organization's eligibility for the exemption shall be valid for one (1) year from the date it is granted and must be renewed annually.

SECTION 2. Section 27-65-111, Mississippi Code of 1972, is amended as follows:

27-65-111. The exemptions from the provisions of this chapter which are not industrial, agricultural or governmental, or which do not relate to utilities or taxes, or which are not properly classified as one of the exemption classifications of this chapter, shall be confined to persons or property exempted by this section or by the Constitution of the United States or the State of Mississippi. No exemptions as now provided by any other section, except the classified exemption sections of this chapter

set forth herein, shall be valid as against the tax herein levied. Any subsequent exemption from the tax levied hereunder, except as indicated above, shall be provided by amendments 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 of tangible personal property and services to hospitals or infirmaries owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual, and which are subject to and governed by Sections 41-7-123 through 41-7-127.

Only sales of tangible personal property or services which are ordinary and necessary to the operation of such hospitals and infirmaries are exempted from tax.

(b) Sales of daily or weekly newspapers, and periodicals or publications of scientific, literary or educational organizations exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code of 1954, as it exists as of March 31, 1975, and subscription sales of all magazines.

(c) Sales of coffins, caskets and other materials used in the preparation of human bodies for burial.

(d) Sales of tangible personal property for immediate export to a foreign country.

(e) Sales of tangible personal property to an orphanage, old men's or ladies' home, supported wholly or in part by a religious denomination, fraternal nonprofit organization or other nonprofit organization.

(f) Sales of tangible personal property, labor or services taxable under Sections 27-65-17, 27-65-19 and 27-65-23 to a YMCA, YWCA, a Boys' or Girls' Club owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual.

(g) Sales to elementary and secondary grade schools, junior and senior colleges owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual, and which are exempt from state income taxation, provided that this exemption does not apply to sales of property or services which are not to be used in the ordinary operation of the school,

or which are to be resold to the students or the public.

(h) The gross proceeds of retail sales and the use or consumption in this state of drugs and medicines:

(i) Prescribed for the treatment of a human being by a person authorized to prescribe the medicines, and dispensed or prescription filled by a registered pharmacist in accordance with law; or

(ii) Furnished by a licensed physician, surgeon, dentist or podiatrist to his own patient for treatment of the patient; or

(iii) Furnished by a hospital for treatment of any person pursuant to the order of a licensed physician, surgeon, dentist or podiatrist; or

(iv) Sold to a licensed physician, surgeon, podiatrist, dentist or hospital for the treatment of a human being; or

(v) Sold to this state or any political subdivision or municipal corporation thereof, for use in the treatment of a human being or furnished for the treatment of a human being by a medical facility or clinic maintained by this state or any political subdivision or municipal corporation thereof.

"Medicines," as used in this paragraph (h), shall mean and include any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment or prevention of disease and which is commonly recognized as a substance or preparation intended for such use; provided that "medicines" do not include any auditory, prosthetic, ophthalmic or ocular device or appliance, any dentures or parts thereof or any artificial limbs or their replacement parts, articles which are in the nature of splints, bandages, pads, compresses, supports, dressings, instruments, apparatus, contrivances, appliances, devices or other mechanical, electronic, optical or physical equipment or article or the component parts and accessories thereof, or any alcoholic beverage or any other drug or medicine not commonly referred to as a prescription drug.

Notwithstanding the preceding sentence of this paragraph (h), "medicines" as used in this paragraph (h), shall mean and include sutures, whether or not permanently implanted, bone screws, bone pins, pacemakers and other articles permanently implanted in the human body to assist the functioning of any natural organ, artery, vein or limb and which remain or dissolve in the body.

"Hospital," as used in this paragraph (h), shall have the meaning ascribed to it in Section 41-9-3, Mississippi Code of 1972.

Insulin furnished by a registered pharmacist to a person for treatment of diabetes as directed by a physician shall be deemed to be dispensed on prescription within the meaning of this paragraph (h).

(i) Retail sales of automobiles, trucks and truck-tractors if exported from this state within forty-eight (48) hours and registered and first used in another state.

(j) Sales of tangible personal property or services to the Salvation Army and the Muscular Dystrophy Association, Inc.

(k) From July 1, 1985, through December 31, 1992, retail sales of "alcohol blended fuel" as such term is defined in Section 75-55-5. The gasoline-alcohol blend or the straight alcohol eligible for this exemption shall not contain alcohol distilled outside the State of Mississippi.

(l) Sales of tangible personal property or services to the Institute for Technology Development.

(m) The gross proceeds of retail sales of food and drink for human consumption made through vending machines serviced by full line vendors from and not connected with other taxable businesses.

(n) The gross proceeds of sales of motor fuel.

(o) Retail sales of food for human consumption purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, from and after October 1, 1987, or from and after the expiration of any waiver granted pursuant to federal law, the effect of which waiver is to permit the collection by the state of tax on such retail sales of food for human consumption purchased with food stamps.

(p) Sales of cookies for human consumption by the Girl Scouts of America no part of the net earnings from which sales inures to the benefit of any private group or individual.

(q) Gifts or sales of tangible personal property or services to public or private nonprofit museums of art.

(r) Sales of tangible personal property or services to alumni associations of state-supported colleges or universities.

(s) Sales of tangible personal property or services to chapters of the National Association of Junior Auxiliaries, Inc.

(t) Sales of tangible personal property or services to domestic violence shelters which qualify for state funding under Sections 93-21-101 through 93-21-113.

(u) Sales of tangible personal property or services to the National Multiple Sclerosis Society, Mississippi Chapter.

(v) Retail sales of food for human consumption purchased with food instruments issued the Mississippi Band of Choctaw Indians under the Women, Infants and Children Program (WIC) funded by the United States Department of Agriculture.

(w) Sales of tangible personal property or services to a private company, as defined in Section 57-61-5, which is making such purchases with proceeds of bonds issued under Section 57-61-1 et seq., the Mississippi Business Investment Act.

(x) The gross collections from the operation of self-service, coin-operated car washing equipment and sales of the service of washing motor vehicles with portable high pressure washing equipment on the premises of the customer.

(y) Sales of tangible personal property or services to a charitable organization (as defined in Section 79-11-501) exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code if the organization has been found to be eligible for this exemption pursuant to Section 1 of Senate Bill No. 3179, 1998 Regular Session.

SECTION 3. This act shall take effect and be in force from and after July 1, 1998.