House Bill 1428

AN ACT TO CREATE THE RETAILER TAX FAIRNESS ACT; TO DEFINE CERTAIN TERMS RELATING TO ELECTRONIC PAYMENT TRANSACTIONS; TO PROVIDE THAT THE AMOUNT OF ANY STATE AND LOCAL TAXES THAT ARE CALCULATED AS A PERCENTAGE OF AN ELECTRONIC PAYMENT TRANSACTION AMOUNT AND LISTED SEPARATELY ON THE PAYMENT INVOICE OR OTHER DEMAND FOR PAYMENT MUST BE EXCLUDED FROM THE AMOUNT ON WHICH AN INTERCHANGE FEE IS CHARGED FOR THAT ELECTRONIC PAYMENT TRANSACTION; TO PROVIDE CERTAIN REQUIREMENTS FOR PAYMENT CARD NETWORKS; TO PROVIDE THAT A PAYMENT CARD NETWORK IN VIOLATION OF THIS ACT IS SUBJECT TO A CIVIL PENALTY OF NOT MORE THAN ONE THOUSAND DOLLARS PER VIOLATION, PAYABLE TO THE PLAINTIFF;

TO PROVIDE THAT IT IS UNLAWFUL TO ALTER OR MANIPULATE THE COMPUTATION AND IMPOSITION OF INTERCHANGE FEES BY INCREASING THE RATE OR AMOUNT OF FEE APPLICABLE TO OR IMPOSED UPON THAT PORTION OF AN ELECTRONIC PAYMENT TRANSACTION NOT ATTRIBUTABLE TO A STATE OR LOCAL TAX TO CIRCUMVENT THE EFFECT OF THIS ACT; AND FOR RELATED PURPOSES.

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

SECTION 1. This act shall be known and may be cited as the

"Retailer Tax Fairness Act."

SECTION 2. The following words and phrases shall have the meanings as defined in this section unless the context clearly indicates otherwise:

(a) "Credit card" means any card, plate, coupon book, or other credit device existing for the purpose of obtaining money, property, labor, or services on credit.

(b) "Debit card" means any card, or other payment code or device, issued or approved for use through a payment card network to debit an asset account, regardless of the purpose for which the account is established, whether authorization is based on signature, personal identification number, or other means. The term "debit card" includes a general-use prepaid card, as defined in 15 USC Section 16931-1(a)(2)(A), and does not include paper checks.

(c) "Electronic payment transaction" means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.

(d) "Interchange fee" means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.

(e) "Issuer" means any entity issuing a debit card or credit card, or the issuer's agent.

(f) "Payment card network" means an entity that:

(i) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement; and

(ii) A merchant or seller uses in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.

(g) "Settlement" means the transfer of funds from a customer's account to a seller or merchant upon electronic submission of finalized sales transactions to the payment card network.

SECTION 3. (1) The amount of any state and local taxes that are calculated as a percentage of an electronic payment transaction amount and listed separately on the payment invoice or other demand for payment must be excluded from the amount on which an interchange fee is charged for that electronic payment transaction.

For purposes of this section, the term "state taxes" includes

the amount of any taxes imposed under Chapter 65, Title 27, Mississippi Code of 1972, as amended, and the amount of all state taxes imposed under Sections 27-55-11, 27-55-519, 27-59-11, 49-17-407 and 65-33-47, Mississippi Code of 1972.

For purposes of this section, the term "local tax" includes any tax levied and collected under the authority of any local and private law of the State of Mississippi upon hotels, motels, restaurants or otherwise.

(2) A payment card network shall either:

(a) Deduct the amount of any tax imposed from the calculation of interchange fees specific to each form or type of electronic payment transaction at the time of settlement; or

(b) Rebate an amount of interchange fee proportionate to the amount attributable to the tax.

(3) Any deduction or rebate must occur at the time of settlement when the merchant or seller is able to capture and transmit tax amounts relevant to the sale at the time of sale as part of the transaction finalization.

(4) If a merchant or seller is unable to capture and transmit tax amounts relevant to the sale at the time of sale, the payment card network shall accept proof of tax amounts collected on sales subject to an interchange fee upon the submission of sales data by the merchant or seller and promptly credit the merchant or seller's settlement account.

(5) A payment card network that violates this act is subject to a civil penalty of not more than One Thousand Dollars ($1,000.00) per violation, payable to the plaintiff, and shall refund the surcharge to each merchant or seller.

(6) It is unlawful to alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of fee applicable to or imposed upon that portion of an electronic payment transaction not attributable to a state or local tax to circumvent the effect of this act.

SECTION 4. This act shall take effect and be in force from and after July 1, 2022.