MISSISSIPPI LEGISLATURE
2022 Regular Session
To: Ways and Means
By: Representatives Horan, Beckett, Hood, Reynolds, Sanford, Stamps, Oliver
AN ACT TO AUTHORIZE AN INCOME TAX CREDIT FOR TAXPAYERS THAT OWN QUALIFIED WOOD ENERGY PRODUCTS AND FOREST MAINTENANCE PROJECTS AND SATISFY CERTAIN MINIMUM INVESTMENT AND NEW JOB CREATION REQUIREMENTS; TO DEFINE CERTAIN TERMS FOR THE PURPOSES OF THIS ACT; TO PROVIDE FOR THE AMOUNT OF THE TAX CREDIT AUTHORIZED BY THIS ACT; TO PROVIDE CRITERIA THAT MUST BE SATISFIED IN ORDER TO BE ELIGIBLE FOR A TAX CREDIT UNDER THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. As used in this act, the following words and phrases shall have the meanings ascribed herein unless the context clearly indicates otherwise:
(a) "Cost" means:
(i) In the case of a transfer of title or a lease agreement that is treated as a purchase by a lessee for Mississippi income tax purposes, the amount of the purchase price; and
(ii) In the case of a lease that is not a lease agreement that is treated as a purchase by a lessee for Mississippi income tax purposes but that otherwise qualifies as a purchase under this section, the amount of lease payments due to be paid during the term of the lease after deducting any portion of the lease payments attributable to interest, insurance, and taxes;
(b) "Incentive agreement" means an agreement entered into by a business and the Mississippi Development Authority to provide the business an incentive to locate a new qualified wood energy products and forest maintenance project or expand an existing qualified wood energy products and forest maintenance project in Mississippi;
(c) "New full-time permanent employee" means a position or job that:
(i) Is created pursuant to an executed incentive agreement;
(ii) Is filled by one (1) or more employees or contractual employees who:
1. Were Mississippi taxpayers during the year in which the tax credits or incentives were earned; and
2. Work at the facility identified in the incentive agreement. New employees of a taxpayer that enters into the incentive agreement who do not work at the facility, and new employees of logging and trucking businesses hired for the purpose of supplying the facility, may be counted if they otherwise meet the definition of a new full-time permanent employee; are subject to the Mississippi Income Tax Withholding Law of 1968; exceed an average annual wage threshold of Forty-five Thousand Dollars ($45,000.00); and are verified by reports and methods established as required by the incentive agreement; and
3. Are not employees hired by a business before the date the incentive agreement was executed unless:
a. The position or job filled by the existing employee was created in accordance with the incentive agreement; and
b. The position vacated by the existing employee was either filled by a subsequent employee or no subsequent employee will be hired because the business no longer conducts the particular business activity requiring that classification. If the Executive Director of the Mississippi Development Authority finds that a significant impairment of Mississippi job opportunities for existing employees will otherwise occur, he or she may authorize the counting of existing employees as new full-time permanent employees; and
(iii) Has been filled for at least twenty-six (26) consecutive weeks with an average of at least thirty-five (35) hours worked per week.
"New full-time permanent employee" includes a contractual employee who works at the facility identified in the incentive agreement only if the contractual employee is offered a benefits package comparable to a direct employee of the business seeking incentives under this act;
(d) "Purchase" means:
(i) A transaction under which title to an item is transferred for consideration; or
(ii) A lease contract that is entered into for a period of at least three (3) years regardless of whether title to the item is transferred at the end of the period;
(e) "Qualified wood energy products and forest maintenance project" means a project specified in the incentive agreement to include one (1) or more Mississippi facilities in the same ownership group:
(i) For which the taxpayer commenced construction by the date specified in the incentive agreement, but no earlier than January 1, 2022;
(ii) That supports the Mississippi timber industry by using low-value wood, including, without limitation, sawmill residuals, unwanted treetops, and damaged or diseased trees, to produce high-efficiency, high-energy wood energy products or wood-based renewable carbon products, including, without limitation, sustainable aviation fuel and biocarbon for steelmaking and ferrosilicon production;
(iii) In which the taxpayer has a total investment in excess of One Hundred Million Dollars ($100,000,000.00);
(iv) That is undertaken by a taxpayer who has entered into an incentive agreement with the Mississippi Development Authority in which the taxpayer commits to creating at least seventy-five (75) net new full-time permanent employees with an average annual wage of at least Sixty Thousand Dollars ($60,000.00);
(v) That will provide a positive cost-benefit analysis to the state as determined by the Mississippi Development Authority;
(vi) That is certified as having a closing date before December 31, 2024, for all facilities, by which the taxpayer has certified and the state has verified that necessary capital acquisition and borrowing for the facilities has occurred to ensure that funds will be available to:
1. Secure a site for the facilities;
2. Obtain engineering services for the facilities;
3. Purchase equipment for the facilities; and
4. Commence construction on the facilities; and
(vii) That is undertaken by a taxpayer that has elected by agreement with the State of Mississippi for the taxpayer's facilities to be classified as a qualified wood energy products and forest maintenance project; and
(f) "Wood energy products equipment" means:
(i) New or used machinery or equipment located in Mississippi on the last day of the taxable year that is operated or used exclusively in Mississippi to collect, separate, treat, pulverize, dry, modify, or convert wood fiber so the resulting product may be used as a raw material, for productive energy use, or to manufacture other materials;
(ii) Devices that are directly connected with or are an integral and necessary part of machinery or equipment operated or used exclusively in Mississippi to collect, separate, treat, pulverize, dry, modify, or convert wood fiber and are necessary for the collection, separation, treatment, pulverization, drying, modification, or manufacturing of wood fiber;
(iii) Equipment that produces energy with wood power; and
(iv) A device that is directly connected with or is an integral and necessary part of machinery or equipment operated or used exclusively in Mississippi to produce energy with wood power.
"Wood energy products equipment" does not include a vehicle or trailer that is licensed or that normally would be licensed for
use on highways in Mississippi.
SECTION 2. (1) There is allowed a tax credit against the tax imposed by this chapter in an amount equal to thirty percent (30%) of the costs of wood energy products equipment purchased for use in Mississippi after the date specified in the incentive agreement by a taxpayer that:
(a) Is engaged in the business of collecting, separating, treating, pulverizing, drying, modifying, or manufacturing wood energy products; and
(b) Has been certified as owning a qualified wood energy products and forest maintenance project.
(2) The tax credit authorized under this section shall not exceed Ten Million Dollars ($10,000,000.00) in any taxable year reduced by the sum of all other credits for such year allowable to the taxpayer under this chapter, except credit for tax payments made by or on behalf of the taxpayer. Any tax credit claimed under this section but not used in any taxable year may be carried forward indefinitely to future taxable years. In addition, a taxpayer may sell or transfer the unused portion of the tax credit to any taxpayer having a liability for taxes under this chapter. A tax credit for any taxable year may not be sold or transferred more than one (1) time, subject to guidelines established by the Department of Revenue. The buyer or transferee of a tax credit may use the acquired credit in the same manner and to the same extent as the seller or transferor of the credit. In order to sell or transfer a tax credit, the seller or transferor shall notify the Department of Revenue and the Mississippi Development Authority in writing within thirty (30) days after the date of the sale or transfer. The notice shall include:
(a) The seller's or transferor's tax credit balance before the sale or transfer of the credit;
(b) The tax credit identification number assigned by the Mississippi Development Authority;
(c) The unused portion of the credit remaining after the sale or transfer;
(d) All federal and state tax identification numbers for both the seller or transferor and the buyer or transferee;
(e) The date of the sale or transfer;
(f) The amount of the credit sold or transferred; and
(g) Any other information required by the Department of Revenue or the Mississippi Development Authority.
Failure by the seller or transferor to comply with the notice requirements of this subsection shall void the sale or transfer.
(3) A tax credit under this section shall not be authorized without:
(a) A cost-benefit analysis, including, without limitation, an analysis of other incentives offered by the State of Mississippi with respect to the qualified wood energy products and forest maintenance project subject to the tax credit, as certified by the Mississippi Development Authority; and
(b) An incentive agreement with performance criteria and claw back provisions as required under subsection (4) of this section.
(4) The issuance of a tax credit authorized under this section shall be subject to an incentive agreement with performance criteria and claw back provisions between the taxpayer and the Mississippi Development Authority that:
(a) Is subject to the approval of the Mississippi Development Authority to ensure that the cost-benefit analysis required under subsection (3) of this section is met and maintained for a test period that is the longer of the life of the tax credits or seven (7) years; however, the test period shall not be longer than fifteen (15) years;
(b) Shall include, without limitation, the:
(i) Capital investment for the qualified wood energy products and forest maintenance project;
(ii) New full-time permanent employee positions created by the qualified wood energy products and forest maintenance project;
(iii) Annual salary requirements for the new full-time permanent employee positions created by the qualified wood energy products and forest maintenance project;
(iv) Timeline for fulfilling the investment or job creation targets stated in the performance and claw back agreement; and
(v) Conditions for the claw back provisions, which are triggered if, during the test period stated in paragraph (a) of this subsection (4), the taxpayer:
1. Does not meet the required targets of the qualified wood energy products and forest maintenance project related to capital investment, job creation, timeline, or annual salary amounts; or
2. Fails to maintain a positive cost-benefit analysis.
SECTION 3. Sections 1 and 2 of this act shall be codified as new sections in Chapter 7, Title 27, Mississippi Code of 1972.
SECTION 4. Nothing in this act shall affect or defeat any claim, assessment, appeal, suit, right or cause of action for taxes due or accrued under the income tax laws before the date on which this act becomes effective, whether such claims, assessments, appeals, suits or actions have been begun before the date on which this act becomes effective or are begun thereafter; and the provisions of the income tax laws are expressly continued in full force, effect and operation for the purpose of the assessment, collection and enrollment of liens for any taxes due or accrued and the execution of any warrant under such laws before the date on which this act becomes 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 January 1, 2022.