House Bill 1638

AN ACT TO PROVIDE AN INCOME TAX CREDIT FOR ANY TAXPAYER WHO PAYS CERTAIN HIGHER EDUCATION TUITION AND FEES FOR A STUDENT THAT THE TAXPAYER CLAIMS AS A PERSONAL EXEMPTION FOR FEDERAL AND STATE INCOME TAX PURPOSES; TO LIMIT THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED UNDER THIS ACT; TO PROVIDE THAT IF THE AMOUNT OF CREDIT CLAIMED BY A TAXPAYER EXCEEDS THE AMOUNT OF INCOME TAX IMPOSED UPON THE TAXPAYER FOR THE TAXABLE YEAR, THEN THE TAXPAYER SHALL RECEIVE A REFUND FROM THE STATE TAX COMMISSION FOR THE AMOUNT OF SUCH EXCESS; AND FOR RELATED PURPOSES.

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

SECTION 1. (1) Any taxpayer who incurs qualified higher education expenses for an eligible student, for which the taxpayer claims a personal exemption on his federal and state individual income tax returns, shall be allowed a refundable credit against the taxes imposed under this chapter in the manner prescribed in this section. For the purposes of this section:

(a) "Eligible student" means a student who is:

(i) Enrolled at and attending a public or private university, college, community college or junior college;

(ii) Legally claimed as a personal exemption on the federal and state individual income tax returns of the taxpayer; and

(iii) Not in default on any higher education student loan.

(b) "Qualified higher education expenses" means tuition and mandatory fees paid in a taxable year by an eligible student or by a taxpayer on behalf of an eligible student, less any refunds, scholarships and other forms of financial assistance received but not subject to repayment.

(2) The amount of the credit authorized under this section shall be equal to the lesser of fifty percent (50%) of qualified higher education expenses incurred for an eligible student during the taxable year or Three Hundred Dollars ($300.00), provided that the amount claimed as a credit when added to any federal education tax credit claimed for an eligible student may not exceed the amount of qualified higher education expenses incurred by or on behalf of the eligible student. If the amount of credit claimed by a taxpayer exceeds the amount of income tax imposed upon the taxpayer for the taxable year reduced by the sum of all other credits allowable to the taxpayer under the state income tax laws, except credit for tax payments made by or on behalf of the taxpayer, then the taxpayer shall receive a refund from the State Tax Commission for the amount of such excess.

(3) To obtain the credit provided for in this section, a taxpayer must provide to the State Tax Commission proof of the higher education expenses incurred for which the credit is claimed and any other information required by the State Tax Commission. The State Tax Commission shall have all powers necessary to implement and administer the provisions of this section and shall promulgate rules and regulations, in accordance with the Mississippi Administrative Procedures Law, necessary for the implementation of this section.

SECTION 2. Section 1 of this act shall be codified as a separate section in Chapter 7, Title 27, Mississippi Code of 1972.

SECTION 3. 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 4. This act shall take effect and be in force from and after January 1, 2007.