House Bill 1182

AN ACT TO CREATE THE INVENTORY TAX REBATE ACT; TO PROVIDE THAT ANY MANUFACTURER, DISTRIBUTOR, WHOLESALE OR RETAIL MERCHANT WHO PAYS AD VALOREM TAXES IMPOSED ON COMMODITIES, PRODUCTS, GOODS, WARES AND MERCHANDISE HELD FOR RESALE, SHALL BE ENTITLED TO A REBATE IN AN AMOUNT EQUAL TO THE AMOUNT OF AD VALOREM TAXES SO PAID; TO CREATE IN THE STATE TREASURY A SPECIAL FUND TO BE KNOWN AS THE "INVENTORY TAX REBATE FUND"; TO REQUIRE THE LEGISLATURE TO APPROPRIATE A CERTAIN AMOUNT OF MONEY INTO THE FUND; TO PROVIDE THAT MONEY IN THE FUND SHALL BE USED BY THE DEPARTMENT OF REVENUE TO MAKE THE PAYMENTS REQUIRED BY THIS ACT; TO PROVIDE THE MANNER OF APPLYING FOR THE REBATE; TO PROVIDE THAT THE DEPARTMENT OF REVENUE SHALL VERIFY CLAIMS AND MAKE THE PAYMENTS TO ELIGIBLE BUSINESSES; TO CREATE A STUDY COMMITTEE TO REVIEW CURRENT LAW AND PROPOSED LEGISLATION ON AD VALOREM TAXATION OF BUSINESS INVENTORIES IN THIS STATE AND TO MAKE RECOMMENDATIONS TO THE LEGISLATURE WHICH IDENTIFY LONG-TERM STRATEGIES TO ELIMINATE AD VALOREM TAXATION OF BUSINESS INVENTORIES WHILE ENSURING THE LOCAL GOVERNMENTS DO NOT EXPERIENCE FISCAL HARM AS A RESULT OF THE ELIMINATION OF THE TAX; TO AMEND SECTION 27-7-22.5, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT BUSINESSES USING A CERTAIN INCOME TAX CREDIT SHALL NOT BE ELIGIBLE FOR THE REBATE; AND FOR RELATED PURPOSES.

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

SECTION 1. Sections 1 through 4 of this act shall be known and may be cited as the "Inventory Tax Rebate Act."

SECTION 2. Any manufacturer, distributor, wholesale or retail merchant who pays to a county, municipality, school district, levee district or any other taxing authority of the state or a political subdivision thereof, ad valorem taxes imposed on commodities, products, goods, wares and merchandise held for resale, shall be entitled to a rebate pursuant to Sections 1 through 4 of this act in an amount equal to the amount of ad valorem taxes so paid.

SECTION 3. (1) There is created in the State Treasury a special fund to be known as the "Inventory Tax Rebate Fund," into which shall be deposited an amount appropriated thereto by the Legislature equal to the amount of ad valorem taxes paid by manufacturers, distributors, and wholesale or retail merchants on commodities, products, wares and merchandise held for resale over the last three (3) fiscal years. Money in the fund shall be used by the Department of Revenue to make the payments required by Sections 1 through 4 of this act.

(2) The liability of the State of Mississippi to make the rebate payments under Sections 1 through 4 of this act shall be limited to the balance contained in the fund.

SECTION 4. (1) An eligible business may apply to the Department of Revenue for a rebate in an amount equal to payments made by the business to a county, municipality, school district, levee district or any other taxing authority of the state or a political subdivision thereof, for ad valorem taxes imposed on commodities, products, goods, wares and merchandise held for resale.

(2) A business applying for a rebate pursuant to Sections 1 through 4 of this act shall submit to the Department of Revenue verifiable documentation of the amount of ad valorem taxes paid and the political subdivision to which the payment was made during the preceding calendar year. All applications must be made not later than June 30 of each year.

(3) After a rebate claim is verified, the Department of Revenue shall make the rebate payment from the Inventory Tax Rebate Fund to each eligible business applying for the rebate not later than September 30 of each year.

(4) In the event the balance in the Inventory Tax Rebate Fund is insufficient to rebate all verifiable claims, the money in the fund shall be paid to each eligible business in the proportion that the claims of each business relates to all claims made during the year in question.

SECTION 5. (1) There is hereby created a study committee to review current law and proposed legislation on ad valorem taxation of business inventories in Mississippi. The committee shall make recommendations to the Legislature which identify long-term strategies to eliminate ad valorem taxation of business inventories while ensuring the local governments do not experience fiscal harm as a result of the elimination of the tax. The committee shall make a report of its findings and recommendations to the Legislature during the 2011 Regular Session, including any recommended legislation.

(2) The committee shall be composed of twelve (12) members appointed as follows:

(a) The Lieutenant Governor shall appoint three (3) members who represent local government interests and three (3) members who represent business interests;

(b) The Speaker of the House of Representatives shall appoint three (3) members who represent local government interests and three (3) members who represent business interests;

Appointments shall be made within thirty (30) days after the effective date of this act, and, within fifteen (15) days thereafter on a day to be designated jointly by the Lieutenant Governor and the Speaker of the House, the committee shall meet and organize by selecting from its membership a chairman and a vice chairman. The vice chairman shall also serve as secretary and shall be responsible for keeping all records of the committee. A majority of the members of the committee shall constitute a quorum. In the selection of its officers and the adoption of rules, resolutions and reports, an affirmative vote of a majority of the committee shall be required. All members shall be notified in writing of all meetings, such notices to be mailed at least five (5) days prior to the date on which a meeting is to be held.

(3) The committee shall study and make recommendations with respect to long-term strategies to eliminate ad valorem taxation of business inventories while ensuring the local governments do not experience fiscal harm as a result of the elimination of the tax.

(4) To effectuate the purpose of this resolution, any department, division, board, bureau, commission or agency of the state or of any political subdivision thereof shall, at the request of the chairman of the committee, provide to the committee such facilities, assistance and data as will enable the committee to properly carry out its task.

(5) Upon presentation of its report to the 2011 Regular

Session, the committee shall be dissolved.

SECTION 6. Section 27-7-22.5, Mississippi Code of 1972, is amended as follows:

27-7-22.5. (1) For any manufacturer, distributor, wholesale or retail merchant who pays to a county, municipality, school district, levee district or any other taxing authority of the state or a political subdivision thereof, ad valorem taxes imposed on commodities, products, goods, wares and merchandise held for resale, a credit against the income taxes imposed under this chapter shall be allowed for the portion of the ad valorem taxes so paid in the amounts prescribed in subsection (2).

(2) The tax credit allowed by this section shall not exceed the amounts set forth in paragraphs (a) through (d) of this subsection; may be claimed only in the year in which the ad valorem taxes are paid; and may be claimed for each location where such commodities, products, goods, wares and merchandise are found and upon which the ad valorem taxes have been paid.

(a) For the 1994 taxable year, the tax credit for each location of the taxpayer shall not exceed the lesser of Two Thousand Dollars ($2,000.00) or the amount of income taxes due the State of Mississippi that are attributable to such location.

(b) For the 1995 taxable year, the tax credit for each location of the taxpayer shall not exceed the lesser of Three Thousand Dollars ($3,000.00) or the amount of income taxes due the State of Mississippi that are attributable to such location.

(c) For the 1996 taxable year, the tax credit for each location of the taxpayer shall not exceed the lesser of Four Thousand Dollars ($4,000.00) or the amount of income taxes due the State of Mississippi that are attributable to such location.

(d) For the 1997 taxable year and each taxable year thereafter, the tax credit for each location of the taxpayer shall not exceed the lesser of Five Thousand Dollars ($5,000.00) or the amount of income taxes due the State of Mississippi that are attributable to such location.

(3) Any amount of ad valorem taxes paid by a taxpayer that is applied toward the tax credit allowed in this section may not be used as a deduction by the taxpayer for state income tax purposes. In the case of a taxpayer that is a partnership or S corporation, the credit may be applied only to the tax attributable to partnership or S corporation income derived from the taxpayer.

(4) A taxpayer who uses the tax credit authorized under this section shall not be eligible for the payment authorized under Sections 1 through 4 of this act in the same taxable year.

SECTION 7. This act shall take effect and be in force from and after July 1, 2010.