Senate Bill 2967

AN ACT TO AMEND SECTION 27-7-307, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE LIABILITY OF CERTAIN OWNERS AND MEMBERS OF CORPORATIONS OR LIMITED LIABILITY CORPORATIONS FOR INCOME WITHHOLDING TAX IS DERIVATIVE OF THE CORPORATION OR LIMITED LIABILITY COMPANY AND THAT THE THREE-YEAR ASSESSMENT PERIOD FOR THE TAX WILL BEGIN TO RUN AFTER THE LIABILITY OF THE CORPORATION OR LIMITED LIABILITY COMPANY BECOMES FINAL; TO AMEND SECTION 27-7-49, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO AMEND SECTION 27-65-55, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE LIABILITY OF CERTAIN OWNERS AND MEMBERS OF CORPORATIONS OR LIMITED LIABILITY CORPORATIONS FOR SALES TAX IS DERIVATIVE OF THE CORPORATION OR LIMITED LIABILITY COMPANY AND THAT THE THIRTY-SIX-MONTH ASSESSMENT PERIOD FOR THE TAX WILL BEGIN TO RUN AFTER THE LIABILITY OF THE CORPORATION OR LIMITED LIABILITY COMPANY BECOMES FINAL; TO AMEND SECTION 27-65-42, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 27-7-307, Mississippi Code of 1972, is amended as follows:

27-7-307. (1) Every employer shall be liable for amounts required to be deducted and withheld by this article regardless of whether or not the amounts were in fact deducted and withheld, except that if the employer fails to deduct and withhold the required amounts and if the tax against which the required amounts would have been credited is paid, the employer shall not be liable for those amounts not deducted and withheld if such failure was due to reasonable cause.

(2) Persons owning stock of ten percent (10%) or more of the total of corporations or ten percent (10%) interest in limited liability companies with thirty-five (35) or less owners and exercising responsibilities for fiscal management of such corporation also shall be * * * liable for amounts withheld or required to be withheld under this article, including interest and penalties thereon, when such amounts become due and unpaid to the extent that such amounts accrued while such person was exercising responsibilities for fiscal management. The liability under this subsection is derivative of the corporation or limited liability company, and the three-year assessment period provided in Section 27-7-49 will begin to run after the liability of the corporation or limited liability company becomes final. A person being assessed under this subsection may appeal his liability under Section 27-77-5 solely regarding the issue of the ownership interest and management requirements of this subsection. The commissioner shall make assessments against and effect collection from said persons pursuant to the provisions of this article for the making of withholding tax determinations against employers.

SECTION 2. Section 27-7-49, Mississippi Code of 1972, is amended as follows:

27-7-49. (1) Returns shall be examined by the commissioner or his duly authorized agents within three (3) years from the due date or the date the return was filed, whichever is later, and no determination of a tax overpayment or deficiency shall be made by the commissioner, and no suit shall be filed with respect to income within the period covered by such return, after the expiration of said three-year period, except as hereinafter provided and as provided in Section 27-7-307.

(2) When an examination of a return made under this article has been commenced, and the taxpayer notified thereof, either by certified mail or personal delivery by an agent of the commissioner, within the three-year examination period provided in subsection (1) of this section, the determination of the correct tax liability may be made by the commissioner after the expiration of said three-year examination period, provided that said determination shall be made with reasonable promptness and diligence.

(3) Where the reported taxable income of a taxpayer has been increased or decreased by the Internal Revenue Service, the three-year examination period provided in subsection (1) of this section shall not be applicable, insofar as the Mississippi income tax liability is affected by the specific changes made by said Internal Revenue Service. However, no additional assessment or no refund shall be made under the provisions of this article after three (3) years from the date the Internal Revenue Service disposes of the tax liability in question.

(4) The three-year examination period provided in subsection (1) of this section shall not be applicable in the case of a false or fraudulent return with intent to evade tax.

(5) A taxpayer may apply to the commissioner for revision of any return filed under this article at any time within three (3) years from the due date, or if an extension of time to file was granted, three (3) years from the date the return was filed. If the return is not filed by the time authorized by the extension, then the three (3) years begin to run from the final day of the extension period.

(6) Where the reportable taxable income of a taxpayer has been decreased by the carryback of a net casualty loss deduction under Section 27-7-20 or the carryback of a net operating loss deduction under Section 27-7-17, the three-year examination period provided under subsection (1) of this section shall not be applicable insofar as the Mississippi income tax liability is affected by the carryback of the net casualty loss deduction or the carryback of the net operating loss deduction.

SECTION 3. Section 27-65-55, Mississippi Code of 1972, is amended as follows:

27-65-55. (1) The tax imposed by this chapter shall be a lien upon the property of any person subject to the provisions thereof who shall sell out his business or stock of goods, or shall quit business, and such person shall be required to make out the return provided for under Section 27-65-33 within ten (10) days after the date he sold out his business or stock of goods, or quit business, and pay the tax imposed by this chapter. The purchaser or transferee in business shall be required to withhold sufficient of the purchase money to cover the amount of any taxes, damages and interest due until such time as the former owner shall produce a receipt from the commissioner showing that such liability has been paid, or a certificate that no taxes are due. In the event the former owner shall fail to pay any taxes, damages and interest due the state within the time allowed, the successor in business shall pay such taxes, damages and interest to the commissioner upon demand. If the purchaser or transferee of a business or stock of goods shall fail to withhold purchase money as provided and the taxes, damages and interest shall be due and unpaid after the period of ten (10) days allowed, he shall be personally liable for the payment of taxes, damages and interest of the former owner, and the property sold or transferred may be proceeded against by the commissioner in the hands of the purchaser or transferee as though no sale or transfer had been made.

(2) Persons owning stock of ten percent (10%) or more of the total of corporations or ten percent (10%) interest in limited liability companies with thirty-five (35) or fewer owners and exercising responsibility for fiscal management, also shall be * * * liable for sales taxes levied by this chapter upon such corporations when such taxes become due and unpaid to the extent that such taxes accrued while such person was exercising responsibility for fiscal management. The liability under this subsection is derivative of the corporation or limited liability company, and the thirty-six-month assessment period in Section 27-65-42 will begin to run after the liability of the corporation or limited liability company becomes final. A person being assessed under this paragraph may appeal his liability under Section 27-77-5 solely regarding the issue of the ownership interest and management requirements of this subsection. The commissioner shall make assessments against said persons of such taxes, damages and interest, and effect collection by the same procedures herein provided for assessment and collection of all taxes levied by this chapter.

(3) Any person, acting as agent for a dealer who has no permanent place of business in this state, who sells tangible personal property in this state, either at auction or as a transient vendor, shall be liable for collection of sales tax, where applicable, and payment of the same of this state unless the vendor principal is authorized to collect the tax and is registered under Section 27-65-27. Such persons shall maintain for a period of three (3) years adequate records which shall be available for inspection by the commissioner or his agent and which shall reveal the true sales tax liability of all parties to each transaction. Failure to maintain and permit examination of such records shall render the agent liable for sales tax accruing from all sales as determined by the commissioner from any information available. The commissioner shall effect collection by the same procedures herein provided for assessment and collection of all taxes levied by this chapter.

SECTION 4. Section 27-65-42, Mississippi Code of 1972, is amended as follows:

27-65-42. The amount of taxes due on any return which has been filed as required by this chapter shall be determined and assessed within thirty-six (36) months from the date such return was filed, and no suit or other proceedings for the collection of any taxes due shall be begun after the expiration of thirty-six (36) months from the date such return was filed, except as otherwise provided in this section and Section 27-65-55. However, when an examination of a taxpayer's records to verify returns made under this chapter has been initiated and the taxpayer notified thereof, either by certified mail or personal delivery by an agent of the commissioner, within the thirty-six-month examination period provided herein, the determination of the correct tax liability may be made by the commission after the expiration of said thirty-six-month examination period, provided that said determination shall be made with reasonable promptness and diligence. When a false or fraudulent return has been filed with the intent to evade tax or in case no return has been filed, the amount of tax due may be determined, assessed and collected and suit or proceedings for the collection of the tax may be begun at any time after it becomes due.

A taxpayer may apply to the commissioner for revision of the tax assessed against him, or paid by him, at any time within thirty-six (36) months from the date of the assessment or from the date the return was filed. Unless a claim for credit or refund is filed by the taxpayer within thirty-six (36) months from the time the return was filed or assessment made, no credit or refund shall be allowed.

SECTION 5. This act shall take effect and be in force from and after July 1, 2010.