House Bill 1446

AN ACT TO CREATE THE RENTAL FAIRNESS ACT OF 2011; TO EXEMPT CERTAIN RENTAL EQUIPMENT FROM AD VALOREM TAXATION; TO LEVY A TAX ON PERSONS ENGAGED IN THE BUSINESS OF RENTING CERTAIN EQUIPMENT IN LIEU OF AD VALOREM TAXES; TO PROVIDE THAT THE PROCEEDS OF THE TAX SHALL BE PAID TO THE COUNTY WHICH IS THE SITUS OF THE EQUIPMENT AND DISTRIBUTED BY THE COUNTY TO THE COUNTY, MUNICIPALITY AND THE SCHOOL DISTRICT OF THE SITUS, AS APPROPRIATE, IN THE SAME MANNER THAT AD VALOREM TAXES ON THE EQUIPMENT WOULD BE DISTRIBUTED; AND FOR RELATED PURPOSES.

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

SECTION 1. This act may be cited as the "Rental Fairness Act of 2011."

SECTION 2. All equipment primarily used as rental equipment under rental agreements with a term of not more than three hundred sixty-five (365) days each and under the control of persons who are engaged in the business of renting the equipment and who are subject to the tax levied under Section 2 of this act shall be exempt from ad valorem taxation.

SECTION 3. (1) There is hereby levied upon every person engaging or continuing in this state in the business of renting equipment under rental agreements with a term of not more than three hundred sixty-five (365) days each, a tax at the rate of two percent (2%) of the gross proceeds of the business derived from the rental of the equipment. For the purposes of this section, a person is in the business of renting equipment if the business is in one or more of the following North American Industry Classification System (NAICS) codes: 532310, 532412 and 532490.

(2) The tax levied in subsection (1) of this section shall not apply to the following:

(a) The rental of a motor vehicle required to be registered or licensed under Chapter 19, Title 27, Mississippi Code of 1972;

(b) The rental of any property purchased under a rent-to-own or similar agreement;

(d) Rental to an affiliated person if such person is an officer, director, partner, member, shareholder, parent or subsidiary of the lessee, or if the person and the lessor have any common ownership interest in excess of five percent (5%).

(3) All administrative provisions of the Mississippi Sales Tax Law, including those which fix damages, penalties and interest for nonpayment of taxes, failure to file returns, and for other noncompliance with the provisions of that law, and all other requirements and duties imposed upon taxpayers, shall apply to all persons liable for taxes under the provisions of this section, and the Department of Revenue shall exercise all the power and authority and perform all the duties with respect to taxpayers under this section as are provided in the Sales Tax Law, except that in cases of conflict the provisions of this section shall control.

(4) On or before February 15 of each year, the proceeds of the tax imposed by this section on business rental activities shall be paid by the Department of Revenue to the county in which the proceeds were collected. Within seven (7) days after receipt of the tax proceeds, the county shall apportion and pay such tax proceeds as follows:

(a) The situs of the rental transactions from which tax proceeds were derived shall first be determined; and

(b) Then the tax proceeds collected at a situs shall be distributed among the county, municipality and school district of the situs, as appropriate, in the same proportion and in the same manner that ad valorem taxes on the equipment would be distributed among those taxing districts (based on their respective millage rates) if collected at the same time as the receipt of the proceeds and paid by the owner located at the same address as the situs of the rental transaction.

(5) The governing authorities of the counties, municipalities and school districts may expend the proceeds of the tax for any lawful purposes.

(6) The revenues received by counties and municipalities under subsection (4) of this section shall be deposited in the general fund of the counties and municipalities, and the revenues received by the school districts shall be deposited in any fund designated by the school district.

(7) The revenues received by counties, municipalities and school districts under subsection (4) of this section shall be included and considered as proceeds of ad valorem taxes for the purposes of the growth limitation on ad valorem taxes under Sections 27-39-321 and 27-39-305.

(8) The tax authorized in this section shall be in addition to any other tax authorized by law to be levied on the business activities described in this section.

SECTION 4. This act shall take effect and be in force from and after July 1, 2011.