Senate Bill 2608

AN ACT TO AMEND SECTION 27-7-22.31, MISSISSIPPI CODE OF 1972, WHICH AUTHORIZES AN INCOME TAX CREDIT FOR COSTS AND EXPENSES INCURRED FOR THE REHABILITATION OF CERTAIN HISTORIC STRUCTURES TO INCLUDE IN THE DEFINITION OF THE TERM "CERTIFIED HISTORIC STRUCTURE" PROPERTY THAT HAS BEEN DETERMINED ELIGIBLE FOR THE NATIONAL REGISTER OF HISTORIC PLACES BY THE SECRETARY OF THE UNITED STATES DEPARTMENT OF THE INTERIOR AND WILL BE LISTED WITHIN 30 MONTHS OF CLAIMING THE CREDIT; TO EXPAND THE TYPES OF STRUCTURES THAT ARE INCLUDED IN THE TERM "STRUCTURE IN A CERTIFIED HISTORIC DISTRICT"; TO AUTHORIZE TAXPAYERS TO CLAIM THE CREDIT IN PHASES IF CERTAIN CONDITIONS ARE MET; TO PROVIDE THAT IF THE AMOUNT OF THE TAX CREDIT EXCEEDS THE TOTAL STATE INCOME TAX LIABILITY FOR THE YEAR IN WHICH THE REHABILITATED PROPERTY IS PLACED IN SERVICE, THE AMOUNT THAT EXCEEDS THE TOTAL STATE INCOME TAX LIABILITY MAY BE CARRIED BACK FOR ONE TAX YEAR AND TO EXTEND THE PERIOD OF TIME THAT SUCH CREDIT MAY BE CARRIED FORWARD FROM 10 SUCCEEDING TAX YEARS TO 20 SUCCEEDING TAX YEARS; TO AUTHORIZE THE TRANSFER, SALE OR ASSIGNMENT OF SUCH INCOME TAX CREDITS; TO PROVIDE THAT THE CREDIT SHALL APPLY TO TAXPAYERS WHO HAVE BEEN ISSUED A CERTIFICATE EVIDENCING THE ELIGIBLE CREDIT BEFORE DECEMBER 31, 2024, OR WHO, BEFORE DECEMBER 31, 2024, HAVE RECEIVED A DETERMINATION IN WRITING FROM THE MISSISSIPPI DEPARTMENT OF ARCHIVES AND HISTORY, THAT THE REHABILITATION IS CONSISTENT WITH THE HISTORIC CHARACTER OF THE PROPERTY AND THAT THE PROPERTY MEETS THE UNITED STATES SECRETARY OF THE INTERIOR'S STANDARDS FOR REHABILITATION AND WHO ARE ISSUED A CERTIFICATE EVIDENCING THE ELIGIBLE CREDIT ON OR AFTER DECEMBER 31, 2024; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 27-7-22.31, Mississippi Code of 1972, is amended as follows:

27-7-22.31. (1) As used in this section:

(a) "Certified historic structure" means a property located in Mississippi that has been:

(i) Listed individually on the National Register of Historic Places; or

(ii) determined eligible for the National Register of Historic Places by the Secretary of the United States Department of the Interior and will be listed within thirty (30) months of claiming the credit authorized by this section; or

(iii) * * * Designated a Mississippi Landmark by the Department of Archives and History pursuant to Section 39-7-3 et seq.

(b) "Eligible property" means property located in Mississippi and offered or used for residential or business purposes.

(c) "Structure in a certified historic district" means a structure (and its structural components) located in Mississippi which * * *:

(i) Is listed in the National Register of Historic Places; or

(ii) Has been determined eligible for the National Register of Historic Places by the Secretary of the United States Department of the Interior and will be listed within thirty (30) months of claiming the credit authorized by this section; or

(iii) Is located in a registered historic district listed on the National Register of Historic Places or located in a potential district that has been determined eligible for the National Register of Historic Places by the Secretary of the United States Department of the Interior and will be listed within thirty (30) months of claiming the credit authorized by this section, and is certified by the Secretary of the United States Department of the Interior as being of historic significance to the district; or

(iv) Is certified by the Mississippi Department of Archives and History as contributing to the historic significance of:

1. A certified historic district listed on the National Register of Historic Places; or

2. A potential district that has been determined eligible for the National Register of Historic Places by the Secretary of the United States Department of the Interior and will be listed within thirty (30) months of claiming the credit authorized by this section; or

3. A local district that has been certified by the United States Department of the Interior.

(d) "Department" means the Department of Archives and History.

(2) Any taxpayer incurring costs and expenses for the rehabilitation of eligible property, which is a certified historic structure or a structure in a certified historic district, shall be entitled to a credit against the taxes imposed pursuant to this chapter in an amount equal to twenty-five percent (25%) of the total costs and expenses of rehabilitation incurred after January 1, 2006, which shall include, but not be limited to, qualified rehabilitation expenditures as defined under Section 47(c)(2)(A) of the Internal Revenue Code of 1986, as amended, and the related regulations thereunder:

(a) If the costs and expenses associated with rehabilitation exceed:

(i) Five Thousand Dollars ($5,000.00) in the case of an owner-occupied dwelling; or

(ii) Fifty percent (50%) of the total basis in the property in the case of all other properties; and

(b) The rehabilitation is consistent with the standards of the Secretary of the United States Department of the Interior as determined by the department.

(3) Any taxpayer eligible for the credit authorized by this section may claim the credit in phases if:

(a) There is a written set of architectural plans and specifications for all phases of the rehabilitation (written plans outlining and describing all phases of the rehabilitation shall be accepted as written plans and specifications);

(b) The written set of architectural plans and specifications are completed before the physical work on the rehabilitation begins;

(4) (a) (i) If the amount of the tax credit established by this section exceeds the total state income tax liability for the year in which the rehabilitated property is placed in service, the amount that exceeds the total state income tax liability may be carried back for one (1) tax year and may be carried forward for the twenty (20) succeeding tax years.

(ii) If the amount of the tax credit established by this section exceeds Two Hundred Fifty Thousand Dollars ($250,000.00), the taxpayer may elect to claim a refund in the amount of seventy-five percent (75%) of the excess credit in lieu of the * * * carryforward. The election must be made in the year in which the rehabilitated property is placed in service. The refund shall not apply to the one-year carryback period. Refunds will be paid in equal installments over a two-year period and shall be made from current collections.

(iii) Refund requests shall be submitted to the Department of Revenue on forms prescribed by the department. Refunds shall be made from current tax collections.

(b) Not-for-profit entities, including, but not limited to, nonprofit corporations organized under Section 79-11-101 et seq. shall be ineligible for the credit authorized by this section. Credits granted to a partnership, a limited liability company taxed as a partnership or multiple owners of property shall be passed through to the partners, members or owners on a pro rata basis or pursuant to an executed agreement among the partners, members or owners documenting an alternative distribution method. Partners, members or other owners of a pass-through entity are not eligible to elect a refund of excess credit in lieu of a carryforward of the credit. However, a partnership or limited liability company taxed as a partnership may elect to claim a refund of excess credit at the entity level on a form prescribed by the Department of Revenue. Additionally, excess tax credits that are attributable to rehabilitated property that was placed in service by a pass-through entity prior to January 1, 2011, and that have previously been allocated to and are held by another pass-through entity prior to January 1, 2011, may be refunded to such other pass-through entity.

(5) Subject to the provisions of this subsection, a taxpayer who receives a tax credit that is in excess of the taxpayer's tax liability under this chapter may transfer, sell or assign the unused portion of the credit to any taxpayer having a liability for taxes under this chapter. A tax credit issued by the department to a taxpayer under this section may not be transferred, sold or assigned more than one (1) time, subject to guidelines established by the Department of Revenue. The transferee, buyer or assignee of a tax credit may use the acquired credit in the same manner and to the same extent as the transferor, seller or assignor of the credit; however, the transfer, sale or assignment of a credit will not extend the length of time that the credit may be carried forward. The transfer, sale or assignment of a tax credit may not be made to a flow-through entity. In order to transfer, sell or assign a tax credit authorized by this section, the transferor, seller or assignor shall notify the department and the Department of Revenue in writing within thirty (30) days after the date of the transfer, sale or assignment. The notice shall include (a) the transferor's, seller's or assignor's tax credit balance before the transfer, sale or assignment of the credit; (b) the tax credit identification number assigned by the department; (c) the unused portion of the credit remaining after the transfer, sale or assignment; (d) all federal and state tax identification numbers for both the transferor, seller or assignor and the transferee, buyer or assignee; (e) the date of the transfer, sale or assignment; (f) the amount of the credit transferred, sold or assigned; and (g) any other information required by the department or the Department of Revenue. Failure by the transferor, seller or assignor to comply with the notice requirements of this subsection shall void the transfer, sale or assignment.

(4) * * * To claim the credit authorized pursuant to this section, the taxpayer shall apply to the department which shall determine the amount of eligible rehabilitation costs and expenses and whether the rehabilitation is consistent with the standards of the Secretary of the United States Department of the Interior. The department shall issue a certificate evidencing the eligible credit if the taxpayer is found to be eligible for the tax credit. The taxpayer shall attach the certificate to all income tax returns on which the credit is claimed.

* * *

(5) (a) The board of trustees of the department shall establish fees to be charged for the services performed by the department under this section and shall publish the fee schedule. The fees contained in the schedule shall be in amounts reasonably calculated to recover the costs incurred by the department for the administration of this section. Any taxpayer desiring to participate in the tax credits authorized by this section shall pay the appropriate fee as contained in the fee schedule to the department, which shall be used by the department, without appropriation, to offset the administrative costs of the department associated with its duties under this section.

(b) There is hereby created within the State Treasury a special fund into which shall be deposited all the fees collected by the department pursuant to this section. Money deposited into the fund shall not lapse at the end of any fiscal year and investment earnings on the proceeds in such special fund shall be deposited into such fund. Money from the fund shall be disbursed upon warrants issued by the State Fiscal Officer upon requisitions signed by the executive director of the department to assist the department in carrying out its duties under this section.

(6) This section shall only apply to taxpayers:

(a) Who have been issued a certificate evidencing the eligible credit before December 31, 2024; or

(b) Who, before December 31, 2024, have received a determination in writing from the Mississippi Department of Archives and History, in accordance with the department's Historic Preservation Certificate Application, Part 2, that the rehabilitation is consistent with the historic character of the property and that the property meets the United States Secretary of the Interior's Standards for Rehabilitation, or will meet the standards if certain specified conditions are met, and, who are issued a certificate evidencing the eligible credit on or after December 31, 2024.

SECTION 2. This act shall take effect and be in force from and after its passage.