House Bill 1315

AN ACT TO CREATE THE INVENTORY TAX REDUCTION ACT; TO ALLOW TAXPAYERS A CREDIT AGAINST INVENTORY TAX THAT SHALL BEGIN IN A CALENDAR YEAR AFTER A CERTAIN AMOUNT OF GROWTH IN STATE GENERAL FUND REVENUE OCCURS; TO INCREASE THE CREDIT EACH CALENDAR YEAR THEREAFTER UNTIL THE AMOUNT OF THE CREDIT EQUALS 50% OF THE AD VALOREM TAX IMPOSED ON THE INVENTORY OF THE TAXPAYER; TO CREATE THE INVENTORY TAX REDUCTION FUND, INTO WHICH SHALL BE DEPOSITED AN AMOUNT APPROPRIATED ANNUALLY BY THE LEGISLATURE THAT IS NECESSARY TO PAY COUNTIES FOR THE ANNUAL REDUCTION IN INVENTORY TAX REVENUE INCURRED BY LOCAL TAXING DISTRICTS IN THE COUNTY AS A RESULT OF THE TAX CREDIT; TO PROVIDE THAT THE DEPARTMENT OF REVENUE SHALL MAKE PAYMENTS FROM THE INVENTORY TAX REDUCTION FUND TO THE COUNTY TAX COLLECTORS FOR DISTRIBUTION TO THE LOCAL TAXING DISTRICTS AS REIMBURSEMENT FOR INVENTORY TAXES THAT ARE LOST EACH FISCAL YEAR AS A RESULT OF THE INVENTORY TAX CREDIT AUTHORIZED BY THIS ACT; TO PROVIDE THAT THE AMOUNT THAT EACH LOCAL TAXING DISTRICT WILL RECEIVE UNDER THIS ACT SHALL BE DETERMINED BY THE DEPARTMENT OF REVENUE BASED ON DOCUMENTATION PROVIDED BY THE TAX COLLECTORS UNDER GUIDELINES ESTABLISHED BY THE DEPARTMENT; TO PROVIDE THAT FUNDS RECEIVED BY LOCAL TAXING DISTRICTS FROM SUCH PAYMENTS SHALL BE CONSIDERED TO BE, AND SHALL BE USED IN THE SAME MANNER AS, THE PROCEEDS OF INVENTORY TAXES; TO AMEND SECTION 27-7-22.5, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT TAXPAYERS UTILIZING THE INCOME TAX CREDIT AUTHORIZED BY THIS SECTION SHALL NOT BE ELIGIBLE FOR THE INVENTORY TAX CREDIT AUTHORIZED BY THIS ACT; AND FOR RELATED PURPOSES.

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

SECTION 1. Sections 1 through 5 of this act shall be known and may be cited as the "Inventory Tax Reduction Act."

SECTION 2. As used in Sections 1 through 5 of this act:

(a) "Taxpayer" means any manufacturer, distributor, wholesale or retail merchant who is required to pay inventory tax.

(b) "Inventory" means commodities, raw materials, works-in-process, products, goods, wares and merchandise held for resale.

(c) "Inventory tax" means ad valorem taxes imposed by a county, municipality, school district, levee district or any other taxing authority of the state or a political subdivision thereof, on inventory.

SECTION 3. (1) A taxpayer shall be allowed a credit against inventory tax as provided for in this section.

(2) A taxpayer shall be allowed a credit against inventory taxes in an amount equal to ten percent (10%) of the ad valorem tax imposed on the inventory of the taxpayer beginning with the first calendar year after three (3) consecutive state fiscal years that occur after fiscal year 2013 in which the average growth in State General Fund revenue for such fiscal years is five percent (5%) or more. The credit authorized in this section shall increase by an additional ten percent (10%) of the ad valorem tax imposed on the inventory of the taxpayer each calendar year thereafter. The total amount of the credit authorized pursuant to this section shall not exceed fifty percent (50%) of the ad valorem tax imposed on the inventory of the taxpayer.

(3) The tax credit provided for by this section shall be used against inventory taxes due at the time that a taxpayer pays inventory taxes to the tax collector.

(4) A taxpayer who is delinquent in the payment of inventory taxes to the extent that the penalty assessed pursuant to Section 27-41-9 has reached twelve percent (12%) of the inventory taxes due shall not be eligible to receive the tax credit authorized under this section.

(5) By not later than September 1 after the close of each state fiscal year, the State Treasurer shall certify to the Department of Revenue the average State General Fund revenue growth over the previous three (3) state fiscal years until such time as the credit authorized by this section reaches fifty percent (50%) of the ad valorem tax imposed on the inventory of the taxpayer. If the amount of revenue growth requires the implementation of the credit or an increase in the amount of the credit, as the case may be, the Department of Revenue shall inform county tax collectors of the amount of the credit and take all other actions necessary to implement the credit authorized by this section.

SECTION 4. (1) There is created in the State Treasury a special fund to be known as the "Inventory Tax Reduction Fund," into which shall be deposited an amount appropriated annually by the Legislature that is necessary to pay counties for the reduction in inventory tax revenue incurred by local taxing districts in the county as a result of the tax credit authorized by Section 3 of this act. Money in the fund shall be utilized by the Department of Revenue to make the payments required by Section 5 of this act.

(2) The Inventory Tax Reduction Fund shall be administered by the Department of Revenue, and money in the fund shall be expended upon appropriation by the Legislature. Unexpended amounts in the fund at the end of a fiscal year shall not lapse into the General Fund and any interest or investment earnings on amounts in the fund shall be deposited to the credit of the fund.

(3) The liability of the State of Mississippi to make the payments required by Section 5 of this act shall be limited to the balance contained in the fund.

SECTION 5. (1) The Department of Revenue shall make payments from the Inventory Tax Reduction Fund established in Section 4 of this act to the county tax collectors for distribution to the local taxing districts as reimbursement for inventory taxes that are lost each fiscal year as a result of the inventory tax credit authorized in Section 3 of this act. The amount that each local taxing district will receive under this subsection shall be determined by the Department of Revenue based on documentation provided by the tax collectors under guidelines established by the department.

(2) Funds received by local taxing districts from the payments under subsection (1) of this section shall be considered to be, and shall be used in the same manner as, the proceeds of inventory taxes.

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, raw materials, works-in-process, 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 (g) of this subsection; and may be claimed for each location where such commodities, raw materials, works-in-process, products, goods, wares and merchandise are found and upon which the ad valorem taxes have been paid. Any tax credit claimed under this section but not used in any taxable year may be carried forward for five (5) consecutive years from the close of the tax year in which the credit was earned.

(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 through taxable year 2013, 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.

(e) For the 2014 taxable year, the tax credit for each location of the taxpayer shall not exceed the lesser of Ten Thousand Dollars ($10,000.00) or the amount of income taxes due the State of Mississippi that are attributable to such location.

(f) For the 2015 taxable year, the tax credit for each location of the taxpayer shall not exceed the lesser of Fifteen Thousand Dollars ($15,000.00) or the amount of income taxes due the State of Mississippi that are attributable to such location.

(g) For the 2016 taxable year and each taxable year thereafter, the tax credit of the taxpayer shall be the lesser of the amount of the ad valorem taxes described in subsection (1) paid 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, limited liability company or S corporation, the credit may be applied only to the tax attributable to partnership, limited liability company or S corporation income derived from the taxpayer.

(4) A taxpayer who utilizes the tax credit authorized under this section shall not be eligible for the credit authorized under Sections 1 through 5 of this act in the same taxable year.

SECTION 7. This act shall take effect and be in force from and after July 1, 2013.