Senate Bill 2403

(As Passed the Senate)

AN ACT TO AMEND SECTIONS 27-7-49 AND 27-65-42, MISSISSIPPI CODE OF 1972, TO REQUIRE THAT EXAMINATIONS OF A TAXPAYER'S INCOME AND SALES TAX RETURNS MUST BE COMPLETED BY THE DEPARTMENT OF REVENUE WITHIN THREE YEARS OF THE DUE DATE OR DATE THE RETURN WAS FILED UNLESS THE COMMISSIONER OF REVENUE AND THE TAXPAYER AGREE IN WRITING TO AN EXTENSION OF THE TIME PERIOD FOR THE EXAMINATION OF THE RETURN; TO PROVIDE THAT THE COMMISSIONER AND THE TAXPAYER MAY AGREE TO FURTHER EXTENSIONS OF TIME BY SUBSEQUENT WRITTEN AGREEMENTS IF THE EXTENSIONS ARE ENTERED INTO BEFORE THE EXPIRATION OF THE IMMEDIATELY PRECEDING EXTENSION AGREEMENT; TO AMEND SECTION 27-73-5, 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 27-7-49, 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~~ the three-year period, except as hereinafter provided in this section and as provided in Section 27-7-307.

(2) * * * The commissioner and the taxpayer may, within the three-year examination period provided in subsection (1) of this section, * * * agree in writing to extend the time period for examination of a return, for issuance of a determination of an overpayment or deficiency or for filing of a suit with respect to income covered by the return. The commissioner and the taxpayer may agree to further extensions of time by subsequent written agreements if the extensions are entered into before the expiration of the immediately preceding extension agreement.

(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~~ the 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. Agreements to extend the time for an examination shall also extend the time for which a taxpayer may apply for a refund or otherwise amend the return.

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

27-65-42. (1) 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~~ the return was filed * * *, . However, the commissioner and the taxpayer may, within the thirty-six (36) month examination period, agree in writing to extend the time period for examination of returns, for issuance of a determination of an overpayment or deficiency or for filing of a suit with respect to income covered by the return. The commissioner and the taxpayer may agree to further extensions of time by subsequent written agreements if the extensions are entered into before the expiration of the immediately preceding extension agreement.

(2) When an examination of a taxpayer's records to verify returns made under this chapter has been initiated and the taxpayer notified * * *~~thereof~~ of the examination, either by certified mail or personal delivery by an agent of the commissioner, within the thirty-six-month examination period provided * * *~~herein~~ for in subsection (1) of this section, the determination of the correct tax liability may be made by the commission within one (1) year after the expiration of * * * ~~said~~ the thirty-six-month examination period * * *.

(3) 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.

(4) 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, within the one-year period provided for in subsection (2) of this section or within the time period extension agreed to by the commissioner and the taxpayer as provided for in subsection (1) of this section. 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, within the one-year period provided for in subsection (2) of this section or within the time period extension agreed to by the commissioner and the taxpayer as provided for in subsection (1) of this section, no credit or refund shall be allowed.

SECTION 3. Section 27-73-5, Mississippi Code of 1972, is amended as follows:

27-73-5. Except as otherwise provided in Sections 27-7-49 and 27-65-42, all suits by any taxpayer for the recovery of any privilege, income, franchise, or other excise tax, and all applications or proceedings for any refund or credit of * * * ~~such~~ these taxes shall be filed or made within three (3) years next after the return was filed, or from the date the assessment of the tax was made, or from the date the tax was paid, as the case may be, whichever is the earlier, and no recovery of taxes under any such suit shall be had and no refund of taxes shall be made unless such suit or application was filed within * * * ~~said~~ this period of limitation.

* * *~~Provided, h~~ However, as to income taxes the three-year (3) statute of limitations shall be extended to six (6) years in cases where the reported net income of a taxpayer has been reduced by the * * * ~~bureau of internal revenue~~Internal Revenue Service for any taxable period.

SECTION 4. This act shall take effect and be in force from and after July 1, 2013, and shall be repealed from and after June 30, 2013.