MISSISSIPPI LEGISLATURE
2017 Regular Session
To: Ways and Means
By: Representative Sykes
AN ACT TO AUTHORIZE AN INCOME TAX CREDIT FOR SMALL BUSINESS ENTERPRISES THAT CREATE NEW FULL-TIME JOBS; TO PROVIDE FOR THE AMOUNT OF THE CREDIT; TO PROVIDE THAT A SMALL BUSINESS ENTERPRISE MUST INCREASE EMPLOYMENT BY AT LEAST 10 PERCENT IN ORDER TO BE ELIGIBLE FOR THE TAX CREDIT; TO PROVIDE THAT A TAX CREDIT CLAIMED UNDER THIS ACT BUT NOT USED IN A TAXABLE YEAR MAY BE CARRIED FORWARD FOR FIVE YEARS FROM THE CLOSE OF THE TAX YEAR IN WHICH THE QUALIFIED JOBS WERE CREATED; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. (1) As used in this section, the following words and phrases shall have the meanings ascribed herein unless the context clearly indicates otherwise:
(a) "Full-time job" means a job of at least thirty-five (35) hours per week.
(b) "Small business enterprise" means a commercial enterprise with not more than one hundred (100) employees.
(c) "Tier One areas" means counties designated as Tier One areas pursuant to Section 57-73-21.
(d) "Tier Two areas" means counties designated as Tier Two areas pursuant to Section 57-73-21.
(e) "Tier Three areas" means counties designated as Tier Three areas pursuant to Section 57-73-21.
(2) Small business enterprises in counties designated as Tier Three areas are allowed a job tax credit for taxes imposed by Section 27-7-5 equal to ten percent (10%) of the payroll of the enterprise for net new full-time jobs for five (5) years beginning with years two (2) through six (6) after the creation of the minimum number of jobs required by this subsection; however, if the small business enterprise is located in an area that has been declared by the Governor to be a disaster area and as a direct result of the disaster the small business enterprise is unable to maintain the required number of jobs, the Commissioner of Revenue may extend this time period for not more than two (2) years. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees subject to Mississippi income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those small business enterprises that increase employment by ten percent (10%) or more are eligible for the credit. A small business enterprise awarded a credit under this subsection shall be eligible to receive the credit during the five (5) years regardless of whether after the increase in employment for which the credit was awarded, the business enterprise has more than one hundred (100) employees. However, credit is not allowed during any of the five (5) years if the net employment increase falls below ten percent (10%). The Department of Revenue shall adjust the credit allowed each year for the net new employment fluctuations above the minimum level of ten percent (10%).
(3) Small business enterprises in counties designated as Tier Two areas are allowed a job tax credit for taxes imposed by Section 27-7-5 equal to five percent (5%) of the payroll of the enterprise for net new full-time jobs for five (5) years beginning with years two (2) through six (6) after the creation of the minimum number of jobs required by this subsection; however, if the small business enterprise is located in an area that has been declared by the Governor to be a disaster area and as a direct result of the disaster the small business enterprise is unable to maintain the required number of jobs, the Commissioner of Revenue may extend this time period for not more than two (2) years. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees subject to Mississippi income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those small business enterprises that increase employment by ten percent (10%) or more are eligible for the credit. A small business enterprise awarded a credit under this subsection shall be eligible to receive the credit during the five (5) years regardless of whether after the increase in employment for which the credit was awarded, the business enterprise has more than one hundred (100) employees. However, the credit is not allowed during any of the five (5) years if the net employment increase falls below ten percent (10%). The Department of Revenue shall adjust the credit allowed each year for the net new employment fluctuations above the minimum level of ten percent (10%).
(4) Small business enterprises in counties designated as Tier One areas are allowed a job tax credit for taxes imposed by Section 27-7-5 equal to two and one-half percent (2.5%) of the payroll of the enterprise for net new full-time jobs for five (5) years beginning with years two (2) through six (6) after the creation of the minimum number of jobs required by this subsection; however, if the small business enterprise is located in an area that has been declared by the Governor to be a disaster area and as a direct result of the disaster the small business enterprise is unable to maintain the required number of jobs, the Commissioner of Revenue may extend this time period for not more than two (2) years. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees subject to Mississippi income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those small business enterprises that increase employment by ten percent (10%) or more are eligible for the credit. A small business enterprise awarded a credit under this subsection shall be eligible to receive the credit during the five (5) years regardless of whether after the increase in employment for which the credit was awarded, the business enterprise has more than one hundred (100) employees. However, the credit is not allowed during any of the five (5) years if the net employment increase falls below ten percent (10%). The Department of Revenue shall adjust the credit allowed each year for the net new employment fluctuations above the minimum level of ten percent (10%).
(5) Tax credits for five (5) years for the taxes imposed by Section 27-7-5 shall be awarded for increases in the annual payroll for net new full-time jobs created by small business enterprises qualified under this section. The Department of Revenue shall adjust the credit allowed in the event of payroll fluctuations during the additional five (5) years of credit.
(6) (a) The sale, merger, acquisition, reorganization, bankruptcy or relocation from one (1) county to another county within the state of any small business enterprise may not create new eligibility in any succeeding business entity, but any unused job tax credit may be transferred and continued by any transferee of the business enterprise. The Department of Revenue shall determine whether or not qualifying net increases or decreases have occurred or proper transfers of credit have been made and may require reports, promulgate regulations, and hold hearings as needed for substantiation and qualification.
(b) This subsection shall not apply in cases in which a business enterprise has ceased operation, laid off all its employees and is subsequently acquired by another unrelated business entity that continues operation of the enterprise in the same or a similar type of business. In such a case the succeeding business entity shall be eligible for the credit authorized by this section unless the cessation of operation of the business enterprise was for the purpose of obtaining new eligibility for the credit.
(7) Any tax credit claimed under this section but not used in any taxable year may be carried forward for five (5) years from the close of the tax year in which the qualified jobs were established, but the credit established by this section taken in any one (1) tax year must be limited to an amount not greater than fifty percent (50%) of the taxpayer's state income tax liability which is attributable to income derived from operations in the state for that year. If the small business enterprise is located in an area that has been declared by the Governor to be a disaster area and as a direct result of the disaster the business enterprise is unable to use the existing carryforward, the Commissioner of Revenue may extend the period that the credit may be carried forward for a period of time not to exceed two (2) years.
(8) No business enterprise for the transportation, handling, storage, processing or disposal of hazardous waste is eligible to receive the tax credits provided in this section.
(9) The credits allowed under this section shall not be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credits.
(10) A small business enterprise desiring to claim a credit under this subsection must submit an application for such credit with the Department of Revenue in a manner prescribed by the department.
SECTION 2. This act shall take effect and be in force from and after January 1, 2017.