Senate Bill 2456

AN ACT TO AMEND SECTION 27-67-3, MISSISSIPPI CODE OF 1972, TO REVISE THE DEFINITION OF THE TERMS "PERSON DOING BUSINESS IN THIS STATE" AND "PERSON MAINTAINING A PLACE OF BUSINESS WITHIN THIS STATE" UNDER THE MISSISSIPPI USE TAX LAW TO INCLUDE ANY OUT-OF-STATE SELLER WHO LACKS A PHYSICAL PRESENCE IN THIS STATE BUT WHO IS MAKING RETAIL SALES OF TANGIBLE PERSONAL PROPERTY INTO THIS STATE AND HAS A SUBSTANTIAL ECONOMIC PRESENCE IN THIS STATE BY SUCH SELLER'S RETAIL SALES OF TANGIBLE PERSONAL PROPERTY SOLD INTO THIS STATE EXCEEDING $250,000.00 BASED ON THE IMMEDIATELY PRECEDING CALENDAR YEAR SALES; TO PROVIDE THAT A PORTION OF USE TAX REVENUE COLLECTED FROM CERTAIN OUT-OF-STATE SELLERS SHALL BE DISTRIBUTED TO MUNICIPALITIES; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 27-67-3, Mississippi Code of 1972, is amended as follows:

27-67-3. Whenever used in this article, the words, phrases and terms shall have the meaning ascribed to them as follows:

(a) "Tax Commission" or "department" means the Department of Revenue of the State of Mississippi.

(b) "Commissioner" means the Commissioner of Revenue of the Department of Revenue.

(c) "Person" means any individual, firm, partnership, joint venture, association, corporation, estate, trust, receiver, syndicate or any other group or combination acting as a unit and includes the plural as well as the singular in number. "Person" shall also include husband or wife, or both, where joint benefits are derived from the operation of a business taxed hereunder or where joint benefits are derived from the use of property taxed hereunder.

(d) "Taxpayer" means any person liable for the payment of any tax hereunder, or liable for the collection and payment of the tax.

(e) "Sale" or "purchase" means the exchange of properties for money or other consideration, and the barter of properties or products. Every closed transaction by which title to, or possession of, tangible personal property or specified digital products passes shall constitute a taxable event. A transaction whereby the possession of property or products is transferred but the seller retains title as security for payment of the selling price shall be deemed a sale.

(f) "Purchase price" or "sales price" means the total amount for which tangible personal property or specified digital product is purchased or sold, valued in money, including installation and service charges, and freight charges to the point of use within this state, without any deduction for cost of property or products sold, expenses or losses, or taxes of any kind except those exempt by the sales tax law. "Purchase price" or "sales price" shall not include cash discounts allowed and taken or merchandise returned by customers when the total sales price is refunded either in cash or by credit, and shall not include amounts allowed for a trade-in of similar property or products. "Purchase price" or "sales price" does not include finance charges, carrying charges or any other addition to the selling price as a result of deferred payments by the purchaser.

(g) "Lease" or "rent" means any agreement entered into for a consideration that transfers possession or control of tangible personal property or specified digital products to a person for use within this state.

(h) "Value" means the estimated or assessed monetary worth of a thing or property. The value of property or products transferred into this state for sales promotion or advertising shall be an amount not less than the cost paid by the transferor or donor. The value of property or products which have been used in another state shall be determined by its cost less straight line depreciation provided that value shall never be less than twenty percent (20%) of the cost or other method acceptable to the commissioner. On property or products imported by the manufacturer thereof for rental or lease within this state, value shall be the manufactured cost of the property and freight to the place of use in Mississippi.

(i) "Tangible personal property" means personal property perceptible to the human senses or by chemical analysis, as opposed to real property or intangibles. "Tangible personal property" shall include printed, mimeographed, multigraphed matter, or material reproduced in any other manner, and books, catalogs, manuals, publications or similar documents covering the services of collecting, compiling or analyzing information of any kind or nature. However, reports representing the work of persons such as lawyers, accountants, engineers and similar professionals shall not be included. "Tangible personal property" shall also include tangible advertising or sales promotion materials such as, but not limited to, displays, brochures, signs, catalogs, price lists, point of sale advertising materials and technical manuals. Tangible personal property shall also include computer software programs.

(j) "Person doing business in this state," "person maintaining a place of business within this state," or any similar term means any person having within this state an office, a distribution house, a salesroom or house, a warehouse, or any other place of business, or owning personal property located in this state used by another person, or installing personal property in this state. This definition also includes (i) any person selling or taking orders for any tangible personal property, either personally, by mail or through an employee representative, salesman, commission agent, canvasser, solicitor or independent contractor or by any other means from within the state, and (ii) any out-of-state seller who lacks a physical presence in this state but who is making retail sales of tangible personal property into this state and has a substantial economic presence in this state by such seller's retail sales of tangible personal property sold into this state exceeding Two Hundred Fifty Thousand Dollars ($250,000.00) based on the immediately preceding calendar year sales.

Any person doing business under the terms of this article by reason of coming under any one or more of the qualifying provisions listed above shall be considered as doing business on all transactions involving sales to persons within this state.

(k) "Use" or "consumption" means the first use or intended use within this state of tangible personal property or specified digital product and shall include rental or loan by owners or use by lessees or other persons receiving benefits from use of the property or product. "Use" or "consumption" shall include the benefit realized or to be realized by persons importing or causing to be imported into this state tangible advertising or sales promotion materials.

(l) "Storage" means keeping tangible personal property or specified digital product in this state for subsequent use or consumption in this state.

(m) "Specified digital products" shall have the meaning ascribed to such term in Section 27-65-26.

SECTION 2. (1) An amount equal to a portion of the use tax revenue collected from taxpayers described in Section 27-67-3(j)(ii) and/or voluntary taxpayers and deposited into the State General Fund shall be allocated and distributed to municipalities in this state in the manner provided in subsection (2) of this section. For the purposes of this section, the term "voluntary taxpayer" means a taxpayer that does not have nexus with this state for sales tax purposes but voluntarily collects and remits use tax to this state on behalf of this state.

(2) (a) The Department of Revenue shall determine the total amount of funds to be distributed under this section by:

(i) Determining the percentage of total sales tax revenue collected during the preceding fiscal year under Section 27-65-1 et seq. that was distributed to municipalities during the preceding fiscal year under Section 27-65-75(1)(a);

(ii) Multiplying the percentage derived under subparagraph (i) of this paragraph (a) by the total amount of use tax collected and remitted during the preceding month under the provisions of this article by taxpayers described in Section 27-67-3(j)(ii) and/or voluntary taxpayers; and

(iii) Multiplying the product derived under subparagraph (ii) of this paragraph (a) by eighteen and one-half percent (18-1/2%).

(b) The total amount derived under paragraph (a) of this subsection shall be the amount of funds distributed to municipalities under this section. The department shall distribute the funds among municipalities based on the proportion that the amount of sales tax revenue distributed to a municipality during the preceding fiscal year under Section 27-65-75(1)(a) bears to the total amount of sales tax revenue distributed to all municipalities during the preceding fiscal year under Section 27-65-75(1)(a). The department shall make the distributions on or before January 31, 2018, and each succeeding January 31 thereafter. The distributions shall be made from General Fund revenue collections for the month of January.

SECTION 3. Section 2 of this act shall be codified as a separate section in Chapter 67, Title 27, Mississippi Code of 1972.

SECTION 4. This act shall take effect and be in force from and after July 1, 2017.