Senate Bill 2087

AN ACT TO AUTHORIZE AN INCOME AND/OR FRANCHISE TAX CREDIT EQUAL TO A CERTAIN AMOUNT OF THE COST OF PURCHASING AND INSTALLING SOLAR ENERGY SYSTEMS AND ENERGY EFFICIENCY SERVICES; TO PROVIDE THE MANNER IN WHICH THE CREDIT MAY BE CLAIMED; TO PROVIDE THAT IF THE AMOUNT OF CREDIT CLAIMED BY A TAXPAYER EXCEEDS THE AMOUNT OF INCOME AND/OR FRANCHISE TAX IMPOSED UPON THE TAXPAYER FOR THE TAXABLE YEAR, THEN THE TAXPAYER SHALL RECEIVE A REFUND FROM THE DEPARTMENT OF REVENUE FOR THE AMOUNT OF SUCH EXCESS; AND FOR RELATED PURPOSES.

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

SECTION 1. The Legislature finds and declares that clean energy technologies present a clear and cost-effective strategy for Mississippi to develop a major new job-producing energy industry in Mississippi's economic development portfolio. This locally generated energy source is stable and independent of the volatility witnessed in traditional energy sources. The jobs created will provide meaningful, nonexportable employment opportunities for existing workers, displaced workers, long-term unemployed citizens and new workforce entrants. Installation of energy efficiency improvements will reduce the loss or waste of energy and allow consumers to increase their disposable income. The competitive marketplace is enhanced and the property rights of Mississippi's citizens are protected and strengthened by promoting individual or family energy decisions through widespread dissemination of clean energy technologies and energy conservation. Through clean energy technologies, a citizen may choose how to supply power to his or her home and reduce dependence on foreign fossil fuels, enhancing our national security. These technologies also curtail the emission of greenhouse gases and harmful air contaminants, lower housing costs through lowered utility bills, put downward pressure on electricity rates and support community development to sustain and enhance our economy.

SECTION 2. (1) As used in this section, the following terms shall have the meaning ascribed below:

(a) "Solar energy system" means an energy system with the primary purpose of collecting or absorbing sunlight for conversion into electricity or a solar thermal energy system with the primary purpose of collecting or absorbing solar energy to produce domestic hot water, and includes the following:

(i) Grid-connected, solar electric systems include battery backup, photovoltaic panels, mounting systems, inverters, charge controllers, batteries, battery cases, alternating current (AC) and direct current (DC) disconnects, lightning and ground fault protection, junction boxes, remote metering display devices and related electrical wiring materials from the photovoltaic panels to point of interconnection with the residence or electrical load.

(ii) Stand-alone solar electric AC systems include photovoltaic panels, mounting systems, inverters, charge controllers, batteries, battery cases, AC and DC disconnects, lightning and ground fault protection, junction boxes, remote metering display devices and related electrical wiring materials from the photovoltaic panels to point of interconnection with the residence or electrical load.

(iii) Solar thermal energy systems include solar thermal collectors, mounting systems, solar hot water storage tanks, pumps, heat exchangers, drainback tanks, expansion tanks, controllers, sensors, valves, freeze protection devices, air elimination devices, piping and other related materials from the solar thermal collectors to the solar hot water storage tanks.

(b) "Energy efficiency services" means modifications to a structure based on recommendations contained in a Home Performance Audit (HPA) and performed in accordance with standards established by the U.S. Department of Energy and the Energy and Natural Resources Division of the Mississippi Development Authority (MDA) that will increase the energy efficiency of an existing structure. Such services include services and associated products that tend to decrease the rate at which energy is used by the structure and equipment associated with the structure, including, but not limited to, lighting, insulation, attic tents, weatherization, air sealing of openings in the building envelope, sealing of ducts, thermostat upgrades, window film and upgrades, repair or replacement of heating, ventilating and air-conditioning (HVAC) equipment, repair or replacement of hot water heaters or other measures identified by the HPA to reduce waste heat, waste cooling, or waste energy, and education services regarding demand response. For the purpose of administering HPAs and providing guidance to homeowners and qualified contractors regarding what may qualify as an energy efficiency service eligible for the credit authorized by this section, the MDA is directed to adopt rules, regulations, standards, procedures and contractor licensing requirements consistent with the Home Performance with Energy Star Program and the Building Performance Institute.

(2) (a) There shall be allowed as a credit in the amount provided for in subsection (3) of this section against any state income and/or franchise tax imposed, for the cost of purchasing and installing a new solar energy system incurred by a taxpayer.

(b) There shall be allowed as a credit in the amount provided for in subsection (3) of this section against any state income and/or franchise tax imposed, for the cost of purchasing energy efficiency products and/or services.

(c) In the case of a taxpayer who purchases and installs such a system in a residence or a residential rental apartment project that is located in Mississippi, the tax credit shall be claimed on the return of the taxpayer for the taxable year in which such system is completed and placed in service. In the case of a taxpayer who purchases a newly constructed home or newly constructed residential rental apartment project with such a system, the tax credit shall be claimed on the return for the taxable year in which the act of sale takes place. Any solar energy system for which a tax credit is received must remain on the structure to which it was originally attached or on another structure located within the state for a minimum of five (5) years from the date of installation. Any solar electric energy system for which a tax credit is received must install revenue grade monitoring to be able to report the production of the system to the homeowner.

(3) (a) (i) The initial amount of the credit authorized by this section for installation of a solar electric system shall be equal to One Dollar and Fifty Cents ($1.50) per DC watt for the first Eight Kilowatts (8kW) of solar capacity installed. In addition, the initial amount of the credit for an energy storage component of a solar electric energy system shall be equal to Twenty Cents ($0.20) per watt-hour of the first twenty kilowatt-hours (20kWh) of battery capacity installed. In addition, the initial amount of the credit for a solar thermal energy system shall be equal to fifty percent (50%) of the first Five Thousand Dollars ($5,000.00) of eligible costs paid or incurred by a taxpayer. The credit is only available for a solar energy system installed in or on a residence located in this state or on a small multifamily residential unit (within an apartment building or condominium building consisting of four (4) residential units or less) located in this state. With respect to each residence or small multifamily residential unit, only one (1) credit for a solar electric energy system and one (1) credit for a solar thermal energy system are allowed, whether such solar energy systems are owned by the real property owner or otherwise. Subject to the credit limitation for each location as described in this subsection, a taxpayer is entitled to claim the tax credit for each newly installed solar energy system that it owns, whether installed on real property owned by the taxpayer or a third party.

The credit may be used in addition to any federal tax credits earned for the same system. A taxpayer shall not receive any other state tax credit, exemption, exclusion, deduction, or any other tax benefit for property for which the taxpayer has received a tax credit under this section.

(ii) All photovoltaic panels, inverters and other electrical apparatus for which the tax credit is being claimed must be tested and certified by a Federal Occupational Safety and Health Administration (OSHA) Nationally Recognized Testing Laboratory (NRTL) such as UL Laboratories and installed in compliance with manufacturer specifications and all applicable building and electrical codes. Whenever, in return for the purchase price or as an inducement to make a purchase, a marketing rebate or incentive is offered, the eligible cost shall be reduced by the fair market value of the marketing rebate or incentive received. Such a marketing rebate or incentive includes, but is not limited to, a cash rebate, construction or renovation work, referral fee, prize, gift certificate, trip or any other thing of value given by the installer to the customer as an inducement to purchase an eligible solar energy system.

(b) (i) The initial amount of the credit authorized by this subsection shall be equal to thirty-five percent (35%) of the first Ten Thousand Dollars ($10,000.00) of eligible costs paid or incurred by a taxpayer for energy efficiency products and/or services for a residence located in this state. With respect to each residence, only the first Ten Thousand Dollars ($10,000.00) of expenditures for energy efficiency services may be considered for claiming the credit, regardless of whether one or more concurrent or successive owners of the residence purchase energy efficiency services. The credit may be used in addition to any federal tax credits available to the taxpayer for an eligible solar energy system. A taxpayer shall not receive any other state tax credit, exemption, exclusion, deduction, or any other tax benefit for property or services for which the taxpayer has received a tax credit under this section.

(ii) Whenever, in return for the purchase price or as an inducement to make a purchase, a marketing rebate or incentive is offered, the eligible cost shall be reduced by the fair market value of the marketing rebate or incentive received. Such a marketing rebate or incentive includes, but is not limited to, a cash rebate, referral fee, unqualified renovations, prize, gift certificate, trip, additional energy efficiency equipment (light bulbs, air filters, etc.) or any other thing of value given by the installer to the customer as an inducement to purchase an energy efficiency service.

(c) For the purposes of calculating the credit under this subsection, "eligible costs" paid or incurred by a taxpayer include the following:

(i) In the case of an individual who purchases a solar energy system on his or her residence located in this state, eligible costs generally will be the purchase price of the solar energy system. Specifically, eligible costs with respect to a solar electric energy system means the total "qualified solar electric property expenditures" of the individual related to such system, as that term is defined in Section 25D of the Internal Revenue Code of 1986, as amended (the "Code"), and eligible costs with respect to a solar thermal energy system means the total "qualified solar water heating property expenditures" of the individual related to such system as that term is defined in Section 25D of the Code. The Commissioner of Revenue shall follow federal rules, regulations and revenue procedures issued pursuant to Section 25D of the Code, as such provisions are not deemed contrary to the context and intent of Mississippi law.

(ii) In the case of an individual or entity that purchases a newly installed solar energy system located on a residence located in this state in the course of a real estate development, "eligible costs" means the taxpayer's eligible basis in the solar energy property for purposes of the energy credit provided for in Section 48 of the Code, which are those amounts spent on the solar energy system properly chargeable to a capital account. The Commissioner of Revenue shall follow federal rules, regulations and revenue procedures issued pursuant to Section 48 of the Code and related guidance issued pursuant to Section 1603 of the American Recovery and Reinvestment Tax Act of 2009, as amended by Section 707 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, as such provisions are not deemed contrary to the context and intent of Mississippi law.

(iii) In the case of an individual who purchases energy efficiency services for his or her residence located in this state, eligible costs means the resident's total expenditures for energy efficiency services at reasonable market rate. All costs unrelated to energy efficiency improvements are explicitly excluded from eligibility except for improvements deemed necessary to mitigate health and safety threats identified by the HPA. A maximum of twenty-five percent (25%) of eligible expenditures may be related to health and safety mitigation costs for purposes of calculating this tax credit.

(d) To qualify for the solar electric energy credit or the solar thermal energy credit, all work must be completed by a contractor licensed by the Mississippi State Board of Contractors (MSBOC) for Solar and Wind Construction, and the contractor must possess certification for solar installation from the National Board for Certified Energy Practitioners (NABCEP), Solar Energy International (SEI), Roof Integrated Solar Energy (RISE), or a similar installer certification program.

(e) To qualify for this credit as regards to energy efficiency products and/or services, all work must be completed by a contractor licensed by the Mississippi State Board of Contractors (MSBOC) for Residential Builder or Remodeler and the contractor must possess certification for building energy analysis from the Building Performance Institute or similar certification program.

(4) (a) Only one (1) tax credit authorized by this section shall be available for a solar electric energy system, as well as one (1) tax credit available for a solar thermal energy system. The owner of an eligible solar energy system is entitled to claim the credit authorized by this section, only once per residence or multifamily residential unit in this state. A taxpayer other than the owner of the eligible solar energy system that finances eligible cost expenditures by the owner of the system may claim the credit available to the owner of the eligible solar energy system if the owner assigns his or her right to claim the credit to the financier, and only if the taxpayer provides the Department of Revenue with a declaration signed by the owner of the system unambiguously stating that the owner of the system has assigned all of his or her rights to claim the credit authorized by this section to the taxpayer and that the owner will not claim the tax credit. Absent such a declaration, the owner of the eligible solar energy system is the only taxpayer eligible to claim the credit.

(b) Only one (1) tax credit authorized by this section is available for energy efficiency products and/or services. The owner of eligible energy efficiency products and/or services is entitled to claim the credit authorized by this section, only once per residence or multifamily residential unit in this state. A taxpayer other than the owner of a residence where energy efficiency services are performed that finances eligible cost expenditures by the owner of the residence may claim the credit available to the owner of the residence if the owner of the residence assigns his or her right to claim the credit to the financier and only if the taxpayer provides the Department of Revenue with a declaration signed by the owner of the residence unambiguously stating that the owner of the residence has assigned all of his or her rights to claim the credit authorized by this section to the taxpayer and that the owner will not claim the tax credit. Absent such a declaration, the owner of the residence where energy efficiency services are performed is the only taxpayer eligible to claim the credit.

(5) Beginning one (1) year from the effective date of this act and each year thereafter, the amount of this credit shall be lowered by ten percent (10%) of its initial amount. This credit shall expire ten (10) years from the effective date of this act.

(6) Credits may be claimed in accordance with the following:

(a) Any entity taxed as a corporation that has not elected to be taxed as a small business corporation shall claim any credit authorized under this section on any taxes due the state on its corporate franchise or income tax return.

(b) Any individual, estate, or trust shall claim any credit authorized under this section on its income tax return.

(c) Credits granted to a partnership, a limited liability company taxed as a partnership or multiple owners of property shall be distributed to the partners, members or owners when earned on a pro rata basis or pursuant to an executed agreement among the partners, members or owners documenting an alternative distribution method. The members, partners or shareholders of an entity required to file a pass-through entity information return shall claim their share of any credit authorized by this section on the returns of the partners or members as follows:

(i) Corporate partners, members or shareholders shall claim their share of the credit on their corporation income tax or franchise tax returns for the period during which it receives a distribution of such credit from a pass-through entity.

(ii) Individual, estate, or trust partners, members or shareholders shall claim their share of the credit on their income tax returns for the period during which it receives a distribution of such credit from a pass-through entity.

(7) Notwithstanding any other provision of law to the contrary, any excess of allowable credit over the aggregate tax liabilities against which such credit may be applied, as provided in this section, shall constitute an overpayment of tax pursuant to Section 27-7-313, and the Commissioner of Revenue shall make a refund of such overpayment from the current collections of the taxes, together with interest as provided in Section 27-7-315. All credits and refunds, including interest earned thereon, must be paid or disallowed by the Department of Revenue within one hundred eighty (180) days of receipt of any such claim for refund or credit.

SECTION 3. Nothing in this act shall affect or defeat any claim, assessment, appeal, suit, right or cause of action for taxes due or accrued under the income tax laws or franchise tax laws before the date on which this act becomes effective, whether such claims, assessments, appeals, suits or actions have been begun before the date on which this act becomes effective or are begun thereafter; and the provisions of the income tax laws or franchise tax laws are expressly continued in full force, effect and operation for the purpose of the assessment, collection and enrollment of liens for any taxes due or accrued and the execution of any warrant under such laws before the date on which this act becomes effective, and for the imposition of any penalties, forfeitures or claims for failure to comply with such laws.

SECTION 4. This act shall take effect and be in force from and after July 1, 2019.