MISSISSIPPI LEGISLATURE
2024 Regular Session
To: Finance
By: Senator(s) Parker
AN ACT TO AMEND SECTION 57-114-3, MISSISSIPPI CODE OF 1972, TO REVISE THE DEFINITION OF "QUALIFIED BUSINESS OR INDUSTRY" TO MAKE IT CONFORM TO THE DEFINITION OF "QUALIFIED ECONOMIC DEVELOPMENT PROJECT"; TO AMEND SECTION 57-114-13, MISSISSIPPI CODE OF 1972, TO MODIFY THE DATE ON WHICH AN ANNUAL REPORT BY A QUALIFIED BUSINESS OR INDUSTRY IS DUE TO BE FILED WITH THE MISSISSIPPI DEVELOPMENT AUTHORITY; TO AMEND SECTION 57-114-15, MISSISSIPPI CODE OF 1972, TO CORRECT A REFERENCE TO THE DEPARTMENT OF REVENUE TO CONFORM TO THE APPLICABLE REFERENCE TO THE DEPARTMENT OF EMPLOYMENT SECURITY; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 57-114-3, Mississippi Code of 1972, is amended as follows:
57-114-3. For purposes of this chapter, the following words shall have the meanings ascribed herein unless the context otherwise requires:
(a) "Affiliate" means, with respect to a specified entity, (i) another person or entity that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the specified person or entity, where the term "control" means the ownership or possession, directly or indirectly, of the power to direct more than fifty percent (50%) of the voting equity securities or a similar ownership interest in the specified controlled entity, or (ii) any member of an affiliated group of corporations, of which the specified entity is also a member, which are each subject to income taxation in Mississippi and may elect to file a combined Mississippi income tax return in accordance with state law.
(b) "Authority" means the Mississippi Development Authority.
(c) "Annual report" means the report described in Section 57-114-13.
(d) "Applicable accounting rules" shall mean the accounting principles generally recognized as applicable to a qualified business or industry and pursuant to which such qualified business or industry regularly prepares and maintains its financial and accounting books and records, and which specifically incorporate Generally Accepted Accounting Principles or International Financial Reporting Standards, as appropriate.
(e) "Applicant" means any corporation, limited liability company, partnership, person or sole proprietorship, business trust or other legal entity and subunit or affiliate thereof that applies to the authority, in the manner prescribed by this chapter, seeking (i) certification by the authority that such applicant is a qualified business or industry and that its proposed new project or expansion of an existing business or industrial operation is a qualified economic development project, and (ii) an award in connection therewith of an mFlex tax incentive.
(f) "Average state or county wage" shall mean, as of the project certification date, the lesser of the most recently published average annual wage per person as determined and published by the Mississippi Department of Employment Security for the state or the county in which the qualified project is or will be located; provided that, if a qualified project is or will be located in two (2) or more counties, the average state or county wage, as used in this chapter, shall mean, as of the project certification date, only the most recently published average annual wage per person as determined and published by the Mississippi Department of Employment Security for the state.
(g) "Average employer wage" means the qualified annual payroll for all new full-time jobs created in the State of Mississippi by a qualified business or industry divided by the number of new full-time jobs thereof for which such qualified annual payroll was paid or is otherwise payable.
(h) "Base full-time job" means a job (i) for which an employee was already hired by the qualified business or industry before, and is employed as of, the project certification date; (ii) that offers a minimum of one thousand eight hundred twenty (1,820) hours of an employee's time per year (i.e., thirty-five (35) hours per week on average) for a normal four (4) consecutive quarter period of the qualified business or industry's operations or a job for which the employee was hired before, and is employed as of, the project certification date and is compensated based on one thousand eight hundred twenty (1,820) hours for such annual period (including in each case an employee who, after hiring, elects to take unpaid time off or is on short-term or long-term disability); and (iii) the employee holding such job receives salary or wages subject to state income tax withholdings. The term "base full-time job" also means a base-leased employee. Part-time jobs may not be combined to add up to a base full-time job.
(i) "Base-leased employee" means a nontemporary employee:
(i) Who was leased by the qualified business or industry before the project certification date from another business or enterprise that is 1. in the business of leasing employees, and 2. is registered with the Office of the Secretary of State and qualified to do business in the state;
(ii) Who is leased as of the project certification date;
(iii) Who is not otherwise an employee of such qualified business or industry;
(iv) Who, as of the project certification date, was already performing services for, and under the supervision of, the qualified business or industry pursuant to a leasing agreement between the qualified business or industry and such other employee leasing firm;
(v) Whose job-performing services for the qualified business or industry offers a minimum of one thousand eight hundred twenty (1,820) hours of an employee's time per year (i.e., thirty-five (35) hours per week on average) for an entire normal work year of the qualified business or industry's operations or a job for which the employee is leased before the project certification date and is compensated based on one thousand eight hundred twenty (1,820) hours for such annual period (including in each case an employee who, after being leased, elects to take unpaid time off or is on short-term or long-term disability); and
(vi) Whose job receives salary or wages subject to state income tax withholdings. Individuals employed by an independent contractor performing one or more services for the qualified business or industry pursuant to a services or management agreement (e.g., security services, landscaping services, and cafeteria management and food services) shall not be considered as base-leased employees.
(j) "Contractor tax" shall mean the tax levied by Section 27-65-21, except for the tax upon the sale of manufacturing or processing machinery for a manufacturer or custom processor.
(k) "Construction contract" shall mean any contract or portion of any contract for any one or more of the activities described in Section 27-65-21 for which the contractor tax applies and is payable by the contractor that is party thereto.
(l) "Manufacturing machinery," as used in this chapter, shall have the same meaning ascribed to such term in Section 27-65-11, as interpreted by any regulations promulgated by the Department of Revenue with respect to such section.
(m) "mFlex agreement" means the written agreement entered into between a qualified business or industry and the authority in accordance with Section 57-114-7(4)(c).
(n) "mFlex tax incentive" means the tax incentive authorized by this chapter to be calculated and awarded by the authority, and thereafter applied as a credit to offset state taxes, in accordance with, and subject to, this chapter.
(o) "Minimum job creation requirement" means the creation by the qualified business or industry, following the project certification date, of at least ten (10) new full-time jobs in the state.
(p) "Minimum qualified investment" means a qualified investment of not less than Two Million Five Hundred Thousand Dollars ($2,500,000.00).
(q) "New full-time job" means a job:
(i) For which an employee is hired by the qualified business or industry after the project certification date;
(ii) That offers a minimum of one thousand eight hundred twenty (1,820) hours of an employee's time per year (i.e., thirty-five (35) hours per week on average) for a normal four (4) consecutive quarter period of the qualified business or industry's operations or a job for which the employee is hired after the project certification date and is compensated based on one thousand eight hundred twenty (1,820) hours for such annual period (including in each case an employee who, after hiring, elects to take unpaid time off or is on short-term or long-term disability); and
(iii) The employee holding such job receives salary or wages subject to state income tax withholdings. The term "new full-time job" also means new-leased employee. Part-time jobs may not be combined to add up to a new full-time job.
(r) "New-leased employee" means a nontemporary employee:
(i) Who is leased by the qualified business or industry after the project certification date from another business or enterprise that is 1. in the business of leasing employees, and 2. is registered with the Office of the Secretary of State and qualified to do business in the state;
(ii) Who is not otherwise an employee of such qualified business or industry;
(iii) Who performs services for the qualified business or industry pursuant to a leasing agreement between the qualified business or industry and such other employee-leasing firm;
(iv) Whose job-performing services for the qualified business or industry offers a minimum of one thousand eight hundred twenty (1,820) hours of an employee's time per year (i.e., thirty-five (35) hours per week on average) for an entire normal work year of the qualified business or industry's operations or a job for which the employee is leased after the project certification date and is compensated based on one thousand eight hundred twenty (1,820) hours for such annual period (including in each case an employee who, after being leased, elects to take unpaid time off or is on short-term or long-term disability); and
(v) Whose job receives
salary or wages subject to state income tax withholdings. Individuals employed
by an independent contractor performing one or more services for the qualified business
or industry pursuant to a services or management agreement (e.g., security services,
landscaping services, and cafeteria management and food services) shall not be considered
as * * * new-leased
employees.
(s) "Nonmanufacturing equipment" means all tangible personal property that is not manufacturing machinery, including, but not limited to, office furniture, fixtures, office computers and communications equipment, and warehouse equipment such as racking and shelving.
(t) "Part-time job" means a job (i) for which an employee is hired by the qualified business or industry that requires fewer than one thousand eight hundred twenty (1,820) hours of an employee's time per year (i.e., requires fewer than thirty-five (35) hours per week on average) for an entire normal work year of the qualified business or industry's operations or a job for which the employee is hired and is compensated based on fewer than one thousand eight hundred twenty (1,820) hours for such annual period; and (iii) for which the employee holding such job receives salary or wages subject to state income tax withholdings.
(u) "Project certification date" means the actual date of the authority's certification, or the effective date of certification determined and prescribed by the authority, of the qualified business or industry and its qualified economic development project as eligible for the state tax credits determined and awarded by the authority, as authorized by, and in accordance with, this chapter.
(v) "Qualified annual payroll" means the sum of the annual salary and wages for new full-time jobs of the qualified business or industry, excluding the amount or value of any benefits that are not subject to state income taxes.
(w) "Qualified business
or industry" means any corporation, limited liability company, partnership,
person or sole proprietorship, business trust or other legal entity and subunit
or affiliate thereof, which makes * * * or causes to be made the minimum
qualified investment in, and/or satisfies or causes to be satisfied the
minimum job creation requirement for, a qualified economic development project.
(x) "Qualified economic
development project" or "qualified project" means the location in
the state of one or more of the following enumerated enterprises for which a corporation,
limited liability company, partnership, sole proprietorship, business trust or other
legal entity, or subunit or affiliate thereof, makes or causes to be made * * * the minimum qualified investment and/or satisfies
or causes to be satisfied the minimum job creation requirement:
(i) A new warehouse and/or distribution enterprise or an expansion of an existing warehouse and/or distribution enterprise; provided that, in any such instance, such warehouse and/or distribution enterprise or expansion thereof is certified by the authority to qualify as such;
(ii) A new manufacturing, remanufacturing, assembly, processing and/or refinery enterprise or an expansion of an existing manufacturing, remanufacturing, assembly, processing and/or refinery enterprise; provided that, in any such instance, such manufacturing, remanufacturing, assembly, processing and/or refinery enterprise or expansion thereof is certified by the authority to qualify as such;
(iii) A new research or research and development enterprise or an expansion of an existing research or research and development enterprise; provided that, in any such instance, such research and development enterprise or an expansion thereof is certified by the authority to qualify as such;
(iv) A new regional or national headquarters of the qualified business or industry or an expansion of an existing regional or national headquarters of the qualified business or industry; provided that, in any such instance, such regional or national headquarters or expansion thereof is certified by the authority to qualify as such;
(v) An air transportation, repair and/or maintenance enterprise or an expansion of an existing air transportation, repair and/or maintenance enterprise; provided that, in either instance, such air transportation, repair and/or maintenance enterprise or expansion thereof is certified by the authority to qualify as such;
(vi) A ship or other maritime vessel or barge transportation, repair and/or maintenance enterprise or an expansion of an existing ship or other maritime vessel or barge transportation, repair and/or maintenance enterprise; provided that, in either instance, the ship or other maritime vessel or barge transportation, repair and/or maintenance enterprise or expansion thereof is certified by the authority to qualify as such;
(vii) A new data/information processing enterprise or an expansion of an existing new data/information processing enterprise; provided that, in any such instance such data/information processing enterprise or expansion thereof is certified by the authority to qualify as such;
(viii) A new technology intensive enterprise or an expansion of an existing technology intensive enterprise; provided that, in either instance, the technology intensive enterprise or expansion thereof is certified by the authority to qualify as such; provided further, that a business or enterprise primarily engaged in creating computer programming codes to develop applications, websites and/or software shall qualify as a technology intensive enterprise;
(ix) A new telecommunications enterprise principally engaged in the creation, display, management, storage, processing, transmission and/or distribution, for compensation, of images, text, voice, video or data by wire or by wireless means, or engaged in the construction, design, development, manufacture, maintenance or distribution for compensation of devices, products, software or structures used in the above activities, or an expansion of an existing telecommunications enterprise as herein described; provided that, in any such instance, any such telecommunications enterprise or expansion thereof is certified by the authority to qualify as such; provided further, that commercial broadcast radio stations, television stations or news organizations primarily serving in-state markets shall not be included within the definition of the term "telecommunications enterprise";
(x) A new data center enterprise principally engaged in the utilization of hardware, software, technology, infrastructure and/or workforce, to store, manage or manipulate digital data, or an expansion of an existing data center enterprise as herein described; provided that, in such instance, any such data center enterprise or expansion thereof is certified by the authority to qualify as such.
(y) "Qualified investment" means any expenditures made or caused to be made by the qualified business or industry following the project certification date for construction, installation, equipping and operation of a qualified economic development project from any source or combination of sources, excluding any funds contributed by the state or any agency or other political subdivision thereof, or by any local government or any agency or other political subdivision thereof, to the extent such expenditures can be capitalized under applicable accounting rules or otherwise by the Internal Revenue Code, whether or not the qualified business or industry elects to capitalize the same, as reflected in its financial statements, including, but not limited to, all costs associated with the acquisition, installation and/or construction of, or capital leasehold interest in, any buildings and other real property improvements, fixtures, equipment, machinery, landscaping, fire protection, depreciable fixed assets, engineering and design costs.
(z) "Reporting year" means the twelve-month period ending on the last day of the month during which the annual anniversary of a project certification date occurs, and for which an annual report must be filed with the authority by a qualified business or industry in accordance with Section 57-114-13.
(aa) "State" means the State of Mississippi.
(bb) "State tax" means:
(i) Any sales and use tax imposed on, and payable directly to the Department of Revenue by, the qualified business or industry in accordance with state law, except for contractor's tax and the taxes levied by Section 27-65-24(1)(b);
(ii) All income tax imposed pursuant to law on income earned by the qualified business or industry pursuant to state law;
(iii) Franchise tax imposed pursuant to state law on the value of capital used, invested or employed by the business enterprise certified by the Mississippi Development Authority; and
(iv) Withholding tax required to be deducted and withheld from employee wages pursuant to Section 27-7-301 et seq.
SECTION 2. Section 57-114-13, Mississippi Code of 1972, is amended as follows:
57-114-13. (1) Unless its mFlex
agreement prescribes a longer reporting period or additional reporting requirements,
each qualified business or industry shall file an annual report with the authority
for each qualified economic development project which has been certified, and for
which any mFlex tax incentive has been awarded, by the authority in accordance with
this chapter, for the longer of the following periods: (a) until the reporting
year during which all or any remaining portion of the mFlex tax incentive amount
awarded to such qualified business or industry has been applied to offset state
taxes, or (b) until the seventh reporting year, provided that an annual report shall
in either instance be due in the final reporting year prescribed hereby or by the
mFlex agreement. Each annual report shall be due to the authority no later than
the last business day of the month following the * * * quarter during which the annual anniversary
of its project certification date occurred. Each annual report shall include the
information set forth in this section, together with any other information required
to be provided by the qualified business or industry pursuant to its mFlex agreement,
for the immediately preceding twelve-month period ending on the last day of the
month during which the annual anniversary of its project certification date occurred.
(2) Each annual report submitted to the authority by a qualified business or industry shall, at a minimum, contain the following information:
(a) The total qualified investment made between the project certification date through the end of the reporting year, including a breakout of actual expenditures made by the qualified business or industry for manufacturing machinery, nonmanufacturing equipment and component building materials to establish and equip the qualified economic development project;
(b) The incremental qualified investment made during the reporting year, including a breakout of actual expenditures made by the qualified business or industry for manufacturing machinery, nonmanufacturing equipment and component building materials to establish and equip the qualified economic development project;
(c) If applicable, the total number of base full-time jobs;
(d) The total number of people employed in new full-time jobs as of the last day the year preceding the reporting year;
(e) The total number of people employed in new full-time jobs as of the last day the year of the reporting year;
(f) The average employer wage for the reporting year;
(g) The percentage and number, as of the last day of the reporting year, of new full-time employees who are eligible for and offered a health insurance coverage funded in whole or at least fifty percent (50%) by the qualified business or industry (or by a leasing company with respect to leased employees);
(h) A description of employee benefits, including but not limited to, health, dental and/or vision insurance, retirement savings account, etc. made available to employees, as well as a description of any employees to whom the benefits are not made available (e.g., part-time employees);
(i) The total amount of the mFlex tax incentive awarded thereto, which the qualified business or industry has already applied and taken as a credit to offset state taxes through the end of the reporting period;
(j) A list of all affiliates of the qualified business or industry, including the Federal Employer Identification Number for each affiliate, for which any state tax liability thereof has been or is expected to be offset by all or some portion of the mFlex tax incentives awarded to the qualified business or industry, which list shall further identify (i) any affiliate of the qualified business or industry that was not disclosed as such on its application or annual report submitted for the prior reporting period, whichever was more recent, but which has either become an affiliate of the qualified business or industry as of the date the current annual report or which the qualified business or industry desires to utilize all or a portion of its mFlex tax incentive as a credit to offset the affiliate's state tax liability following the date of the current annual report; (ii) any change in the name of any previously disclosed affiliate since the date the qualified business or industry filed its application or annual report for the prior reporting period, whichever was more recent; (iii) any prior affiliate of the qualified business or industry disclosed as such on its application or annual report for the prior reporting period, whichever was more recent, and which is no longer an affiliate of the qualified business or industry as of the date the current annual report; and (iv) any affiliate of the qualified business or industry disclosed as such on its application or annual report for the prior reporting period, whichever was more recent, and which the qualified business or industry no longer desires that the affiliate utilize all or a portion of its mFlex tax incentive as a credit to offset the affiliate's state tax liability following the date of the current annual report.
(3) The authority shall prescribe a form or forms for the annual report.
(4) Notwithstanding the obligation of a qualified business or industry to file an annual report with the authority for each qualified economic development project which has been certified, and for which any mFlex tax incentive has been awarded, the authority is authorized to request from the qualified business or industry at any other time any of the information set forth herein that must be included in an annual report for purposes of determining whether a qualified business or industry has met any of the project performance measures set forth in its mFlex agreement on or before the respective deadlines imposed with respect thereto. Upon any such written request by the authority, the qualified business or industry shall, within thirty (30) days after receipt of the request, provide to the authority a certified copy of the information requested.
(5) If a qualified business or industry fails to either file an annual report with the authority on or before the deadline mandated by subsection (1) of this section, or provide any information requested by the authority pursuant to subsection (4) of this section within the time period mandated by such subsection, the authority shall provide written notice to the qualified business or industry of the failure to report, and the qualified business or industry shall have thirty (30) additional days to cure the reporting failure following its receipt of the notice. If the qualified business or industry thereafter fails to file its annual report with the authority, or provide such information requested by the authority within the thirty-day-cure period, the authority is authorized to suspend or revoke, at the discretion thereof, all or a portion of the amount of the mFlex tax incentive previously awarded to the qualified business or industry for its qualified economic development project.
(6) If a qualified business or industry either fails to achieve or exceeds any project performance measure set forth in its mFlex agreement within or for any time period required by such agreement, the authority shall, following its (a) review of any annual report filed by the qualified business or industry or of any certified information provided by the qualified business or industry pursuant to subsection (4) of this section, and (b) verification based upon such information that the qualified business or industry either failed to achieve or exceeded any of the project performance measures set forth in its mFlex agreement within or for any time period required by such agreement, adjust the mFlex tax incentive awarded thereto for its qualified economic development project such that the award is no longer based upon any one or more of the performance measures set forth in its mFlex agreement, but is instead based upon one or more of the following, as applicable, as of the end of the most recent reporting year for which the annual report was filed: (a) the actual expenditures made by the qualified business or industry for purposes of the calculation prescribed by Section 57-114-9(a), (b) and (c); and (b)(i) the actual number of new full-time jobs created by the qualified business or industry, together with (ii) the actual average employer wage associated therewith, for purposes of the calculations prescribed by Section 57-114-9(d) and (e).
(7) A qualified business or industry and the authority may, at any time, amend or restate an mFlex agreement in order to modify the performance measures of the qualified business or industry with respect to its qualified economic development project, and in connection with such amendment or amendment and restatement, the authority shall modify the amount of the mFlex tax incentive awarded for the qualified economic development project to comport with the modified performance measures; provided that the modified award amount shall thereafter be subject to the adjustment requirements of subsection (6) of this section.
(8) If the authority adjusts any mFlex tax incentive award pursuant to subsection (6) or subsection (7) of this section, the authority shall issue an amended certification of the corresponding qualified economic development project, which shall specify the amount of mFlex tax incentive award adjustment. The authority shall forward the amended certification, along with any other necessary information, to the Department of Revenue so that the mFlex tax incentive award adjustment for the qualified business or industry can be recorded by the Department of Revenue and used to verify each state tax credit subsequently applied by the qualified business or industry.
(9) If at any time the authority reduces the mFlex tax incentive award granted for the qualified economic development project to an amount less than the total amount of credits already applied and taken by the qualified business or industry, or by one or more affiliates thereof eligible to utilize such credit, to offset state taxes thereof, the Department of Revenue shall charge the qualified business or industry, or such affiliate or affiliates, with an assessment for the amount of state taxes for which no mFlex tax incentive is available, following such reduction by the authority, for application as a tax credit, beginning with those state taxes against which the qualified business or industry most recently applied the credit, and such state tax assessment shall be immediately due and payable.
(10) Any portion of an mFlex tax incentive awarded to the qualified business or industry by the authority for its qualified economic development project pursuant to this chapter that has not been applied, on or before the tenth annual anniversary of the project certificate date, as a credit by such qualified business or industry, or by one or more affiliates thereof eligible to utilize such credit, to offset state taxes otherwise payable, shall expire.
(11) Within thirty (30) days following the end of each calendar quarter, the authority shall provide to the Governor, Lieutenant Governor and the Speaker of the House of Representatives a copy of each amendment to any certification made, together with a copy of each amendment to any mFlex agreement approved and executed, during the immediately preceding calendar quarter.
SECTION 3. Section 57-114-15, Mississippi Code of 1972, is amended as follows:
57-114-15. (1) No provisions of this chapter shall in any way limit or restrict the authority of the Department of Revenue to perform audits for all state tax liabilities for any qualified business or industry that is awarded any mFlex tax incentives by the authority.
(2) The Department of Revenue is authorized to provide to the authority any information received, obtained or produced, or findings or determinations made, thereby as a result of the performance by Department of Revenue of any audit of state tax liabilities of any qualified business or industry that is awarded any mFlex tax incentives by the authority, and any such information, findings or determinations provided to the authority by the Department of Revenue shall be exempt from the provisions of the Mississippi Public Records Act of 1983, as amended.
(3) If any audit by the Department of Revenue results in a reclassification of component building materials, manufacturing equipment or nonmanufacturing equipment, as previously reported by a qualified business or industry, to a different property classification, or a change in the number of new full-time employees or average employer wage, as previously reported by a qualified business or industry, the authority is authorized to adjust the amount of the mFlex tax incentive awarded to the qualified business or industry for a qualified economic development project to comport with any property reclassification or change in the number of new full-time employees or average employer wage in the manner prescribed by Section 57-114-13.
(4) The Department of Employment
Security is authorized to provide to the authority any information received, obtained
or produced, or findings or determinations made * * * thereby, with respect to any qualified
business or industry that is awarded any mFlex tax incentives by the authority,
and any such information, findings or determinations provided to the authority by
the Department of * * *
Employment Security shall be exempt from the provisions of the Mississippi
Public Records Act of 1983, Section 25-61-1 et seq.
(5) The State Auditor may conduct performance and compliance audits under this chapter according to Section 7-72-11(o).
(6) Upon written request made by the Director of the University Research Center Division of the Mississippi Institutions of Higher Learning, the authority shall provide to the director a copy of any certification, together with any amendments thereto, made by the authority, and/or any mFlex agreement, together with any amendments thereto, approved and executed by the authority pursuant to this chapter, described in such request for the purpose of the University Research Center conducting an economic impact analysis and other analyses performed by the University Research Center with respect thereto; provided that any such analyses conducted by the University Research Center with respect to one or more particular qualified economic development projects shall be communicated and provided only to the Governor, Lieutenant Governor, Speaker of the House of Representatives and/or the authority.
SECTION 4. This act shall take effect and be in force from and after its passage.