Bill Text: MS SB2417 | 2011 | Regular Session | Introduced
Bill Title: Franchise tax; base the levy on retained earnings employed in this state.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2011-02-23 - Died In Committee [SB2417 Detail]
Download: Mississippi-2011-SB2417-Introduced.html
MISSISSIPPI LEGISLATURE
2011 Regular Session
To: Finance
By: Senator(s) Clarke
Senate Bill 2417
AN ACT TO AMEND SECTIONS 27-13-5 AND 27-13-7, MISSISSIPPI CODE OF 1972, TO REVISE THE FRANCHISE TAX LEVY TO PROVIDE THAT THE LEVY SHALL BE EQUAL TO $2.50 FOR EACH $1,000.00, OR FRACTION THEREOF, OF THE RETAINED EARNINGS OF THE ENTITY TAXED THAT ARE EMPLOYED IN THIS STATE; TO AMEND SECTIONS 27-13-9, 27-13-11 AND 27-13-13, 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 27-13-5, Mississippi Code of 1972, is amended as follows:
27-13-5. (1) Franchise tax levy. Except as otherwise provided in subsections (3), (4), (5) and (7) of this section, there is hereby imposed, to be paid and collected as hereinafter provided, a franchise or excise tax upon every corporation, association or joint-stock company or partnership treated as a corporation under the income tax laws or regulations, organized or created for pecuniary gain, having privileges not possessed by individuals, and having authorized capital stock now existing in this state, or hereafter organized, created or established, under and by virtue of the laws of the State of Mississippi, equal to Two Dollars and Fifty Cents ($2.50) for each One Thousand Dollars ($1,000.00), or fraction thereof, of the retained earnings used, invested or employed in the exercise of any power, privilege or right enjoyed by such organization within this state, except as hereinafter provided. In no case shall the franchise tax due for the accounting period be less than Twenty-five Dollars ($25.00). It is the purpose of this section to require the payment to the State of Mississippi of this tax for the right granted by the laws of this state to exist as such organization, and to enjoy, under the protection of the laws of this state, the powers, rights, privileges and immunities derived from the state by the form of such existence.
(2) Annual report of domestic corporations. Each domestic corporation shall file, within the time prescribed by Section 79-3-251, an annual report as required by the provisions of Section 79-3-249.
(3) A corporation that has negotiated a fee-in-lieu as defined in Section 57-75-5 shall not be subject to the tax levied by this section on such project; * * * however, * * * the fee-in-lieu payment shall be otherwise treated in the same manner as the payment of franchise taxes.
(4) An approved business enterprise as defined in the Growth and Prosperity Act shall not be subject to the tax levied by this section on the retained earnings used, invested or employed by the approved business enterprise in a growth and prosperity county or supervisors district as provided in the Growth and Prosperity Act.
* * *
(5) The tax levied by this chapter and paid by a business enterprise located in a redevelopment project area under Sections 57-91-1 through 57-91-11 shall be deposited into the Redevelopment Project Incentive Fund created in Section 57-91-9.
(6) A business enterprise as defined in Section 57-113-1 that is exempt from certain state taxes under Section 57-113-5 shall not be subject to the tax levied by this section on the retained earnings used, invested or employed by the business enterprise.
SECTION 2. Section 27-13-7, Mississippi Code of 1972, is amended as follows:
27-13-7. (1) Franchise tax levy. Except as otherwise provided in subsections (3), (4), (5) and (7) of this section, there is hereby imposed, levied and assessed upon every corporation, association or joint-stock company, or partnership treated as a corporation under the Income Tax Laws or regulations as hereinbefore defined, organized and existing under and by virtue of the laws of some other state, territory or country, or organized and existing without any specific statutory authority, now or hereafter doing business or exercising any power, privilege or right within this state, as hereinbefore defined, a franchise or excise tax equal to Two Dollars and Fifty Cents ($2.50) of each One Thousand Dollars ($1,000.00), or fraction thereof, of the retained earnings used, invested or employed within this state, except as hereinafter provided. In no case shall the franchise tax due for the accounting period be less than Twenty-five Dollars ($25.00). It is the purpose of this section to require the payment of a tax by all organizations not organized under the laws of this state, measured by the amount of capital or its equivalent, for which such organization receives the benefit and protection of the government and laws of the state.
(2) Annual report of foreign corporations. Each foreign corporation authorized to transact business in this state shall file, within the time prescribed by Section 79-3-251, an annual report as required by the provisions of Section 79-3-249.
(3) A corporation that has negotiated a fee-in-lieu as defined in Section 57-75-5 shall not be subject to the tax levied by this section on such project; * * * however, * * * the fee-in-lieu payment shall be otherwise treated in the same manner as the payment of franchise taxes.
(4) An approved business enterprise as defined in the Growth and Prosperity Act shall not be subject to the tax levied by this section on the retained earnings used, invested or employed by the approved business enterprise in a growth and prosperity county or supervisors district as provided in the Growth and Prosperity Act.
* * *
(5) The tax
levied by this chapter and paid by a business enterprise located in a
redevelopment project area under Sections 57-91-1 through 57-91-11 shall be
deposited into the Redevelopment Project Incentive Fund created in Section 57-91-9.
(6) A business enterprise as defined in Section 57-113-1 that is
exempt from certain state taxes under Section 57-113-5 shall not be subject to
the tax levied by this section on the retained earnings used, invested
or employed by the business enterprise.
SECTION 3. Section 27-13-9, Mississippi Code of 1972, is amended as follows:
27-13-9. * * * The tax imposed, levied and assessed, under the provisions of this chapter, shall be calculated on the basis of the retained earnings employed in this state for the year preceding the date of filing the return, whether a calendar year, or fiscal year, except where otherwise provided in this chapter * * *; provided, that in computing * * * retained earnings, there shall be included deferred taxes, deferred gains, deferred income, contingent liabilities and all true reserves, including all reserves other than for definite known fixed liabilities which do not enhance the value of assets; and amounts designated for the payment of dividends shall not be excluded from such calculations until such amounts are definitely and irrevocably placed to the credit of stockholders, subject to withdrawal on demand * * *. In the case of an association or other organization, except those exempted under Section 27-13-63, that does not have a capital structure like a corporation, the tax is based on that organization's accounts that are equivalent to the aforementioned corporate accounts, or any other retained earnings employed in Mississippi. * * * In no case shall the franchise tax so computed be less than Twenty-five Dollars ($25.00) for the period covering which the return is filed. * * *
* * *
SECTION 4. Section 27-13-11, Mississippi Code of 1972, is amended as follows:
27-13-11. For the purpose of determining the amount of retained earnings * * *, the book value of the accounts as regularly employed in conducting the affairs of the corporation shall be accepted as prima facie correct, except where the commissioner determines that the book value does not properly reflect retained earnings employed in this state and in that situation the commissioner's determination of retained earnings shall be prima facie correct.
If any organization has cause to believe that the calculations required on the return prescribed are not sufficiently informative or do not properly reveal the true franchise or excise tax to be due as measured by the retained earnings of that organization, or shall feel aggrieved at the requirements upon it for information or tax, then the organization shall have the right to file with the commissioner a petition and affidavit signed as returns are by this chapter required to be signed, setting forth the facts showing the retained earnings.
SECTION 5. Section 27-13-13, Mississippi Code of 1972, is amended as follows:
27-13-13. (1) In the case of organizations doing business both within and without Mississippi, the retained earnings employed in this state shall be determined by first computing the ratio between (a) the real and tangible personal property owned in Mississippi and gross receipts from business carried on in Mississippi, and (b) the total real and tangible personal property owned and gross receipts wherever located and from wherever received. That ratio then shall be applied to the total retained earnings and the result of that application shall be the retained earnings employed in this state. * * *.
(2) (a) For the purpose of this section, for tax returns for tax years ending before January 1, 1999, an organization which uses a formula method of apportionment in making income tax returns to this state shall determine its gross receipts from business carried on in Mississippi by applying to total unitary receipts the ratio achieved, or which would be achieved, by such formula and adding to the result of such application any nonunitary Mississippi receipts.
(b) For the purpose of this section, for tax returns for tax years ending on or after January 1, 1999, the gross receipts of an organization that is required to use a formula method of apportionment in making income tax returns to this state shall be the same (both as to gross receipts from business carried on in Mississippi and gross receipts wherever located) as the gross receipts (or sales) used for the receipts or sales factor in the applicable income tax formula. However, gross receipts from business carried on in Mississippi, for the purposes of this section, shall also include any receipts from the taxpayer's business operations which are not apportioned but rather are directly allocated or assigned to this state. If the taxpayer is required to use a formula method of apportionment in making income tax returns which does not have a receipts or sales factor, then the receipts factor for the franchise tax formula shall be determined by regulation of the department.
(c) For purposes of this section, for tax returns for tax years ending on or after December 31, 2001, the ratio described in subsection (1) of this section shall include all gross receipts as specified in paragraph (b) of this subsection and where a taxpayer owns a direct or indirect interest in a flow-through entity, the taxpayer shall include in the ratio its portion of the flow-through entity's (i) real and tangible personal property owned in Mississippi and gross receipts from business carried on in Mississippi, and (ii) total real and tangible property owned and gross receipts wherever located and from wherever received. The taxpayer shall include its portion of the flow-through entity's assessed value of Mississippi property when determining its assessed value of Mississippi property. A flow-through entity's real property, tangible personal property, gross receipts and assessed value of property shall include its portion of these same items of any flow-through entity in which it owns a direct or indirect interest. For purposes of this section, flow-through entity is every form of organization other than a corporation, association or joint-stock company or other organization which would qualify for exemption under Section 27-13-63 if the organization were a corporation, association or joint-stock company.
SECTION 6. This act shall take effect and be in force from and after July 1, 2011.
