Mississippi State and Local Tax Update

Income Tax

H.B. 1519, effective January 1, 2012, provides that, with respect to the distributing corporation in the distribution of stock or securities of a controlled corporation, no gain will be recognized from such distribution provided the distribution is a part of a transaction that qualifies for tax-free treatment under IRC §355 or IRC §368(a)(1)(D) ; or if the distribution is pursuant to an overall plan to facilitate an ultimate distribution that qualifies for tax-free treatment under IRC §355 or IRC §368(a)(1)(D).

Sales and Use Tax

The Mississippi Supreme Court held that the Chancery Court was without appellate jurisdiction to hear the appeal of a store owner relating to sales tax assessments because the owner did not comply with the mandatory requirements of perfecting the appeal which are to either pay the delinquent tax or post a bond within 30 days from the date of assessment. The owner's subsequent payment, a week later and more than 30 days from date of assessment, of most of the assessed tax did not cure the defect because the statute requires payment of the entire tax ordered to be paid at the time the appeal is filed. Having no appellate jurisdiction over the appeal, the Chancery Court should have granted the Department of Revenue's motion for summary judgment and dismissal instead of hearing the merits of the case.  Khurana d/b/a VK Quick Mart and VK's Wine & Liquor v. Dept. of Rev.

Property Tax

The Mississippi Attorney General has issued an opinion clarifying that the notice to lien holders of lands being sold for unpaid taxes should be sent by certified mail, not by registered mail. The notice should be sent by certified mail with return receipt requested, as provided in Miss. Code Ann.§ 27-43-5 which more expressly addresses the matter, and is the better indicator of the legislative intent on how the notice should be mailed. The opinion noted that provisions in Miss. Code Ann.§ 27-43-9 requiring the clerk to enter “the date of mailing by registered mail the notice to the lienors” upon the tax sale book are for notation purposes only and are not controlling on the matter. (Attorney General Opinions, 2011-00518, 01/20/2012.)

The Mississippi Court of Appeals held that a property tax sale was correctly set aside as void because the statutory redemption notice requirements were not met. Under Miss. Code Ann.§ 27-43-3, notice of tax sale must be given by personal service as summons issued by the courts are served, by mail, and by publication in a newspaper in the county where the land is located. All three requirements must be met for the redemption notice to be complete. The property owner received actual notice in the form of a certified letter, but the municipal clerk failed to publish the redemption notice in the county newspaper 45 days before the redemption period expired, thus failing to satisfy the mandatory notice requirements and rendering the tax sale void.  City of Bruce v. Borrego Springs Bank, N.A.

In determining whether the owner of a private airport hangar at a publicly-owned airport was exempt from all ad valorem taxes, the Mississippi Attorney General has issued an opinion interpreting the phrase “commercial purpose” to mean engaging in business, or for the purpose of buying or selling goods, products or property. But whether the owner was using the hangar for a “commercial purpose” was a factual determination to be made by the governing authorities. (Attorney General Opinion, 2012-00024, 02/21/2012.)

The Mississippi Attorney General has issued an opinion that the property tax exemption for any privately owned new structure or a renovation of, or improvement to, an existing structure situated on a historic landmark site or located in a historic preservation or central business district may be claimed by any subsequent owner during the 7-year statutory period. Ad valorem taxes apply to the property, not to the owner, and similarly, any exemption applies to the property, not to the owner. (Attorney General Opinion, 2012-00094, 03/20/2012.)

Economic Development

S.B. 2613, effective April 17, 2012, extends the repeal date, from December 31, 2012 to December 31, 2016, on the tax credit for export cargo charges for using port facilities; and extends the repeal date, from July 1, 2012 to July 1, 2016, on the tax credit for import and export cargo charges paid by users of airports.

Effective, July 1, 2012, S.B. 2656 extends the repeal date, from January 1, 2013 to January 1, 2016, on the job tax credit for each full-time employee employed in a new cut and sew job by enterprises that own or operate an upholstered household furniture manufacturing facility.

H.B. 968, effective July 1, 2012, extends the period that a business improvement district may exist before it must be reauthorized from five years to 10 years. The bill also decreases the approval percentage needed to adopt, implement or reauthorize a business improvement district or modify the boundaries of a business improvement district from 70% of the eligible property owners to 60% of the eligible property owners.

Effective retroactive to January 1, 2012, S.B. 2342 provides that manufacturers of personal property that maintain separate facilities for temporary storage and handling of such personal property pending transit to a final destination outside of Mississippi are eligible for licensing as a “free port warehouse” and that personal property manufactured in Mississippi and stored in such facilities pending transit to a final destination outside the state is eligible for exemption from property taxation.

H. B. 1255 allows the board of supervisors of a county or the governing authorities of a municipality to enter into agreements with an economic development project: (1) to provide water, sewer, and other county or municipal services; and/or (2) providing that the board of supervisors or governing authorities will agree in advance to approve any request for exemption for ad valorem taxes in the manner provided by law and that any such exemption must be for a period of 10 years. Such agreements may be for a period of not more than 20 years.

S.B. 2609 extends from July 1, 2012 to July 1, 2016, the repeal date on the provision of law that provides an income tax credit for certain employers sponsoring skills training for employees.

Effective July 1, 2012, H.B. 1257 authorizes public entities to create public benefit corporations for the purpose of entering into financing agreements and engaging in new markets tax credit transactions which include arrangements to plan, acquire, renovate, construct, lease, sublease, manage, operate and or improve new or existing public property or facilities located within the boundaries or service area of the public entity. The law also extends, from 30 to 60 days, the time within which a qualified community development entity allocated a qualified equity investment tax credit must issue the qualified equity investment for which the credit was allocated.