Economic Development

Title 35 Mississippi Department of Revenue Part X Economic Development 35.X.01 35.X.02 Chapter 02. National or Regional Headquarters Credit and National 35.X.03 35.X.04 35.X.05 35.X.06 35.X.07 35.X.08 35.X.09 35.X.10 35.X.11 Chapter 01 Jobs Tax Credit Qualifying for and Calculating the Jobs Tax Credit Under Miss. Code Ann. Section 57-73-21, income tax credits are available for: 1. Permanent business enterprises primarily engaged in manufacturing, processing, distribution, wholesaling, research and development, warehousing and warehousing activities. 2. Permanent business enterprises designated by rule or regulation of the Mississippi Development Authority (MDA) as air transportation and maintenance facilities, final destination or resort hotels having a minimum of 150 guest rooms, recreational facilities that impact tourism, movie industry studios, telecommunication enterprises, data or information processing enterprises, computer software development enterprises or any technology intensive facility or enterprise. No business enterprise for the transportation, handling, storage, processing or disposal of hazardous waste is eligible to receive this credit. The credit is not available to businesses that move from one location within the state to another location within the state without increasing employment. Any business that utilizes the MDA Job Training Grant Fund will not be eligible for the Jobs Tax Credit authorized under Miss. Code Ann. Section 57-73-21. The jobs tax credit is for each net new full time job created as long as the minimum increase has been achieved and maintained. The minimum increase in jobs necessary to qualify for the credit must occur within 1 year. A full-time job is a job of at least thirty-five (35) hours a week and includes leased employees from an entity that is in the business of leasing employees as long as all other requirements are met. Part-time jobs may not be combined to add up to a full- time job. The credit is based on filled positions and the employees must be employed in this state and subject to Mississippi Withholding Tax. The credit is allowed each year for 5 years beginning in years 2 through 6 after the creation of the job. The year the jobs are created is year 1. The unused portions of the credit can be carried forward for up to 5 years from the original year in which the excess credit could not be used. The earliest year’s unexpired credit may be used first. For purposes of this credit, the counties in Mississippi are classified as Tier Three (less developed), Tier Two (moderately developed), and Tier One (developed). The counties are evaluated and ranked each year based on the unemployment rate and per capita income of each county for the most recent 36 month period. They are then divided into the three previously mentioned groups with one-third of the counties in each group. The classification for a specific county can change from year to year based on this evaluation. This classification is used to determine the minimum number of jobs a business enterprise must create in a given year before it qualifies for the credit. It is also used to determine the amount of credit per job created. The amount of credit per employee and the job levels for each county classification are as follows: Minimum Annual Increase County Classification in Number of Jobs Credit per Job Tier One 2.50% of payroll Tier Two 5.00% of payroll Tier Three 10.00% of payroll 107 If, after qualifying for one five year period, the business increases the number of jobs substantially enough to qualify again for another five year period, they may apply for a second five year period. Each five year period is accounted for separately. Jobs created within an existing five year period that do not meet the minimum number of jobs required to qualify for an additional five year period are allowed to be included within the existing five year period. After a taxpayer has qualified for the credit, the credit is not allowed for a year if the net employment increase falls below the minimum required for qualification. The credit is only lost for the year(s) that the taxpayer is below the minimum. A recapture of credit taken in previous year(s) is not required. If the taxpayer's employment level increases back above the minimum, then the taxpayer may use the credit for the remainder of the period. However, the original five year period for the credit (years 2 through 6) is not extended. A taxpayer can only earn credit at a given level of employment for a single five (5) year period. To determine whether a taxpayer with an existing facility has created the minimum number of jobs to qualify for the credit, the taxpayer must compare the average annual employment level for the previous year with the average annual employment in the current year. If the amount of the increase exceeds the minimum required, then the employer will qualify for the credit. This allows the credit for employers who have not constructed a new facility, but have substantially increased employment at an existing facility. To determine whether a taxpayer with a new facility qualifies for the credit, the average employment for the portion of the year after production was started should be compared with the same period for the previous year. If the increase exceeds the minimum, then the taxpayer will qualify for the credit. For example, a calendar year taxpayer begins doing business in Mississippi and constructs a new facility that begins production on June 1, 2014. To determine whether the taxpayer qualifies for the credit, June through December of 2014 should be compared to June through December of 2013. If the increase meets the minimum requirement, then the taxpayer would qualify for the credit. The sale, merger, acquisition, reorganization, bankruptcy or relocation from one county to another county within the state of any business enterprise may not create new eligibility in the current or any succeeding business entity, but any unused job tax credit may be transferred and continued by any transferee of the business enterprise. The Commissioner shall determine whether qualifying net increases have occurred or proper transfers of credit have been made and may require the business enterprise to submit such information as needed for substantiation and qualification. The credit cannot be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credits. Credit received by a partnership, LLC or an S- Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass through entity would have had. The tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. The total of the Jobs Tax Credit, the Headquarters Credit and the Research & Development Skills Credit is limited to 50% of the Mississippi income tax liability. These credits may be used in combination with any of the other credits. The credit is not refundable. Compliance with the equal pay provisions of the federal Equal Pay Act of 1963, the Americans with Disabilities Act of 1990 and the fair pay provisions of the Civil Rights Act of 1964 is required in order to qualify for these credits. (Reserved) Same Ownership If an employer qualified for the credit but then reduced employment levels through layoffs or plant closures, the reduction in employment must continue for a minimum of five (5) years before the employer may use the reduced employment levels in the computation of additional credit. If the reduction in employment is for five (5) years or more, then the employer may requalify for the credit on any additional jobs. If the reduction has continued for less than five (5) years, then the employer may requalify in very limited circumstances. Such situations will be considered on a case by case basis. The taxpayer should submit a letter with a request to receive the credit and a justification for the request. The credit will be granted at the discretion of the Commissioner. If an employer retains ownership of a facility and replaces some, or all, of the existing equipment, but makes the same or a similar product, then the base employment level is not affected by the equipment replacement. The jobs tax credit would not be available unless a qualifying increase in employment has occurred. If an employer retains ownership of a facility, suspends operations and retools the production floor with ninety-five percent (95%) new equipment that makes a new product not similar to the old product, then the facility will be treated as a new facility. If an employer closes an old facility and opens a new facility making the same or a related product, then the employment level at the old facility would be used to determine whether employment increases at the new facility qualify for the jobs tax credit. (Reserved) Different Ownership If an employer sells a plant to a related party, then the related party will be treated the same as the employer. If an employer sells a facility to an unrelated third party, and the new owner continues the old operations, then the new owner must exceed the old owner’s peak employment by a qualifying increase in order to receive any jobs tax credit. If an employer sells a facility to an unrelated third party and the new owner suspends operations to retool the production floor, then the facility will be treated as a new facility for the new owner. However, the retooling must include replacing ninety-five (95%) of the equipment to make a new product that is not similar to the old product. If an employer ceases operations at a facility for a year or more and sells the facility to an unrelated third party, then the facility will be treated as a new facility for the new owner, even if the same or a similar product is being made. If the new owner has shut down a facility with similar operations at the same time, then the facility will not be treated as a new facility. If a completely different product is being made, the one-year shut down requirement may be shortened. This will be considered on a case by case basis. If, the new employer requesting the incentive produces a product that was manufactured at a facility in this state that was closed, then the new employer will not earn the jobs tax credit for the new facility unless the employment levels exceeds any previous high at the closed facility. If the employer who owns the new facility is located in this state, it will be able to earn the jobs tax credit, but only to the extent that its level of employment plus the level of the original location (up to any previous high level of employment at the old location before the closing or retooling level) combined is in excess of any previous high level of employment at the original location. The definition of original product will include upgrades and modifications of a normal product line. A business that acquires an unrelated business enterprise that has ceased operation and laid off all of its employees, and that continues operation of the enterprise in the same or similar type of business as the old owner may be eligible for the credit. The new owner would be eligible for the credit as long as the cessation of the business enterprise by the old owner was not for the purpose of securing new eligibility for the credit. This credit is authorized under Miss. Code Ann. Section 57-73-21(2), (3) and (4). (Reserved) Jobs Tax Credit for Economically Distressed Communities This credit is available to the same types of businesses which are eligible for the basic Jobs Tax Credit. These businesses must create at least ten (10) new full-time jobs and be located in an area within a city where thirty percent (30%) of the residents are below the national poverty level and where the unemployment rate is 1½ times the national average. All other requirements, instructions or limitations as previously defined for the basic Jobs Tax Credit in Sections 100 through 300 above apply, except for the following: 1. The amount of credit is equal to ten percent (10%) of the payroll of each new full- time job. 2. The credit can offset fifty percent (50%) of the income tax liability attributable to the income generated by the operations in this state. 3. The business may choose when to begin taking advantage of the credit, but it must be within five (5) years of the beginning of commercial production. 4. The business must attach a map to the application showing the location of the business inside the economically distressed area. 5. There is no extension of the credit period. The MDOR must certify the area as an economically distressed community before the Economically Distressed Community Jobs Tax Credit can be taken. For the MDOR to certify an economically distressed community, the city officials must provide the following: 1. A map detailing the area to be certified. 2. A copy of the documentation from the US Census Bureau proving that thirty percent (30%) of the residents are below poverty level. 3. The census tract grouping unemployment rate for the area and the national unemployment rate for the same area for the same time period. 4. The population of the city. After receiving this information, the MDOR will verify the information and, if all requirements are met, will certify the area as an economically distressed community. This credit is authorized under Miss. Code Ann. Section 27-7-22.27. (Reserved) Jobs Tax Credit for Brownfields This credit is available to any commercial or industrial property owner who incurs costs in the remediation of contaminated property in accordance with the Mississippi Brownfields Voluntary Cleanup and Redevelopment Act. There is no minimum number of new full-time jobs that must be created. All other requirements, instructions or limitations as previously defined for the basic Jobs Tax Credit in Sections 100 through 300 above apply, except for the following: 1. There is no minimum number of new full-time jobs that must be created, regardless of where the property is located. 2. This Brownfields Jobs Tax Credit cannot be taken in conjunction with the National or Regional Headquarters Credit or the Research and Development Skills Credit. 3. The owner of the brownfields property must attach a copy of the certification from the Commission on Environmental Quality of the completion of the remediation and the amount of cost incurred in the project to the application. This credit is authorized under Miss. Code Ann. Section 57-73-21(7). (Reserved) Jobs Tax Credit for Alternative Energy Suppliers This credit is for a business engaged in the manufacture or production of alternative energy; 50% of the finished product of the alternative energy project must be derived from resources or products from this state. All other requirements, instructions or limitations as previously defined for the basic Jobs Tax Credit in Sections 100 through 300 above apply, except for the following: 1. A minimum of 25 new jobs must be created. 2. The amount of credit is equal to $1,000 per new full-time job regardless of where the business is located. 3. The business may choose when to begin taking advantage of the credit, but it must be within five (5) years of the beginning of commercial production. 4. The credit is good for a period of 20 years. 5. The credit can offset 100% of the income tax liability attributable to the income generated by the alternative energy project in this state. 6. The Alternative Energy Jobs Tax Credit cannot be taken in conjunction with the basic Jobs Tax Credit, the National or Regional Headquarters Credit or the Research and Development Skills Credit. 7. An affidavit from the producer describing the resources and products from this state used in the production of the alternative energy and attesting to the truthfulness of the statement must be attached to the application. This credit is authorized under Miss. Code Ann. Section 27-7-22.29. (Reserved) Jobs Tax Credit for Upholstered Household Furniture Manufacturer This credit is for any business owning or operating an upholstered household furniture manufacturing facility employing new, full-time, cut and sew jobs that did not exist before January 1, 2010. All other requirements, instructions or limitations as previously defined for the basic Jobs Tax Credit in Sections 100 through 300 above apply, except for the following: 1. There is no minimum number of jobs provision. 2. The amount of credit is equal to $2,000 per new full-time job regardless of where the business is located. 3. The business may choose when to begin taking advantage of the credit, but it must be within five (5) years from the close of the tax year in which the credits were earned. 4. The credit is good for a period of 5 years. 5. The credit can offset up to 100% of the income tax liability of the business each year. 6. The Upholstered Furniture Manufacturer Jobs Tax Credit cannot be taken in conjunction with the basic Jobs Tax Credit, the National or Regional Headquarters Credit or the Research and Development Skills Credit. 7. A description of the items being manufactured and the jobs being performed must be attached to the application. 8. There is no extension of the credit period. This credit is authorized under Miss. Code Ann. Section 27-7-22.36. (Reserved) Applying for the Credit and Claiming the Credit An application is not required to qualify for the Jobs Tax Credits but may be submitted for review. An application is only required in order lock in the county classification. If an employer plans to expand its labor forces in a facility in a Tier Three or Tier Two county, then the employer may complete the certification application and make a request in a letter that the current designation of the county be retained. This allows an employer to retain the county designation and the amount of anticipated credit that was in effect for the expansion. If there is no construction or expansion of a facility, the expansion in labor forces must take place by the end of the following tax year for the certification and county designation to remain valid. If there is a construction or expansion of a facility, it must begin within one (1) year of the certification for the certification and county designation to remain valid. This initial certification applies to the credits covered under the specific certification generated during years two (2) through six (6) after the expansion of labor. This certification to lock in the county’s classification will not be granted retroactively. For subsequent qualification and credit for additional increases in employment, the county designation in effect at that time should be used to determine the qualification and amount of the credit. For detailed instructions concerning the application process or claiming the credits see the Mississippi Tax Incentives, Exemptions and Credits Book. (Reserved) 35.X.01 revised effective June 1, 2016. Chapter 02 National or Regional Headquarters Credit and National or Regional Headquarters Relocation Tax Credit National or Regional Headquarters Tax Credit A credit is available to any company transferring or establishing a national or regional headquarters from within or outside the State of Mississippi and creating a minimum of twenty (20) jobs at the headquarters. A credit is also available to any company expanding or making additions to its national or regional headquarters already in Mississippi after January 1, 2013, and creating a minimum of twenty (20) jobs at the headquarters. The minimum increase of twenty (20) jobs must occur within one (1) year. The amount of the credit is $500.00 for each net new full time employee for the first five (5) years. The amount of the credit is increased to $1,000.00 provided the employee’s salary (excluding benefits not subject to Mississippi income tax) is one hundred twenty-five percent (125%) of the average annual wage of the state. If the employee’s salary (excluding benefits not subject to Mississippi income tax) is two hundred percent (200%) of the average annual wage of the state, the credit is increased to $2,000.00 for that employee. The average annual wage is the most recently published average annual wage as determined by the Mississippi Department of Employment Security. A full-time employee is an employee who works at least thirty-five (35) hours a week. To be used in the credit computation, the employee must be located in Mississippi and subject to withholding tax. Part-time jobs cannot be combined to add up to a full-time job. No enterprise in the business of transporting, handling, storing, processing or disposing of hazardous waste is eligible to receive these credits. No regional or national sales office is eligible for these credits. A national headquarters is that office or location of a multi-state business where managerial, professional, technical and administrative personnel are domiciled and employed. It is the location where the centralized functions such as financial, legal, technical and personnel functions are performed. The function and purpose of the national headquarters is to plan, direct and control all aspects of the organization's operations and it has final authority over all regional offices, operating facilities or any other offices of the business enterprise. The national headquarters is subordinate only to the ownership of the organization or its representatives. A regional headquarters is one of several management offices or facilities of a multi-state business that is responsible for planning, directing and controlling all aspects of the business operations within a sub-divided area of the United States. A regional headquarters performs a function that is separate from the management of operational facilities within the region. A regional headquarters performs functions similar to the national headquarters, but within a more limited area. It has final authority over all matters within its region and is subordinate only to the national headquarters. Before the credit is granted, the taxpayer must show that the headquarters will have officers and other high level employees with the support staff normally associated with a headquarters. The support staff for the headquarters is also included in the computation of the credit. The support staff are those full time employees required to assist management and other headquarters personnel to perform functions that are unique to, or required by, the headquarters operation. The classification of support personnel as headquarters employees is dependent on their duties being in direct relationship to the functions of the office or facility and not solely on their physical presence at the location. Employees who are physically present at the location, but whose work is not related to the office functions of the headquarters, such as salesmen, truck drivers, janitors, etc., are not considered headquarters personnel and may not be counted toward the minimum twenty (20) jobs to be created. Companies that transfer full time headquarters employees into the state that are employed in Mississippi for less than twelve (12) months will be allowed a pro-rated portion of the yearly credit in the first and last years. The amount of the credit is pro-rated based on the number of months the employee is employed in this state divided by twelve (12). If the number of jobs falls below the twenty (20) required within a year, the credit is lost for that year and cannot be recovered. If the minimum number of jobs is achieved again, the credit is available for the remainder of the original five (5) year period. The original period is not extended. If the salaries that originally qualified for the additional amount of credit fall below the required average annual state wage, the amount of credit must be adjusted for that year and cannot be recovered. But, if the salaries once again meet the criteria, the additional credit is available for the remainder of the original five (5) year period. The total of the Jobs Tax Credit, the National or Regional Headquarters Credit, the National or Regional Headquarters Relocation Credit and the Research & Development Skills Credit is limited to fifty percent (50%) of the Mississippi Income Tax liability. The unused portions can be carried forward for up to five (5) years from the original year in which the excess credit could not be used, but you may use the oldest year's unexpired credit first. They may be used in combination with any of the other credits. The credit is not refundable. The sale, merger, acquisition, reorganization, bankruptcy or relocation from one county to another county within the state of any business enterprise may not create new eligibility in the current or any succeeding business entity, but any unused credit may be transferred and continued by any transferee of the business enterprise. The Department of Revenue shall determine whether qualifying net increases have occurred or proper transfers of credit have been made and may require such information as needed for substantiation and qualification. The credit cannot be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credits. Credit received by a partnership, LLC or an S- Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass through entity would have had. The tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. If the permanent business enterprise is located in an area that has been declared by the Governor to be a disaster area and as a direct result of the disaster the business enterprise is unable to use the existing carryforward, the Commissioner of the Department of Revenue may extend the period that the credit may be carried forward for a period of time not to exceed two (2) years. The extension must be authorized in writing by the Commissioner. This credit is authorized under Miss. Code Ann. Section 57-73-21(5). (Reserved) National or Regional Headquarters Relocation Tax Credit A relocation income tax credit is available to any company that transfers or relocates its national or regional headquarters to Mississippi from outside Mississippi in an amount equal to the actual relocation costs paid by the company. A minimum of twenty (20) jobs must be created in order to qualify for the credit. Relocation costs for which the relocation income tax credit may be taken includes nondepreciable expenses that are necessary to relocate headquarters employees to the national or regional headquarters. These qualified relocation expenses include travel expenses for employees and members of their households to and from Mississippi in search of homes and moving expenses to relocate furnishings, household goods and personal property of the employees and members of their households and other similar nondepreciable relocation expenses. The relocation credit is applied to the tax year in which the relocation costs are paid. The maximum cumulative amount of tax credits that may be claimed by all taxpayers claiming a relocation tax credit in any one (1) fiscal year cannot exceed One Million Dollars ($ 1,000,000.00), exclusive of credits that might be carried forward from previous years. A company may not receive a credit for the relocation of an employee more than one (1) time in a twelve-month period for that employee. This credit may be used in combination with any of the other credits. The total of the Jobs Tax Credit, the National or Regional Headquarters Tax Credit, the National or Regional Headquarters Relocation Tax Credit and the Research and Development Skills Tax Credit is limited to fifty percent (50%) of the income tax liability attributable to the income derived from operations in this state for that year. Any excess credit amount can be carried forward for up to five (5) years from the original year in which the excess credit could not be used. The credit is not refundable. If the permanent business enterprise is located in an area that has been declared by the Governor to be a disaster area and as a direct result of the disaster the business enterprise is unable to use the existing carryforward, the Commissioner of the Department of Revenue may extend the period that the credit may be carried forward for a period of time not to exceed two (2) years. The extension must be authorized in writing by the Commissioner. This credit is authorized under Miss. Code Ann. Section 57-73-21(7). (Reserved) Applying for the Credits and Claiming the Credits To apply for the credits, an Application for Certification of Economic Incentives and a letter requesting the credit must be submitted. The letter must contain sufficient information to allow a determination of whether the location qualifies as a national or regional headquarters. A list of eligible relocation expenses must be provided when applying for the National or Regional Headquarters Relocation Tax Credit. A letter will be issued informing the taxpayer if the applicable credit is granted. Compliance with the equal pay provisions of the federal Equal Pay Act of 1963, the Americans with Disabilities Act of 1990 and the fair pay provisions of the Civil Rights Act of 1964 is required in order to qualify for these credits. For detailed instructions concerning the application process or claiming the credits see the Mississippi Tax Incentives, Exemptions and Credits Book. (Reserved) Chapter 03 Research and Development Skills Credit Under Miss. Code Ann. Section 57-73-21(6), a credit of $1,000.00 is available for the first five (5) years for each net new full-time employee in any job requiring research and development skills. The employee must be engaged in research and development activities. Qualification of jobs for this credit would require at a minimum, a Bachelor’s degree in a scientific or technical field of study from an accredited four (4) year college or university, employment in the employees’ area of expertise, compensation at a professional level and two (2) years of related job experience. Examples are chemists and engineers. This credit is available to most companies regardless of the business in which it engages. However, no business enterprise for the transportation, handling, storage, processing or disposal of hazardous waste is eligible to receive this credit. A full time employee is an employee who works at least thirty-five (35) hours a week. The employees must be located in Mississippi and subject to Mississippi withholding tax. Part-time positions cannot be combined to add up to a full-time position. If the employee is employed in Mississippi for less than twelve (12) months, credit will be allowed for a pro-rated portion of the yearly credit in the first and last years. The amount of the credit is pro-rated based on the number of months the employee is employed in this state divided by twelve (12). The total of the Jobs Tax Credit, the National or Regional Headquarters Credit, the National or Regional Headquarters Relocation Credit and the Research & Development Skills Credit is limited to 50% of the Mississippi Income Tax liability. The unused portions can be carried forward for up to (5) years from the original year in which the excess credit could not be used. This credit may be used in combination with any of the other credits and is not refundable. The sale, merger, acquisition, reorganization, bankruptcy or relocation from one county to another county within the state of any business enterprise may not create new eligibility in the current or any succeeding business entity, but any unused credit may be transferred and continued by any transferee of the business enterprise. A letter detailing the facts surrounding such an occurrence and requesting a ruling on the eligibility of any credits must be presented to the Department to determine whether qualifying net increases have occurred or proper transfers of credit have been made. The credit cannot be used by any business enterprise or corporation other than the business enterprise actually creating the jobs qualifying for the credits. Credit received by a partnership, LLC or an S-Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass through entity would have had. The tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. Compliance with the equal pay provisions of the federal Equal Pay Act of 1963, the Americans with Disabilities Act of 1990 and the fair pay provisions of the Civil Rights Act of 1964 is required. An application is not required in order to take this credit but may be submitted for review. The taxpayer may apply for certification of the credit by submitting the Application for Certification of Economic Development along with a letter requesting the credit. The letter should contain sufficient information to allow a determination of whether the employee qualifies for the credit For detailed instructions concerning the application process or claiming the credits see the Mississippi Tax Incentives, Exemptions and Credits Book. This credit is authorized under Miss. Code Ann. Section 57-73-21(6) (Reserved) Chapter 04 Basic Skill Training or Retraining Tax Credit An income tax credit is allowed to employers that are: 1. Permanent business enterprises primarily engaged in manufacturing, processing, distribution, wholesaling, research and development and warehousing. 2. Permanent business enterprises designated by rule or regulation of the Mississippi Development Authority as air transportation and maintenance facilities, final destination or resort hotels having a minimum of (one hundred fifty) 150 guest rooms, recreational facilities that impact tourism, movie industry studios, telecommunication enterprises, data or information processing enterprises, computer software development enterprises or any technology intensive facility or enterprise. 3. Employers that have qualified for the national or regional headquarters credit. The credit allowed is fifty percent (50%) of qualified expenses, not to exceed fifty percent (50%) of the income tax liability. Any excess credit will not be refunded, but may be carried forward for up to five (5) years. The program must be certified for a specific number of years not to exceed five (5) years. The credit may offset up to fifty percent (50%) of the income tax due. It may be used in combination with any of the other credits. The training or retraining credit cannot exceed $2,500 in the aggregate per employee for a three (3) year period. To qualify for the credit, the basic skills training or retraining must be offered through, or be approved by, the community or junior college in the district where the business is located. Employers must be certified as eligible for the tax credit by the local community or junior college that serves the employer and the Mississippi Department of Revenue. The training does not have to be on the community or junior college campus to qualify if it is sponsored and approved by the college. A copy of the certification must be furnished to the Department of Revenue by the taxpayer when the certification is granted. When a return is filed on which the credit is taken, a schedule showing the expenses and computation of the credit and a copy of the certification must be attached to the return. The credit may be available for basic skills training that enhances reading, writing or math skills up to the twelfth (12th) grade level for employees who are unable to function effectively on the job due to deficiencies in these areas or who would be displaced because such deficiencies will inhibit their training for new technology. The credit may also be available for retraining programs for hourly employees who have been employed for a minimum of one (1) year by the employer that, upon successful completion, increase the employee’s opportunity for consideration for promotion or retention with the employer. For either type of training to qualify for the credit, it must be job-related and increase opportunities for employee advancement or retention. Employers may contact the Mississippi Community College Board Office of Workforce Education for a list of Community Colleges and the cities where the main campuses are located at: Office of Workforce Education Mississippi Community College Board 3825 Ridgewood Road Jackson, MS 39211 (P) 601-432-6519 (F) 601-432-6365 The credit is applied to qualified training or retraining expenses, which are expenses related to instructors, instructional materials and equipment and the construction and maintenance of facilities by the employer that are designated for training or retraining provided through such community or junior college or training approved by such community or junior college. The qualified expenses are net of any reimbursement. Tuition reimbursement programs will qualify as long as they are related to the employee’s job and there is an agreement between the employer and employee that the employee must work for the employer for a reasonable period of time after the tuition reimbursement program has been completed so that the training may be utilized. The expenses that qualify are net of any reimbursement or paybacks to the employer. If an employee begins a program and is terminated for cause by the employer, the employer does not have to recapture the amount previously taken as a credit, unless the employee has to repay the employer. If so, the employer has to recapture those amounts. The credit cannot be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credit. Credit received by a partnership, LLC or S- Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass-through entity would have had. The tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. The credit is not refundable. An expense cannot be used both as a credit and a deduction. If a credit is based on an expense, then the amount of the credit taken must be added back to Mississippi taxable income in the year the credit is used. This credit is authorized under Miss. Code Ann. Section 57-73-25, as amended. (Reserved) (Reserved) Chapter 05 Rural Economic Development (Red) Credit An income tax credit is available for debt service on certain bonds issued by the Mississippi Business Finance Corporation. Debt service may include the total amount paid to service the debt. This credit is also known as the Mississippi Business Finance Corporation Revenue Bond Service Credit. Only debt service paid on revenue bonds issued by the Mississippi Business Finance Corporation to finance economic development projects to induce the location of manufacturing facilities within this state can be taken as a credit. This credit can be used against the taxes due from the income generated by or arising out of the economic development project. The bonds that qualify for this credit are the bonds issued under the authority of Sections 57-10-401 through 57-10-439 of the Mississippi Code of 1972. For more information on the benefits of this program contact the Mississippi Development Authority, Post Office Box 849, Jackson, MS 39205-0849. This credit has been amended several times and the credit carry forward periods will vary. Currently, excess credits may be carried forward to the three (3) succeeding years following the year in which the credit was earned. The credit is limited to eighty percent (80%) of the income tax due on income generated by the economic development project that gave rise to the credit. This income is determined by a formula adopted by the Mississippi Business Finance Corporation. It may be used in combination with any of the other credits. The credit cannot be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credits. Credit received by a partnership, LLC or an S- Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass through entity would have had. The tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. The credit is not refundable. An expense cannot be used both as a credit and a deduction. If a credit is based on an expense, then the amount of the credit taken must be added back to Mississippi taxable income in the year the credit is used. To apply for this credit: You do not have to apply for this credit, but you must attach a schedule of computation of the current year's credit and expenses that created the credit. You must also attach a schedule of credits used in prior years with any carry forward amounts showing the amounts used and carried forward by year. This credit is authorized under Section 27-7-22.3 of the Mississippi Code of 1972, as amended. This regulation is effective January 1, 2001. (Reserved) (Reserved) Chapter 06 Ad Valorem Credit An income tax credit is available for ad valorem tax paid on commodities, goods, wares and merchandise held for resale by manufacturers, distributors, and wholesale or retail merchants. The credit is limited to the lesser of $5,000.00 per location or the income tax attributable to the location. For the credit to be taken, the ad valorem tax must be determined by specific location. Within these limitations, this credit may offset up to one hundred percent (100%) of the income tax due. It may be used in combination with any of the other credits. The credit may be claimed only in the tax year in which the ad valorem taxes are paid. A carry forward is not available. A copy of the tax receipt from the county, city or school district that shows the inventory valuation and a schedule showing the calculation by location of the ad valorem tax paid based on the valuation must be attached to the return. The credit cannot be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credits. Credit received by a partnership, LLC or an S- Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass through entity would have had. The tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. The credit is not refundable. An expense cannot be used both as a credit and a deduction. If a credit is based on an expense, then the amount of the credit taken must be added back to Mississippi taxable income in the year the credit is used. To apply for this credit: You do not have to apply for this credit ahead of time, but you must attach a copy of the tax receipt to your return to claim this credit. If you have more than five (5) locations, you should attach five (5) receipts and a schedule of all receipts including the ones attached. This credit is authorized under Miss. Code Ann. Section 27-7-22.5, as amended. (Reserved) Chapter 07 Child/Dependent Care Credit An income tax credit is allowed to any employer providing dependent care for its employees during the employee's working hours. The credit allowed is 25% of qualified expenses. Starting January 1, 1998 the credit allowed is 50% of qualified expenses. This credit can offset up to 100% of the income tax due from the entity. Any excess credit will not be refunded, but can be carried forward for up to five (5) years. An employer must have its child care program certified by the Department of Health for programs serving children twelve (12) years of age or younger and for programs serving elderly adults. The State Tax Commission certifies programs serving dependents older than twelve (12) years of age. To request certification from the Tax Commission, the employer should submit a letter explaining the employer's child care program and specifically requesting certification for child care credit. A copy of the certification from the Department of Health must be furnished by the taxpayer to the Tax Commission when the certification is granted. Information concerning the Department of Health's certification may be obtained at the following office: Mississippi State Department of Health, Division of Child Care and Special Licensure, Post Office Box 1700, Jackson, MS 39215-1700. To qualify, the facility must have an average daily enrollment for the taxable year of no less than six (6) children who are twelve (12) years of age or younger and be licensed according to the regulations governing licensure of child care facilities in Mississippi; or must serve five (5) or fewer children and/or elderly adults in a family child care/elder care home approved by the Department of Health for participation in the United States Department of Agriculture child and adult nutrition program; or must serve children over twelve (12) years of age but less than eighteen (18) years of age in either a community-based facility or a facility at the employment site; or must serve adult relatives of employees in either a community based elder-care facility or a facility at the employment site; or must serve children or adult dependents having physical, emotional or mental disabilities in either a community-based facility or a facility at the employment site. The net cost of any contract executed by the employer for a third party to provide dependent care is a qualified expense. If the employer elects to provide dependent care directly, then the qualified expenses are expenses for staff, learning and recreational materials and equipment, and cost associated with the construction and maintenance of a facility. Additional eligible expenses include costs assumed by the employer which increases the quality, availability and affordability of dependent care in the community used by employees during the employee's work hours. For facilities and equipment, the eligible expense is the amount of depreciation expense allowable in computing taxable income. These cost are net of any reimbursement. Any unused credit may be carried over for 5 years. An expense cannot be used both as a deduction and as the basis for a credit. Any expense used in computing the allowable credit cannot be taken as a deduction. The expense must be added back to Mississippi taxable income. The credit cannot be used by any business enterprise or corporation other than the business enterprise actually qualifying for the credits. Credit received by a partnership, LLC or an S- Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass through entity would have had. The tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. The credit is not refundable. The Child Care Credit may offset up to 100% of the tax due. It may also be used in combination with any of the other credits. To apply for this credit: You must have had your program previously certified and have furnished a copy of the certification to the Tax Commission. You must attach a schedule showing the computation to the return. This credit is authorized under Section 57-73-23 of the Mississippi Code of 1972, as amended. This regulation is effective January 1, 2001. (Reserved) (Reserved) Chapter 08 Export Port Charges Credit An income tax credit is available to taxpayers that utilize port facilities at Mississippi state, county and municipal ports or harbors as established pursuant to Miss. Code Ann. Sections 59- 5-1 through 59-5-69, Sections 59-7-1 through 59-7-519, Sections 59-9-1 through 59-9-85 or Sections 59-11-1 through 59-11-7. The amount of credit allowed shall be the total of export cargo charges paid on receiving into the port, handling to a vessel and wharfage. This credit shall not exceed fifty percent (50%) of the income tax reduced by the sum of all other credits, except credits for tax payments. Any excess credit will not be refunded, but can be carried forward for up to five (5) years. The credit cannot be used by any business enterprise or corporation other than the business enterprise that incurred the expenses. Credit received by a partnership, LLC or an S Corporation may be passed through to offset tax due from the activity that created the credit. The credit is subject to the same limitations that the pass through entity would have had. The tax due on salaries or wages paid by an S Corporation and guaranteed payments to partners by a partnership cannot be offset by the credit. The credit is not refundable. An expense cannot be used both as a credit and a deduction. If a credit is based on an expense, then the amount of the credit taken must be added back to Mississippi taxable income in the year the credit is used. To obtain the credit, the taxpayer must provide to the Mississippi Department of Revenue, a statement from the governing authority of the port certifying the amount of charges paid by the taxpayer for which credit is claimed. For detailed instructions concerning the application process or claiming the credits see the Mississippi Tax Incentives, Exemptions and Credits Book. This credit is authorized under Miss. Code Ann. Section 27-7-22.7. (Reserved) 35.X.09 revised effective August 3, 2019 Chapter 09 Motion Picture Production Tax Incentive Definitions A motion picture production company (MPPC) is one that produces a nationally distributed motion picture, video, DVD, television program or series, commercial, or computer or video game. This includes a company engaged in the business of making such productions using animation, interactive media, preproduction and postproduction 3D applications, video game cinematics, virtual production, visual effects, and motion capture within the fields of feature film, television, commercials and games. The production of news or athletic events do not qualify, nor does any project that contains any material or performance deemed obscene as defined in Miss. Code Ann. Section 97-29-103. The company cannot have defaulted on any state loan or have declared bankruptcy where a state obligation had been discharged because of the bankruptcy. A Mississippi vendor is a business that either owns an office building in Mississippi or has signed a lease for office space in Mississippi for at least a year, has at least one employee stationed full time at the Mississippi office, is registered with the Secretary of State, is known in the trade as a vendor active in the relevant line of business and advertises as a Mississippi vendor. An employee is defined as an individual directly involved in the physical production and/or post-production of a motion picture produced in this state and who is employed by a MPPC, personal service corporation or loan out company. Payroll is defined as salary, wages or other compensation including related benefits paid to Mississippi resident employees upon which Mississippi income tax is due and has been withheld. Fringes means costs paid by a MPPC for Mississippi resident employee benefits that are not subject to state income tax. Fringes may include, but are not limited to, payments by an employer for unemployment insurance, Federal Insurance Contribution Act (FICA), workers' compensation insurance, pension and welfare benefits and health insurance premiums. A Mississippi resident is defined as a person domiciled in Mississippi or who has maintained a permanent home in this state and spends in the aggregate more than six (6) months each year within the state. Proof of domicile or maintenance of a permanent home includes valid Mississippi driver’s license, Mississippi voter registration, valid Mississippi car tag, or homestead exemption. (Reserved) General The Motion Picture Production Tax rebate is based on the amount of the base investment made in Mississippi and Mississippi resident payroll and fringes as defined in Miss. Code Ann. Section 57-89-3. The rebate is available for a MPPC that expends at least $50,000 in base investment, payroll and/or fringes, in this state on a production certified by the Mississippi Development Authority. The amount of the rebate is twenty-five percent (25%) of the base investment made and expended in this state. Payroll and fringes for a Mississippi resident is eligible for a thirty percent (30%) rebate. An additional five percent (5%) rebate is available for payroll of honorably discharged veterans. Purchases made before the MDA approval date are not included in the rebate. Only eligible expenses purchased by the MPPC associated with the MDA certified project will be allowed for the rebate. The total amount of rebates authorized for a motion picture production will not exceed $10,000,000 in the aggregate and the total amount of rebates authorized in any fiscal year will not exceed $20,000,000 in the aggregate. The MPPC is responsible for registering with the proper state authorities to legally conduct business within this state. This includes the Mississippi Department of Employment Security, Mississippi Worker’s Compensation Commission, Mississippi Secretary of State, etc. The MPPC is responsible for registering for a withholding tax account and reporting any withholding tax due on this account. (Reserved) Base Investment Base investment includes purchases of goods and services from Mississippi vendors, as defined above, housing, housing allowances, food, rental of equipment, dry cleaning, per diem and anything else that the MPPC spends in Mississippi that is related to the production. Purchases of services and tangible personal property must be made from a Mississippi Vendor, as defined above, to qualify for the rebate. Payments made to out of state independent contractors or vendors for tangible personal property and services do not qualify for the rebate. Purchases of services from a vendor must satisfy the following five criteria to be eligible for the rebate: 1. The vendor must qualify as a Mississippi vendor; 2. The service must be wholly performed in this state; 3. The payment may not be for a qualified personnel expenditure; 4. The service must be directly attributable to the production; and 5. The transaction must be subject to taxation in this state. Items that do not qualify as base investment: 1. Online purchases, regardless if Mississippi sales tax is charged 2. Postage 3. Mileage 4. Bank fees Page 19 of 28 5. Credit Card fees 6. Taxes 7. Personal Expenditures 8. Out of state expenses billed through a Mississippi pass through company. 9. Any other items that do not meet the definition of base investment. Airline tickets must be purchased through a Mississippi travel agent and the sales invoice must indicate the airports in which the flight departed and arrived. Airports located in Mississippi or one of the following cities are eligible for the rebate: 1. Memphis, TN 2. New Orleans, LA 3. Baton Rouge, LA 4. Mobile, AL Location rentals for housing or a set should include the Vendor/Owner name, address of the rental property, description of use, dates used, and a copy of payment. Items purchased during production that are sold in Mississippi at the end of production must be decreased by the sales price of the item before being included in the rebate. Contract labor paid to a Mississippi resident is eligible for a twenty-five percent (25%) rebate, while non-resident contract labor is not eligible for the rebate. A rebate request for contract labor should include the name of the individual, city of residence, social security number, copy of payment and a link to an image of Form 1099, if applicable, journals and any other supporting documentation. Purchases of property or services from a local vendor who has acquired the property or services from out of state may qualify for the rebate if: 1. The Mississippi vendor is regularly engaged in the business of providing that same type of good or service. 2. The Mississippi vendor is a permanent business enterprise; and 3. The Mississippi vendor’s sales to the motion picture production company are at an arm’s length basis as evidenced by an added markup that is consistent with industry norms. The MPPC must not provide any assistance to the local vendor in providing the services or tangible personal property. The use of a local production company to provide goods and services may also qualify for the rebate if the local production company meets the requirements in Paragraph 308 above and the company was not established specifically for the needs of any one production. Petty cash and reimbursement expenses may qualify for the rebate if the documentation provided in the rebate request includes a reconciliation of the expenses allowed by the MPPC (e.g., Petty Cash top sheet or reimbursement/check purchase order), copies of invoices or receipts, and payment information. Examples of expenses that may qualify for the rebate include meals, gas, office supplies, set design, art department expenses Page 20 of 28 and other similar production related expenses. In the case of a motion picture production company, or its owner, principal, member, production partner, independent contractor director or producer, or subsidiary company that (i) is designated and pre-qualified by the Mississippi Development Authority as Mississippi-based or a Mississippi resident; (ii) has filed income taxes in the State of Mississippi during each of the previous three (3) years; and (iii) has engaged in activities related to the production of at least two (2) motion pictures in Mississippi during the past ten (10) years, base investment may include payroll and fringes paid for any employee who is not a resident and whose wages are subject to the Mississippi Income Tax Withholding Law of 1968, if so requested by the motion picture production company. A motion picture production company must submit such a request to the Mississippi Development Authority at the time the company applies for approval as a state-certified production. If base investment includes payroll and fringes, and the payroll and fringes paid for an employee exceeds Five Million Dollars ($5,000,000.00), then only the first Five Million Dollars ($5,000,000.00) of such payroll and fringes may be included in base investment. (Reserved) Payroll If the eligible production has physical production or postproduction activities both inside and outside the state, the rebate will only be allowed on a prorated amount of the eligible payroll based on the percentage of activities performed in Mississippi. Source documentation should include a journal indicating time worked between states. An individual who is hired through a loan out company or a temporary staffing company will be considered an employee if the loan out company or temporary staffing company is withholding Mississippi tax, otherwise, the individual will be treated as a contract employee. Loan out companies will be able to claim the withholding as an estimated payment on their Mississippi income tax return. Loan out companies must contact the MDOR before filing the return to ensure that there will not be a delay or problem in regard to the withholding being claimed as an estimated payment. Payments made to personal service corporations may qualify for the rebate if Mississippi income tax has been withheld and remitted. Payroll fees paid to Mississippi payroll companies qualify for the rebate. If the payroll and fringes paid for an employee exceeds $5,000,000, then the rebate is only authorized for the first $5,000,000 of the single employee’s payroll and fringes. The production company may receive an additional 5% of the wages payroll and fringes paid for an employee who is an honorably discharged veteran of the United States Armed Forces upon which Mississippi income tax is due and has been withheld. A Page 21 of 28 copy of Federal Form DD 214 Proof of Military Service is required to qualify for the additional 5%. (Reserved) Audit by MDOR 501 To claim the rebate by submitting the request to the MDOR, the motion picture company must submit an electronic Excel spreadsheet upon completion of the project containing a detailed accounting of the base investment and the employee payroll to the MDOR in the proper format. The base investment tab must include a listing of purchase invoices showing the name and address of the vendor, date, description of items purchased, and the amount of expenditures made to those vendors. Proper documentation to prove payment by the MPPC that was certified for the rebate is also required. This includes copies of bank statements, credit card statements and any other form of payment used to purchase items eligible for the rebate. Include at what stage of production the purchase was made: Preproduction, Production or Postproduction. Each location should be grouped together by date for productions that take place in more than one location. The payroll tab should list residents of Mississippi, including social security numbers, names, addresses, W-2s, a breakdown of the amount of wages paid to and withheld from those individuals, employee benefits and employer fringes. The payroll documentation should include a payroll detail with a breakdown of wages, employee benefits and employer fringes by employee. All tabs of the spreadsheet must contain links to the PDF files of all source documentation contained in the rebate request. All source documentation must be kept for verification and additional documentation may be requested. The MDOR conducts a line-by-line review of the spreadsheet submission. The rebate request (in the form of an Excel spreadsheet) and PDF files are to be submitted to the MDOR on an USB Flash Drive (USB) and mailed to: Mississippi Department of Revenue, Office of Tax Policy, P.O. Box 22828, Jackson, MS 39215. Maintain a copy of the USB submission in case a USB is lost or damaged in the mail. In addition, due to the agency’s data security policies, any USB received by the Department cannot be returned to its original sender or the representatives of the production company. It is recommended that the USB be password protected due to the sensitive information contained within and that the password be emailed to the Department rather than being enclosed with the USB on a letter or written note. When the rebate request is received the MDOR will determine if the submission is in the proper format to perform the review. If the request is not in the proper format, it will be sent back with an explanation containing the formatting requirements that were not met. The rebate request will be denied if a suitable submission is not received within six Page 22 of 28 (6) months. A rebate request that is submitted in the proper format will be reviewed and the review will be sent to the MPPC. The MPPC must respond to the MDOR review or any subsequent reviews within six (6) months. If there is no response in the form of additional documentation or agreement to the rebate amount, then the qualifying rebate amount will be paid out and the remaining request will be denied. When a rebate request is denied the MPPC should review their appeal rights located at www.dor.ms.gov. The MDOR will review any additional information provided by the MPPC for a period of one year from the denial date. After reviewing and approving the rebate request, the MDOR will issue the rebate check to the certified production company. The rebate check is not transferrable. (Reserved) Audit by CPA The MPPC may also claim the rebate by engaging a CPA. The CPA will need to perform the audit of the MPPC's production expenditures, and such CPA shall verify each base investment, payroll, and fringes expenditure. Requirements for a CPA engaged to perform a Motion Picture Incentive Submission Audit: 1. Contact the Mississippi Department of Revenue (MDOR) at 601-923-7440 once the audit is agreed to. The MDOR will provide a document containing language to be included in the audit submission. 2. Read the Motion Picture Production Incentive section of the most current Mississippi Tax Incentives, Exemptions and Credits Book at https://www.dor.ms.gov/Pages/Business-Incentive.aspx. 3. Both the verifying and reviewing CPAs must attest to conducting two (2) levels of review either within the CPA firm or as a cooperative endeavor for the review of the audit. 4. Supply notarized statements confirming that the CPAs are independent from any other activities related to the film project audited. 5. Provide a copy of both CPAs’ licenses. 6. Provide a copy of the CPA firms’ permits. 7. Both the verifying and reviewing CPAs must attest to completing twenty (20) hours of CPE each reporting cycle. 8. Verify supporting documentation for each individual expenditure claimed by the MPPC. 9. Work with the production company to resolve exceptions or discrepancies prior to submission to the Mississippi Department of Revenue (DOR). 10. Attest that all amounts on the rebate submission request are properly calculated and documented. 11. Find that the MPPC expended at least fifty thousand dollars ($50,000) in base investment, payroll and/or fringes in the State of Mississippi. 12. Find that no one employee exceeds five million dollars ($5,000,000) in payroll and Page 23 of 28 fringes. 13. Verify that only eligible expenses incurred and paid for after the Mississippi Development Authority (MDA) certification date are included in the rebate amount. 14. Verify that only eligible expenses purchased by the MPPC certified for the incentive are allowed for the rebate. 15. Supply to the DOR an electronic copy of the submission showing the rebate calculation and the line items that were approved/denied. The audit must be submitted to Incentives@dor.ms.gov. The MPPC shall provide the CPA performing the audit with, at a minimum, the following information: 1. A copy of the Motion Picture Incentive Certificate from MDA. 2. A list of all expenditures claimed by line item in electronic format. 3. Payroll expense reports which identify, trace, and reconcile payroll costs for each employee to a final payroll register, identify on which payments and in what amounts withholdings of Mississippi income tax have been made and document that appropriate corresponding payments and filings have been made to the State of Mississippi. 4. Copies of all paid invoices and receipts relating to each expenditure claimed as base investment. 5. A completed crew list. 6. A completed cast list. 7. MS Driver’s license, voter registration, car tag or homestead exemption to confirm the residency of employees/contract labor. 8. Copies of issued W-2s and 1099s relating to all activities within the State of Mississippi on the state certified production. If the production company has not issued any W-2s or 1099s prior to completion of the submission, then it shall provide other comparable documentation to verify payment. 9. Documentation or other verification that purchases of services and tangible personal property are made from a Mississippi vendor and purchases of services satisfy the five criteria to be eligible for the rebate. Please see paragraph 302 of this regulation. 10. Documentation showing that the MPPC has registered to do business with the Mississippi Secretary of State. 11. Any other documentation needed to confirm base investment, payroll, and fringes expenditures during the audit. The CPA shall specifically identify the amount of the base investment, payroll, and fringes expenditures eligible for the rebate. The CPA performing the audit may not include an expenditure in the rebate amount unless the MPPC has provided a receipt of payment or other evidence that the expenditure has been paid by the MPPC and was expended in Mississippi. Please see the most current Mississippi Tax Incentives, Exemptions and Credit Book at https://www.dor.ms.gov/Pages/Business-Incentive.aspx. Page 24 of 28 The CPA must verify that any property or services purchased through a Mississippi vendor that has acquired the property or services from out of state meets the requirements in paragraph 308 of this regulation. The CPA must include the language in the “Requirements for CPAs Auditing Motion Picture Production Rebate Submissions” instructions when submitting the audit. The language must be on the CPAs letterhead. The DOR will review the audit using a sample in lieu of a one hundred percent (100%) line item review. Upon receipt of the CPA’s audit the DOR will request samples of supporting documentation to be submitted in electronic format if it is not provided. The sample will not exceed ten percent (10%) of the line items. The CPA must provide the supporting documentation to the DOR within ten (10) days of the request, or the submission will be denied. The DOR will apply the rate of misstatement of the exceptions identified in the sample, if any, to the respective populations tested. The rate of misstatement will be calculated by the total value of the exceptions identified, divided by the total dollar value tested, and multiplied by the respective populations tested. The total of all calculated misstatements for each population tested will be deducted from the original submission to arrive at a revised rebate amount. Any adjusted amounts per the sample will be presented to the CPA. Additional information may be provided to the DOR for the transaction in the sample. Keep in mind that the DOR will have thirty (30) days after receipt of the original audit submission by the CPA to approve or deny a request. A rebate check will be issued to the MPPC and is not transferrable. The State of Mississippi shall not be liable for or otherwise responsible for any actions of a qualified accountant. (Reserved) 35.X.09 revised effective June 24, 2021. Chapter 10 SMART Business Incentive General The SMART (Strengthening Mississippi Academic Research Through) Business rebate is based on an investor incurring qualified research costs subject to a research agreement as defined in Miss. Code Ann. Section 37-148-1 et seq. The amount of the rebate is twenty- five percent (25%) of the qualified research costs. Page 25 of 28 The total amount of rebates authorized for an investor will not exceed $1,000,000 in the aggregate and the total amount of rebates authorized in any fiscal year will not exceed $5,000,000 in the aggregate. In order to receive the rebate, the investor must submit the SMART Business Incentive form as well as proof of payment to college or research corporation, a copy of the SMART Business certificate from IHL, a copy of the research agreement, and any other documentation requested by the Department of Revenue. Rebates may not be issued more than once a year to any one investor. Any research performed prior to certification by IHL will not be considered qualified research costs. Any research performed outside the state of Mississippi will not be considered qualified research. Any research funded by any grant, contract or otherwise by another person or governmental entity will not be considered qualified research. (Reserved) Chapter 11 Sales and Use Tax Exemption for Bond Financing General A sales and/or use tax exemption for construction or expansion is available for an eligible business that has obtained bond financing through the Mississippi Business Finance Corporation (MBFC). The type of eligible businesses depends upon the type of bond issued. The Mississippi Development Authority (MDA) and the MBFC determines whether a business qualifies for financing under these programs and the MDOR determines how the exemption is applied. The bonds that qualify for the exemptions are authorized by: 1. Sections 57-10-1 et seq., Miss. Code Ann., and is known by the short title of "Small Business Assistance ". 2. Sections 57-61-1 et seq., Miss. Code Ann., and is known by the short title of the “Mississippi Business Investment Act”. 3. Sections 57-71-1 et seq., Miss. Code Ann., and is known by the short title of the "Mississippi Small Enterprise Development Finance Act". All bonds must be issued within eighteen (18) months from the inducement date or an extension must be requested by the business addressed to the MDOR. If bonds do not remain outstanding for at least one (1) year the purchase is not considered to be made Page 26 of 28 with bond proceeds and would not be exempt from sales or use tax. A full accounting of the draws and expenditures associated with bond proceeds is required. (Reserved) Small Business Assistance The Small Business Assistance program is administered by the Mississippi Business Finance Corporation. The sales and use tax exemption is for all purchases, including leases, necessary to establish the enterprise that are made with bond funds. This program consists of two types of bonds, Industrial Revenue Development Bonds and Rural Economic Development Bonds. The Industrial Revenue Development Bonds are issued to for-profit companies and in very limited circumstances, non-profit companies will qualify. Only businesses engaged in manufacturing or processing may qualify for the tax-exempt bonds. The following businesses may qualify for taxable bonds: 1. Companies that manufacture, process, store, warehouse, assemble or distribute agricultural, mining or industrial products. 2. Research and development enterprises. 3. Offices used to manage, supervise or service a manufacturing operation 4. Any commercial enterprise. The Rural Economic Development Bonds are issued to manufacturing or processing companies, certain warehouse and distribution centers, certain telecommunication and data processing companies, multi-state national or regional headquarters, certain research and development and technology intensive enterprises. (Reserved) Mississippi Business Investment Program The Mississippi Business Investment Program, administered by the MDA, is designed for making low interest loans to counties and incorporated cities or towns (Local Sponsors) to finance improvements necessary to complement investments by private companies that create and maintain new full-time jobs. The bonds issued are general obligations bonds of the State of Mississippi. The sales and use tax exemption is for all purchases of tangible personal property and services to establish the facility that are made with bond funds. Eligibility for the assistance provided by the Mississippi Business Investment Program is determined by the MDA and is limited to the following types of projects: Agricultural, industrial, manufacturing, aquacultural or maricultural, tourism, service, regional shopping malls and research and development projects. Temporary borrowings in anticipation of the issuance of the bonds authorized by this program will mirror the exemption of the bonds. A promissory note from the Local Page 27 of 28 Sponsor to the State evidences these borrowings. If the project agreement is unfulfilled, the State can require the Local Sponsor and/or the private company to repay the unpaid loan principal with interest and penalties. If necessary, a portion of the Local Sponsor's sales tax and/or homestead exemption reimbursement may be withheld in an amount that is sufficient to repay the obligation. (Reserved) Mississippi Small Enterprise Development Finance Program The Mississippi Small Enterprise Development Finance Program, administered by the MBFC, is designed for making loans to qualified private companies that will increase employment and investment in the state. The sales and use tax exemption is for all purchases of tangible personal property and services to establish the facility that are made with bond funds. The loan may not be in excess of ninety percent (90%) of the market value of the financed assets and the loan may not be used to refinance existing debt. The aggregate amount loaned to one borrower may not exceed four million dollars ($4,000,000) and the term shall not exceed twenty (20) years. The project must create a minimum of ten (10) new jobs. (Reserved) Purchases The purchases must be sold directly to, billed directly to and paid for directly by the entity induced by MBFC. The exemption does not cover tagged vehicles or ongoing expenses and supply items that are not purchases required to establish the facility. Bond financing exemptions do not apply to the three and one-half percent (3½%) or the one and one-half (1½%) contractor’s tax levied in Miss. Code Ann. Section 27-65-21. The contractor’s tax is levied directly on the contractor for the privilege of performing contracts exceeding $10,000 for the construction, repair or renovation of non-residential real property. The contractor’s tax is levied on the contractor’s gross receipts from the construction contract regardless of any exemptions the project owner may have. Purchases of component materials for a construction project made by the contractor and reimbursed by the project owner are considered part of the contractor’s gross receipts subject to the three and one-half percent (3½%) contractor’s tax. Miss. Code Ann. Section 27-65-21(1)(a)ii provides that amounts included in commercial construction contracts with manufacturers representing the sale of manufacturing machinery shall be taxed at the 1 ½% reduced rate of tax in lieu of the 3 ½% contractors’ sales tax. However, the owner’s exemption will apply on the sale by the construction contractor to the project owner of manufacturing machinery that retains its identity as tangible personal property. Page 28 of 28 (Reserved) Applying for the Exemption For detailed instructions concerning the application process or claiming the credits see the Mississippi Tax Incentives, Exemptions and Credits Book. (Reserved) 35.X.11 revised effective October 1, 2018