Bill Text: MS HB1764 | 2024 | Regular Session | Engrossed
Bill Title: Sales tax; revise rate regarding certain oil, gas and other mineral resources services, equipment and materials.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2024-05-08 - Approved by Governor [HB1764 Detail]
Download: Mississippi-2024-HB1764-Engrossed.html
MISSISSIPPI LEGISLATURE
2024 Regular Session
To: Ways and Means
By: Representative Powell
House Bill 1764
(As Passed the House)
AN ACT TO AMEND SECTION 27-65-17, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT SALES OF EQUIPMENT AND MATERIALS USED IN CONNECTION WITH GEOPHYSICAL SURVEYING, EXPLORING, DEVELOPING, DRILLING, REDRILLING, COMPLETING, WORKING OVER, PRODUCING, DISTRIBUTING, OR TESTING OF OIL, GAS AND OTHER MINERAL RESOURCES SHALL BE TAXED AT THE RATE OF FOUR PERCENT, AND THAT OPERATORS THAT REBILL SALES OF EQUIPMENT AND MATERIALS TO NONOPERATING WORKING INTEREST OWNERS ON BEHALF OF A JOINT ACCOUNT THROUGH THE JOINT INTEREST BILLING (JIB), WHERE THE SALES TAX HAS BEEN PAID OR ACCRUED BY THE OPERATOR SHALL NOT BE CHARGED A SALES TAX ON THE JIB AS SERVICES INCOME; TO AMEND SECTION 27-65-21, MISSISSIPPI CODE OF 1972, TO REMOVE FROM THE CONTRACTOR'S TAX CONTRACTS EXCEEDING $10,000.00 FOR THE REDRILLING, OR WORKING OVER, OR OF DRILLING OR COMPLETING AN OIL WELL OR A GAS WELL; TO AMEND SECTION 27-65-23, MISSISSIPPI CODE OF 1972, TO REVISE THE SALES TAX IMPOSED ON VARIOUS SERVICES TO PROVIDE FOR A TAX RATE OF FOUR PERCENT ON INCOME FROM SERVICES PERFORMED IN CONNECTION WITH GEOPHYSICAL SURVEYING, EXPLORING, DEVELOPING, DRILLING, REDRILLING, COMPLETING, WORKING OVER, PRODUCING, DISTRIBUTING, OR TESTING OF OIL, GAS AND OTHER MINERAL RESOURCES, INCLUDING OVERHEAD SERVICES, AND THAT OPERATORS THAT REBILL SALES OF EQUIPMENT AND MATERIALS TO NONOPERATING WORKING INTEREST OWNERS ON BEHALF OF A JOINT ACCOUNT THROUGH THE JOINT INTEREST BILLING (JIB), WHERE THE SALES TAX HAS BEEN PAID OR ACCRUED BY THE OPERATOR SHALL NOT BE CHARGED A SALES TAX ON THE JIB AS SERVICES INCOME; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 27-65-17, Mississippi Code of 1972, is amended as follows:
27-65-17. (1) (a) Except as otherwise provided in this section, upon every person engaging or continuing within this state in the business of selling any tangible personal property whatsoever there is hereby levied, assessed and shall be collected a tax equal to seven percent (7%) of the gross proceeds of the retail sales of the business.
(b) Retail sales of farm tractors and parts and labor used to maintain and/or repair such tractors shall be taxed at the rate of one and one-half percent (1-1/2%) when made to farmers for agricultural purposes.
(c) (i) Retail sales of farm implements sold to farmers and used directly in the production of poultry, ratite, domesticated fish as defined in Section 69-7-501, livestock, livestock products, agricultural crops or ornamental plant crops or used for other agricultural purposes, and parts and labor used to maintain and/or repair such implements, shall be taxed at the rate of one and one-half percent (1-1/2%) when used on the farm.
(ii) The one and one-half percent (1-1/2%) rate shall also apply to all equipment used in logging, pulpwood operations or tree farming, and parts and labor used to maintain and/or repair such equipment, which is either:
1. Self-propelled, or
2. Mounted so that it is permanently attached to other equipment which is self-propelled or attached to other equipment drawn by a vehicle which is self-propelled.
In order to be eligible for the rate of tax provided for in this subparagraph (ii), such sales must be made to a professional logger. For the purposes of this subparagraph (ii), a "professional logger" is a person, corporation, limited liability company or other entity, or an agent thereof, who possesses a professional logger's permit issued by the Department of Revenue and who presents the permit to the seller at the time of purchase. The department shall establish an application process for a professional logger's permit to be issued, which shall include a requirement that the applicant submit a copy of documentation verifying that the applicant is certified according to Sustainable Forestry Initiative guidelines. Upon a determination that an applicant is a professional logger, the department shall issue the applicant a numbered professional logger's permit.
(d) Except as otherwise provided in subsection (3) of this section, retail sales of aircraft, automobiles, trucks, truck-tractors, semitrailers and manufactured or mobile homes shall be taxed at the rate of three percent (3%).
(e) Sales of manufacturing machinery or manufacturing machine parts when made to a manufacturer or custom processor for plant use only when the machinery and machine parts will be used exclusively and directly within this state in manufacturing a commodity for sale, rental or in processing for a fee shall be taxed at the rate of one and one-half percent (1-1/2%).
(f) Sales of machinery and machine parts when made to a technology intensive enterprise for plant use only when the machinery and machine parts will be used exclusively and directly within this state for industrial purposes, including, but not limited to, manufacturing or research and development activities, shall be taxed at the rate of one and one-half percent (1-1/2%). In order to be considered a technology intensive enterprise for purposes of this paragraph:
(i) The enterprise shall meet minimum criteria established by the Mississippi Development Authority;
(ii) The enterprise shall employ at least ten (10) persons in full-time jobs;
(iii) At least ten percent (10%) of the workforce in the facility operated by the enterprise shall be scientists, engineers or computer specialists;
(iv) The enterprise shall manufacture plastics, chemicals, automobiles, aircraft, computers or electronics; or shall be a research and development facility, a computer design or related facility, or a software publishing facility or other technology intensive facility or enterprise as determined by the Mississippi Development Authority;
(v) The average wage of all workers employed by the enterprise at the facility shall be at least one hundred fifty percent (150%) of the state average annual wage; and
(vi) The enterprise must provide a basic health care plan to all employees at the facility.
A medical cannabis establishment, as defined in the Mississippi Medical Cannabis Act, shall not be considered to be a technology intensive enterprise for the purposes of this paragraph (f).
(g) Sales of materials for use in track and track structures to a railroad whose rates are fixed by the Interstate Commerce Commission or the Mississippi Public Service Commission shall be taxed at the rate of three percent (3%).
(h) Sales of tangible personal property to electric power associations for use in the ordinary and necessary operation of their generating or distribution systems shall be taxed at the rate of one percent (1%).
(i) Wholesale sales of food and drink for human consumption to full-service vending machine operators to be sold through vending machines located apart from and not connected with other taxable businesses shall be taxed at the rate of eight percent (8%).
(j) Sales of equipment used or designed for the purpose of assisting disabled persons, such as wheelchair equipment and lifts, that is mounted or attached to or installed on a private carrier of passengers or light carrier of property, as defined in Section 27-51-101, at the time when the private carrier of passengers or light carrier of property is sold shall be taxed at the same rate as the sale of such vehicles under this section.
(k) Sales of the factory-built components of modular homes, panelized homes and precut homes, and panel constructed homes consisting of structural insulated panels, shall be taxed at the rate of three percent (3%).
(l) Sales of materials used in the repair, renovation, addition to, expansion and/or improvement of buildings and related facilities used by a dairy producer shall be taxed at the rate of three and one-half percent (3-1/2%). For the purposes of this paragraph (l), "dairy producer" means any person engaged in the production of milk for commercial use.
(m) Sales of equipment and materials used in connection with geophysical surveying, exploring, developing, drilling, redrilling, completing, working over, producing, distributing, or testing of oil, gas and other mineral resources shall be taxed at the rate of four percent (4%). Operators that rebill sales of equipment and materials to nonoperating working interest owners on behalf of a joint account through the joint interest billing (JIB), where the sales tax has been paid or accrued by the operator shall not be charged a sales tax on the JIB as services income.
(2) From and after January 1, 1995, retail sales of private carriers of passengers and light carriers of property, as defined in Section 27-51-101, shall be taxed an additional two percent (2%).
(3) A manufacturer selling at retail in this state shall be required to make returns of the gross proceeds of such sales and pay the tax imposed in this section.
SECTION 2. Section 27-65-21, Mississippi Code of 1972, is amended as follows:
27-65-21. (1) (a) (i) Upon every person engaging or continuing in this state in the business of contracting or performing a contract or engaging in any of the activities, or similar activities, listed below for a price, commission, fee or wage, there is hereby levied, assessed and shall be collected a tax equal to three and one-half percent (3-1/2%) of the total contract price or compensation received, including all charges related to the contract such as finance charges and late charges, from constructing, building, erecting, repairing, grading, excavating, drilling, exploring, testing or adding to any building, highway, street, sidewalk, bridge, culvert, sewer, irrigation or water system, drainage or dredging system, levee or levee system or any part thereof, railway, reservoir, dam, power plant, electrical system, air-conditioning system, heating system, transmission line, pipeline, tower, dock, storage tank, wharf, excavation, grading, water well, any other improvement or structure or any part thereof when the compensation received exceeds Ten Thousand Dollars ($10,000.00). Such activities shall not include constructing, repairing or adding to property which retains its identity as personal property. The tax imposed in this section is levied upon the prime contractor and shall be paid by him.
(ii) Amounts included in the contract price or compensation received representing the sale of manufacturing or processing machinery for a manufacturer or custom processor shall be taxed at the rate of one and one-half percent (1-1/2%) in lieu of the three and one-half percent (3-1/2%).
(b) The following shall be excluded from the tax levied by this section:
(i) The contract price or compensation received for constructing, building, erecting, repairing or adding to any building, electrical system, air-conditioning system, heating system or any other improvement or structure which is used for or primarily in connection with a residence or dwelling place for human beings. Such residences shall include homes, mobile homes, summer cottages, fishing and hunting camp buildings and similar buildings, but shall not include apartment buildings, condominiums, hotels, motels, hospitals, nursing or retirement homes, tourist cottages or other commercial establishments.
(ii) The portion of the total contract price attributable to design or engineering services if:
1. The total contract price for the project exceeds the sum of One Hundred Million Dollars ($100,000,000.00); or
2. The engineering services are performed by a professional engineer as defined in Section 73-13-3, who is the general or prime contractor.
(iii) The contract price or compensation received to restore, repair or replace a utility distribution or transmission system that has been damaged due to ice storm, hurricane, flood, tornado, wind, earthquake or other natural disaster if such restoration, repair or replacement is performed by the entity providing the service at its cost.
(iv) The contract price or compensation received for constructing, building, erecting, repairing or adding to any building, facility or structure located at any refinery as defined in Section 27-65-24.
(c) Sales of materials and services for use in the activities hereby excluded from taxes imposed by this section, except services used in activities excluded pursuant to paragraph (b)(iii) of this subsection, shall be subject to taxes imposed by other sections in this chapter.
(2)
* * *
[Deleted]
(3) When the work to be performed under any contract is sublet by the prime contractor to different persons, or in separate contracts to the same persons, each such subcontractor performing any part of said work shall be liable for the amount of the tax which accrues on account of the work performed by such person when the tax heretofore imposed has not been paid upon the whole contract by the prime contractor.
When a person engaged in any business on which a tax is levied in Section 27-65-23, also qualifies as a contractor, and contracts with the owner of any project to perform any services in excess of Ten Thousand Dollars ($10,000.00) herein taxed, such person shall pay the tax imposed by this section in lieu of the tax imposed by Section 27-65-23.
Any person entering into any contract over Seventy-five Thousand Dollars ($75,000.00) as defined in this section shall, before beginning the performance of such contract or contracts, either pay the contractors' tax in advance, together with any use taxes due under Section 27-67-5, or execute and file with the commissioner a good and valid bond in a surety company authorized to do business in this state, or with sufficient sureties to be approved by the commissioner conditioned that all taxes which may accrue to the State of Mississippi under this chapter, or under Section 27-67-5 and Section 27-7-5, will be paid when due. Such bonds shall be either (a) "job bonds" which guarantee payment when due of the aforesaid taxes resulting from performance of a specified job or activity regardless of date of completion; or (b) "blanket bonds" which guarantee payment when due of the aforesaid taxes resulting from performance of all jobs or activities taxable under this section begun during the period specified therein, regardless of date of completion. The payments of the taxes due or the execution and filing of a surety bond shall be a condition precedent to the commencing work on any contract taxed hereunder. Provided, that when any bond is filed in lieu of the prepayment of the tax under this section, that the tax shall be payable monthly on the amount received during the previous month, and any use taxes due shall be payable on or before the twentieth day of the month following the month in which the property is brought into Mississippi.
Any person failing either to execute any bond herein provided, or to pay the taxes in advance, before beginning the performance of any contract shall be denied the right to perform such contract until he complies with such requirements, and the commissioner is hereby authorized to proceed either under Section 27-65-59, under Section 27-65-61 or by injunction to prevent any activity in the performance of such contract until either a satisfactory bond is executed and filed, or all taxes are paid in advance, and a temporary injunction enjoining the execution of such contract shall be granted without notice by any judge or chancellor now authorized by law to grant injunctions.
Any person liable for a tax under this section may apply for and obtain a material purchase certificate from the commissioner which may entitle the holder to purchase materials and services that are to become a component part of the structure to be erected or repaired with no tax due. Provided, that the contractor applying for the contractor's material purchase certificate shall furnish the Department of Revenue a list of all work sublet to others, indicating the amount of work to be performed, and the names and addresses of each subcontractor.
SECTION 3. Section 27-65-23, Mississippi Code of 1972, is amended as follows:
27-65-23. Upon every person engaging or continuing in any of the following businesses or activities there is hereby levied, assessed and shall be collected a tax equal to seven percent (7%) of the gross income of the business, except as otherwise provided:
Air-conditioning installation or repairs;
Automobile, motorcycle, boat or any other vehicle repairing or servicing;
Billiards, pool or domino parlors;
Bowling or tenpin alleys;
Burglar and fire alarm systems or services;
Car washing — automatic, self-service, or manual;
Computer software services actually performed within this state;
Cotton compresses or cotton warehouses;
Custom creosoting or treating, custom planing, custom sawing;
Custom meat processing;
Electricians, electrical work, wiring, all repairs or installation of electrical equipment;
Elevator or escalator installing, repairing or servicing;
Film developing or photo finishing;
Foundries, machine or general repairing;
Furniture repairing or upholstering;
Grading, excavating, ditching, dredging or landscaping;
Hotels (as defined in Section 41-49-3), motels, tourist courts or camps, trailer parks;
Insulating services or repairs;
Jewelry or watch repairing;
Laundering, cleaning, pressing or dyeing;
Marina services;
Mattress renovating;
Office and business machine repairing;
Parking garages and lots;
Plumbing or pipe fitting;
Public storage warehouses (There shall be no tax levied on gross income of a public storage warehouse derived from the temporary storage of tangible personal property in this state pending shipping or mailing of the property to another state.);
Refrigerating equipment repairs;
Radio or television installing, repairing, or servicing;
Renting or leasing personal property used within this state;
Services
performed in connection with geophysical surveying, exploring, developing, drilling,
producing, distributing, or testing of * * * water * * * resources not related to development
of oil, gas and other mineral resources;
Shoe repairing;
Storage lockers;
Telephone answering or paging services;
Termite or pest control services;
Tin and sheet metal shops;
TV cable systems, subscription TV services, and other similar activities;
Vulcanizing, repairing or recapping of tires or tubes;
Welding; and
Woodworking or wood-turning shops.
Income from services taxed herein performed for electric power associations in the ordinary and necessary operation of their generating or distribution systems shall be taxed at the rate of one percent (1%).
Income from services taxed herein performed on materials for use in track or track structures to a railroad whose rates are fixed by the Interstate Commerce Commission or the Mississippi Public Service Commission shall be taxed at the rate of three percent (3%).
Income from services performed in connection with geophysical surveying, exploring, developing, drilling, redrilling, completing, working over, producing, distributing, or testing of oil, gas and other mineral resources, including overhead services shall be taxed at the rate of four percent (4%). Operators that rebill services to nonoperating working interest owners on behalf of the joint account through the joint interest billing (JIB), where the sales tax has been paid or accrued by the operator shall not be charged a sales tax on the JIB as services income.
Income from renting or leasing tangible personal property used within this state shall be taxed at the same rates as sales of the same property.
Persons doing business in this state who rent transportation equipment with a situs within or without the state to common, contract or private commercial carriers are taxed on that part of the income derived from use within this state. If specific accounting is impracticable, a formula may be used with approval of the commissioner.
A lessor may deduct from the tax computed on the rental income from tangible personal property a credit for sales or use tax paid to this state at the time of purchase of the specific personal property being leased or rented until such credit has been exhausted.
Charges for custom processing and repairing services may be excluded from gross taxable income when the property on which the service was performed is delivered to the customer in another state either by common carrier or in the seller's equipment.
When a taxpayer performs services covered by this section, which are performed both in intrastate and interstate commerce, the taxpayer may utilize any reasonable formulae of apportionment which will apportion to this state, for taxation, that portion of the services which are performed within the State of Mississippi.
SECTION 4. Nothing in this act shall affect or defeat any claim, assessment, appeal, suit, right or cause of action for taxes due or accrued under the sales tax laws before the date on which this act becomes effective, whether such claims, assessments, appeals, suits or actions have been begun before the date on which this act becomes effective or are begun thereafter; and the provisions of the sales tax laws are expressly continued in full force, effect and operation for the purpose of the assessment, collection and enrollment of liens for any taxes due or accrued and the execution of any warrant under such laws before the date on which this act becomes effective, and for the imposition of any penalties, forfeitures or claims for failure to comply with such laws.
SECTION 5. This act shall take effect and be in force from and after July 1, 2024, and shall stand repealed on June 30, 2024.
