Bill Text: MS HB1531 | 2012 | Regular Session | Engrossed
Bill Title: College Private Research Incentive Act; create. [Track Bill]
Status: 2012-04-17 - Died In Committee [HB1531 Detail]
2012 Regular Session
To: Ways and Means; Universities and Colleges
By: Representatives Smith (39th), Dixon
House Bill 1531
(As Passed the House)
AN ACT TO PROVIDE AN INCOME TAX CREDIT FOR TAXPAYERS THAT MAKE PAYMENTS FOR RESEARCH COSTS PURSUANT TO RESEARCH AGREEMENTS WITH COLLEGES, GOVERNMENTAL ENTITIES OF THIS STATE AND RESEARCH CORPORATIONS; TO DEFINE CERTAIN TERMS FOR THE PURPOSES OF THIS ACT; TO PROVIDE FOR THE AMOUNT OF THE CREDIT AUTHORIZED IN THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act shall be known and may be cited as the "College Private Research Incentive Act."
SECTION 2. (1) The following words and phrases shall have the meanings ascribed in this section unless the context clearly requires otherwise:
(a) "Business component" means any product, process, computer software, technique, formula, or invention which is to be:
(i) Held for sale, lease, or license, or
(ii) Used by the taxpayer in a trade or business of the taxpayer.
(b) "College" means any college or university located in Mississippi and accredited by the Southern Association of Colleges and Schools.
(c) "Qualified research" means:
(i) 1. Research that is undertaken for the purpose of discovering information:
a. That is technological in nature, and
b. The application of which is intended to be useful in the development of a new or improved business component of the taxpayer; and
2. Substantially all of the activities of which constitute elements of a process of experimentation for a purpose described in item 3 of this subparagraph.
3. Research shall be treated as conducted for a purpose described in this subparagraph if it relates to:
a. A new or improved function,
b. Performance, or
c. Reliability or quality.
Research shall not be treated as conducted for a purpose described in this subparagraph if it relates to style, taste, cosmetic, or seasonal design factors.
(ii) The term "qualified research" shall not include any of the following:
1. Research related to the adaptation of an existing business component to a particular customer's requirement or need;
2. Research related to the reproduction of an existing business component (in whole or in part) from a physical examination of the business component itself or from plans, blueprints, detailed specifications, or publicly available information with respect to such business component;
a. Efficiency survey,
b. Activity relating to management function or technique,
c. Market research, testing or development (including advertising or promotions),
d. Routine data collection, or
e. Routine or ordinary testing or inspection for quality control;
4. Research with respect to computer software which is developed by (or for the benefit of) the taxpayer primarily for internal use by the taxpayer, other than for use in:
a. An activity that constitutes qualified research, or
b. A production process with respect to which the requirements of subparagraph (i) of this paragraph are met;
5. Research conducted outside the State of Mississippi; or
6. Research to the extent funded by any grant, contract, or otherwise by another person or governmental entity.
(d) "Research agreement" means a written contract, grant, or cooperative agreement entered into between a taxpayer and a college, governmental entity of the State of Mississippi or research corporation for the performance of qualified research.
(e) "Research corporation" means any research corporation formed under Section 37-147-15, if the corporation is wholly owned by a college and all income and profits of the corporation inure to the benefit of the college.
(f) "Research costs" means payments made to a college, a governmental entity of the State of Mississippi or research corporation according to a research agreement.
(g) "State" means the State of Mississippi or a governmental entity thereof.
(2) (a) (i) Subject to the provisions of subparagraph (ii) of this paragraph, during each taxable year a taxpayer may earn and apply for and, if such application is approved by the Department of Revenue, be granted a credit (hereinafter referred to as a "College Private Research tax credit") which may be applied by the taxpayer against any income tax liability owed by the taxpayer under Section 27-7-1 et seq. The credit shall be equal to seven percent (7%) of the amount of research costs paid by the taxpayer to a college and/or the state pursuant to a written research agreement.
(ii) 1. A College Private Research tax credit shall be allowed against the income tax owed by a taxpayer for the taxable year in which the credit is earned.
2. The amount of the tax credit applied by a taxpayer in a taxable year shall not exceed the total tax liability of the taxpayer for such taxes for that taxable year reduced by the sum of all other credits allowable to such taxpayer, except credit for tax payments made by or on behalf of the taxpayer. If the tax credit allowed under this section exceeds the total tax liability of the taxpayer for such taxes, then any unused credit may be carried forward by the taxpayer as a credit against subsequent tax liability for a period not to exceed five (5) taxable years.
3. In the case of an individual who:
a. Owns an interest in an unincorporated trade or business,
b. Is a partner in a partnership,
c. Is a beneficiary of an estate or trust, or
d. Is a shareholder in an S corporation,
the amount of the tax credit allowed for a taxable year shall not exceed an amount (separately computed with respect to such person's interest in such trade or business or entity) equal to the amount of tax attributable to that portion of a person's taxable income which is allocable or apportionable to the person's interest in such trade or business entity. If the amount of the tax credit for a taxable year exceeds the limitation provided in this item 3, then any unused credit may be carried forward by the taxpayer as a credit against subsequent tax liability for a period not to exceed five (5) years.
(b) To qualify for a College Private Research tax credit, the taxpayer must:
(i) Submit an application to the Department of Revenue on a form prescribed by the department;
(ii) Pay an application fee of Two Hundred Dollars ($200.00); and
(iii) Prove to the satisfaction of the Department of Revenue that the taxpayer has incurred research costs according to a research agreement, or any amendment thereto, executed on or after July 1, 2012.
(c) The Department of Revenue may audit an applicant in order to verify the applicant's eligibility for the College Private Research tax credit.
(3) The Department of Revenue shall implement and administer the provisions of this section. The Department of Revenue shall adopt and promulgate such rules and regulations, in compliance with the Mississippi Administrative Procedures Law, as are necessary for the efficient and effective administration of this section in keeping with the purposes for which it is enacted. Such rules shall include provisions for (a) the Department of Revenue to certify the eligibility of an applicant for receipt of the College Private Research tax credit and the qualification of a claimant to claim the credit against income tax and (b) the presentation of an applicant's eligibility certification and any other documentation required to apply for and earn or claim a credit.
SECTION 3. This act shall take effect and be in force from and after July 1, 2012.