Bill Text: MS HB1524 | 2010 | Regular Session | Introduced
Bill Title: Contractor's tax; designate owners of certain major industrial facilities as the prime contractor for certain projects.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2010-02-02 - Died In Committee [HB1524 Detail]
Download: Mississippi-2010-HB1524-Introduced.html
MISSISSIPPI LEGISLATURE
2010 Regular Session
To: Judiciary B; Ways and Means
By: Representative Broomfield
House Bill 1524
AN ACT TO AMEND SECTION 27-65-21, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE OWNER AND OPERATOR OF CERTAIN MAJOR INDUSTRIAL FACILITIES LOCATED IN THIS STATE SHALL BE DEEMED TO BE THE PRIME CONTRACTOR FOR PURPOSES OF THE CONTRACTOR'S TAX; TO BRING FORWARD SECTION 27-65-93, MISSISSIPPI CODE OF 1972, FOR PURPOSES OF POSSIBLE AMENDMENT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. The Legislature finds and declares that:
(a) The general welfare and material well-being of citizens of Mississippi depend in large measure upon the development and growth of industry in the state;
(b) It is in the best interest of the state to streamline the administration, calculation and remittance of the tax imposed by Section 27-65-21 without reducing or deferring the tax or otherwise creating or enlarging any exemption under Section 27-65-21; and
(c) Allowing certain major industrial facilities located within the state to collect and remit the tax imposed by Section 27-65-21 will relieve those in the business of contracting or otherwise engaging in any of the activities taxed by Section 27-65-21 from the burden of remitting the tax, and also minimize the administrative burden on the Department of Revenue in the collection of the tax with regard to major industrial facilities.
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 the total contract price for the project exceeds the sum of One Hundred Million Dollars ($100,000,000.00).
(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.
(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) Upon every person engaging or continuing in this state in the business of contracting or performing a contract of redrilling, or working over, or of drilling an oil well or a gas well, regardless of whether such well is productive or nonproductive, for any valuable consideration, 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 when such compensation exceeds Ten Thousand Dollars ($10,000.00).
The words, terms and phrases as used in this subsection shall have the meaning ascribed to them as follows:
"Operator" -- One who holds all or a fraction of the working or operating rights in an oil or gas lease, and is obligated for the costs of production either as a fee owner or under a lease or any other form of contract creating working or operating rights.
"Bottom-hole contribution" -- Money or property given to an operator for his use in the drilling of a well on property in which the payor has no interest. The contribution is payable whether the well is productive or nonproductive.
"Dry-hole contribution" -- Money or property given to an operator for his use in the drilling of a well on property in which the payor has no interest. Such contribution is payable only in the event the well is found to be nonproductive.
"Turnkey drilling contract" -- A contract for the drilling of a well which requires the driller to drill a well and, if commercial production is obtained, to equip the well to such stage that the lessee or operator may turn a valve and the oil will flow into a tank.
"Total contract price or compensation received" -- As related to oil and gas well contractors, shall include amounts received as compensation for all costs of performing a turnkey drilling contract; amounts received or to be received under assignment as dry-hole money or bottom-hole money; and shall mean and include anything of value received by the contractor as remuneration for services taxable hereunder. When the kind and amount of compensation received by the contractor is contingent upon production, the taxable amount shall be the total compensation receivable in the event the well is a dry hole. The taxable amount in the event of production when the contractor receives a production interest of an undetermined value in lieu of a fixed compensation shall be an amount equal to the compensation to the contractor if the well had been a dry hole.
(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.
Except as otherwise provided in subsection (4) of this section, 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 of Revenue 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.
Except as otherwise provided in subsection (4) of this section, 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.
(4) (a) As used in this subsection, "major industrial facility" means a manufacturing facility that has a true value for ad valorem tax purposes of more than One Billion Dollars ($1,000,000,000.00) upon which ad valorem taxes (excluding any payments in lieu of ad valorem taxes) are levied on the facility and paid by the owner of the facility to at least one (1) jurisdiction in the state, and the owner of the facility:
(i) Has a sales tax permit issued by the Department of Revenue under Section 27-65-27; and
(ii) Has a permit issued by the Department of Revenue under Section 27-65-93 authorizing the owner to remit sales taxes directly to the Department of Revenue.
(b) For purposes of this section, the owner and operator of a major industrial facility located in this state shall be deemed to be the prime contractor with respect to any activity at the major industrial facility. Upon request of the Department of Revenue, the owner and operator shall furnish the department with a list of all work sublet by the person to others indicating the amount of work performed and the name and address of each subcontractor.
(c) The owner and operator of a major industrial facility shall be exempt from the tax prepayment, surety and bond requirements of this section.
SECTION 3. Section 27-65-93, Mississippi Code of 1972, is brought forward as follows:
27-65-93. (1) The commissioner shall, from time to time, promulgate rules and regulations, not inconsistent with the provisions of the sales tax law, for making returns and for the ascertainment, assessment and collection of the tax imposed by the sales tax law as he may deem necessary to enforce its provisions; and, upon request, he shall furnish any taxpayer with a copy of the rules and regulations.
(2) All forms, necessary for the enforcement of the sales tax law, shall be prescribed, printed and furnished by the commissioner.
(3) The commissioner may adopt rules and regulations providing for the issuance of permits to manufacturers, utilities, construction contractors, companies receiving bond financing through the Mississippi Business Finance Corporation or the Mississippi Development Authority, and other taxpayers as determined by the commissioner to purchase tangible personal property taxed under Section 27-65-17, items taxed under Section 27-65-18, items taxed under Section 27-65-19, services taxed under Section 27-65-23 and items taxed under Section 27-65-26 without the payment to the vendor of the tax imposed by the sales and use tax laws, and providing for persons to report and pay the tax directly to the commissioner in instances where the commissioner determines that these provisions will facilitate and expedite the collection of the tax at the proper rates which may be due on purchases by the permittee. Under the provisions of this chapter, the vendor is relieved of collecting and remitting the taxes specified hereunder and the person holding the permit shall become liable for such taxes instead of the seller. The full enforcement provisions of the sales tax law shall apply in the collection of the tax from the permittee.
SECTION 4. This act shall take effect and be in force from and after July 1, 2010.
