Bill Text: MS HB575 | 2010 | Regular Session | Introduced
Bill Title: Cultural products district program; create.
Sponsorship: Partisan Bill (Republican 1)
Status: (Failed) 2010-02-24 - Died In Committee [HB575 Detail]
Download: Mississippi-2010-HB575-Introduced.html
MISSISSIPPI LEGISLATURE
2010 Regular Session
To: Tourism; Ways and Means
By: Representative Zuber
House Bill 575
AN ACT TO CREATE CULTURAL PRODUCTS DISTRICTS; TO PROVIDE CERTAIN DEFINITIONS; TO AUTHORIZE THE DIVISION OF TOURISM OF THE MISSISSIPPI DEVELOPMENT AUTHORITY TO PROVIDE GUIDELINES AND REGULATIONS FOR THE DISTRICTS; TO PROVIDE A TAX CREDIT FOR INDIVIDUAL INCOME TAX LIABILITY FOR CERTAIN ELIGIBLE COSTS AND EXPENSES INCURRED DURING THE REHABILITATION OF CERTAIN STRUCTURES WITHIN A DISTRICT; TO PROVIDE A TAX CREDIT AGAINST INCOME AND CORPORATION FRANCHISE TAX FOR CERTAIN ELIGIBLE COSTS AND EXPENSES FOR THE REHABILITATION OF CERTAIN STRUCTURES IN DISTRICTS; TO EXEMPT ONE-OF-A-KIND WORKS OF ART FROM THE SALES AND USE TAXES IF THE ART IS SOLD WITHIN A DISTRICT; TO REQUIRE THE DIVISION OF TOURISM OF THE MISSISSIPPI DEVELOPMENT AUTHORITY TO REPORT TO THE LEGISLATURE REGARDING THE OVERALL IMPACT OF THE SALES TAX EXEMPTION; TO AMEND SECTION 27-65-111, MISSISSIPPI CODE OF 1972, TO EXEMPT FROM CERTAIN SALES TAX THE SALE OF ORIGINAL, ONE-OF-A-KIND WORKS OF ART THAT ARE SOLD WITHIN A CULTURAL PRODUCTS DISTRICT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. (1) As used in this section:
(a) "Cultural product district" means a district that has been designated by a local governing authority for the purpose of revitalizing a community by creating a hub of cultural activity, including affordable artist housing and work space and meets the criteria that shall be developed by the Division of Tourism of the Mississippi Development Authority who shall determine whether or not a district complies with the following standards:
(i) The district shall be geographically contiguous and distinguished by cultural resources that play a vital role in the life and cultural development of a community; and
(ii) The district shall focus on a cultural compound, a major art institution, art and entertainment businesses, an area with arts and cultural activities or cultural or artisan production and be engaged in the promotion, preservation, and educational aspects of the arts and culture of the locale, and contribute to the public through interpretive and educational uses.
(b) "Eligible costs and expenses" means qualified rehabilitation expenditures as defined in regulations promulgated by the Division of Tourism of the Mississippi Development Authority in consultation with the State Tax Commission and shall take into consideration qualified rehabilitation expenditures as defined in Section 47(c)(2)(A) of the Internal Revenue Code and applicable regulations.
(c) "Department" means the Mississippi Department of Archives and History.
(d) "Division" means the Division of Tourism of the Mississippi Development Authority.
(e) "Local governing authority" means the governing body of a county in which a cultural district is located unless the district is located within a municipality, in which case it means the governing body of a municipality and if a district is located partly in both a county and a municipality it means the governing bodies of both the county and the municipality.
(f) "Owner-occupied mixed use structure" means a structure that serves a dual purpose as a residence and a business.
(g) "Rehabilitation" means the process of returning a structure to a state of unity, through repair, or alteration, which makes possible an efficient use while preserving those portions and features of the structure and its site and environment which makes the structure and its site and environment historically, architecturally or culturally significant. "Rehabilitation" does not include an alteration which is primarily remodeling.
(h) "Works of art" means visual arts and crafts including, but not limited to, paintings, photographs, sculpture, pottery, and traditional or fine crafts that the division determines, through consultation with the Mississippi Arts Commission, is an "original, one-of-a-kind" work.
(2) There shall be a credit allowed against individual income tax liability under Section 27-7-1 et seq. for the amount of eligible costs and expenses incurred during the rehabilitation of an owner-occupied residential or owner-occupied mixed use structure located in a cultural district that has been certified by the department as contributing to the historical significance of the district, or a vacant and blighted owner-occupied residential structure that is at least fifty (50) years old.
(3) (a) The tax credit authorized under this section shall be limited to one (1) credit per structure rehabilitated and the total credit shall not exceed Twenty-five Thousand Dollars ($25,000.00) per structure.
(b) To qualify for the credit authorized under this subsection (2), the rehabilitation costs of the structure must exceed Twenty Thousand Dollars ($20,000.00).
(4) (a) The credit authorized in this section shall be calculated using percentages of the eligible costs and expenses of the rehabilitation based on the adjusted gross income of the owner-occupant.
(b) If the residential structure is owned and occupied by two (2) or more individuals, the applicable percentage shall be based on the sum of the adjusted gross incomes of all owner-occupants in proportion to their contribution to the eligible costs and expenses, unless they agree to an alternate division as follows:
(i) If the adjusted gross income is less than or equal to Fifty Thousand Dollars ($50,000.00), the credit shall be twenty-five percent (25%) of the eligible costs and expenses of the rehabilitation;
(ii) If the adjusted gross income is greater than Fifty Thousand Dollars ($50,000.00), but less than or equal to Seventy-five Thousand Dollars ($75,000.00), the credit shall be twenty percent (20%) of the eligible costs and expenses of the rehabilitation;
(iii) If the adjusted gross income is greater than Seventy-five Thousand Dollars ($75,000.00), but less than or equal to One Hundred Thousand Dollars ($100,000.00), the credit shall be fifteen percent (15%) of the eligible costs and expenses of the rehabilitation; or
(iv) If the adjusted gross income is greater than One Hundred Thousand Dollars ($100,000.00), the credit is only available for the rehabilitation of a vacant and blighted owner-occupied residential structure that is at least fifty (50) years old, and the credit shall be ten percent (10%) of the eligible costs and expenses of the rehabilitation.
(5) (a) The tax credit for qualified rehabilitation expenditures shall be divided in five (5) equal portions to be applied against the tax for the five-year period beginning in the taxable year in which the rehabilitated residential structure is first placed in service.
(b) In order to be eligible to use a tax credit, as authorized in this section, the taxpayer who initially earned the credit must continue to own and occupy the residential structure as the taxpayer's primary residence; however, if the residential structure is sold during the five-year period beginning in the taxable year in which the rehabilitated residential structure is first placed in service, all unused credit portions granted under this section shall immediately become void and of no effect.
(6) A fee not to exceed Two Hundred Fifty Dollars ($250.00) shall be charged per application by the department, and the fee shall be used by the department, without appropriation, to offset the administrative costs of the department associated with its duties under this section.
(7) If the amount of credit claimed by a taxpayer exceeds the amount of income tax imposed upon the taxpayer for the taxable year reduced by the sum of all other credits allowable to the taxpayer under the state income tax laws, except for tax payments made by or on behalf of the taxpayer, the taxpayer shall receive a refund from the State Tax Commission for the amount of such excess.
(8) The maximum amount of tax credits allowed by the Department of Archives and History to be granted in any calendar year shall not exceed Ten Million Dollars ($10,000,000.00).
(9) The granting of credits under this section shall be on a first-come, first-served basis and if the total amount of credits applied for in any particular year exceeds the aggregate amount of tax credits allowed for that year, the excess shall be treated as having been applied for the first day of the subsequent year.
(10) (a) To claim the credit authorized pursuant to this section, the taxpayer shall apply to the department which shall determine the amount of eligible rehabilitation costs and expenses and whether the rehabilitation is consistent with the standards of the Secretary of the United States Department of the Interior. The department shall issue a certificate evidencing the eligible credit if the taxpayer is found to be eligible for the tax credit. The taxpayer shall attach the certificate to all income tax returns on which the credit is claimed.
(b) There is hereby created within the State Treasury a special fund into which shall be deposited all the fees collected by the department pursuant to this section. Money deposited into the fund shall not lapse at the end of any fiscal year and investment earnings on the proceeds in such special fund shall be deposited into such fund. Money from the fund shall be disbursed upon warrants issued by the State Fiscal Officer upon requisitions signed by the executive director of the department to assist the department in carrying out its duties under this section.
(11) The Mississippi Development Authority, the Mississippi Department of Archives and History and the State Tax Commission shall promulgate rules and regulations necessary to implement the provisions of this section.
SECTION 2. (1) There shall be allowed credit against the taxes imposed under Section 27-1-1 et seq. and Section 27-13-1 et seq. for the amount of eligible costs and expenses incurred during the rehabilitation of a historic structure located in a cultural product district. For the purposes of this section "cultural product district" shall have the same meaning as set forth in Section 1 of this act.
(2) The credit authorized in this section shall not exceed twenty-five percent (25%) of the eligible costs and expenses of the rehabilitation. For purposes of this section "eligible costs and expenses" means qualified rehabilitation expenditures as defined in Section 47(c)(2)(A) of the Internal Revenue Code of 1986, as amended, except that "substantially rehabilitated" shall mean that the qualified rehabilitation expenditures must exceed Ten Thousand Dollars ($10,000.00).
(3) No taxpayer, or any entity affiliated with such taxpayer, shall receive more than an aggregate amount of Five Million Dollars ($5,000,000.00) worth of credit for any number of structures rehabilitated within a particular cultural product district.
(4) The tax credit for qualified rehabilitation expenditures is earned only in the year in which the property attributable to the expenditures is placed in service.
(5) To qualify for the credit authorized pursuant to this section, the historic structure that must be a nonresidential real property or residential rental property that is located in the cultural product district and be certified by the Mississippi Department of Archives and History as contributing to the historic significance of a certified historic district. For the purposes of this section "department" means the "Mississippi Department of Archives and History."
(6) A fee not to exceed Two Hundred Fifty Dollars ($250.00) shall be charged per application by the department, and the fee shall be used by the department, without appropriation, to offset the administrative costs of the department associated with its duties under this section.
(7) The credit authorized in this section shall be allowed against the tax imposed under Section 27-7-1 et seq. for the taxable year in which the credit is earned and against the tax imposed under Section 27-13-1 et seq. for the taxable year following the taxable year in which the credit is earned.
(8) If the tax credit allowed pursuant to this section exceeds the amount of the taxes due by the taxpayer, any unused credit may be carried forward as a credit against subsequent tax liability for a period not to exceed five (5) years, and the credit may be used in addition to the twenty percent (20%) federal tax credit for such purposes.
(9) Persons who are awarded credits under this section may elect to sell their unused tax credits to one or more individuals or entities and the tax credits may be transferred or sold by a taxpayer or any subsequent transferee an unlimited number of times. The transfer of the credit does not extend the carry forward period of the credit.
(10) If a credit is transferred as authorized in subsection (9) of this section, transferors and transferees shall submit to the department and the State Tax Commission in writing a notification of any transfer of or sale of tax credits within thirty (30) days after the transfer or sale of the tax credits and shall include:
(a) The transferor's tax credit balance before the transfer;
(b) The credit identification number assigned by the department;
(c) The remaining tax credit balance after the transfer;
(d) All federal and state tax identification numbers for both transferor and transferee;
(e) The date of the transfer;
(f) The amount of tax credit transferred; and
(g) Any other information required by the department and the State Tax Commission.
Failure to comply with this notification provision shall result in the disallowance of the tax credit until the parties are in full compliance with the requirements of this subsection (10).
(11) If any tax credit is claimed pursuant to this section then the claims shall be made as follows:
(a) All entities taxed as corporations for state income or corporation franchise tax purposes shall claim on their corporation income and corporation franchise tax return;
(b) Estates or trusts shall claim on their fiduciary income tax returns;
(c) Entities not taxed as corporations shall claim on the returns of the partners or members as follows:
(i) Corporate partners or members shall claim their share of the credit on their corporation income or corporation franchise tax return;
(ii) Individual partners or members shall claim their share of the credit on their individual income tax returns; and
(iii) Partners or members that are estates or trusts shall claim their share of the credit on their fiduciary income tax returns.
(12) (a) To claim the credit authorized pursuant to this section, the taxpayer shall apply to the department which shall determine the amount of eligible rehabilitation costs and expenses and whether the rehabilitation is consistent with the standards of the Secretary of the United States Department of the Interior. The department shall issue a certificate evidencing the eligible credit if the taxpayer is found to be eligible for the tax credit. The taxpayer shall attach the certificate to all income tax returns on which the credit is claimed.
(b) There is hereby created within the State Treasury a special fund into which shall be deposited all the fees collected by the department pursuant to this section. Money deposited into the fund shall not lapse at the end of any fiscal year and investment earnings on the proceeds in such special fund shall be deposited into such fund. Money from the fund shall be disbursed upon warrants issued by the State Fiscal Officer upon requisitions signed by the executive director of the department to assist the department in carrying out its duties under this section.
(13) The Mississippi Department of Archives and History and the State Tax Commission shall promulgate rules and regulations necessary to implement the provisions of this section.
SECTION 3. (1) For the purposes of this section:
(a) "Cultural product district" means and has the same definition set forth in Section 1 of this act.
(b) "Division" means the Division of Tourism of the Mississippi Development Authority.
(c) "Local governing authority" means and has the same definition set forth in Section 1 of this act.
(d) "One-of-a-kind works of art" means an item that meets the standards and criteria of the division in consultation with the Mississippi Arts Commission.
(2) The sale of original, one-of-a-kind works of art from an established location within the boundaries of a cultural product district shall be exempt from sales taxation as provided in Section 27-65-111.
(3) The local governing authority shall prepare a written report to be submitted to the division by January 1, 2013, and every second year thereafter, outlining the overall impact of the tax exemptions on their community, the amount of tax-exempt art sales, and any other factors that describe the impact of the program.
(4) The division shall collate the reports received pursuant to subsection (3) of this section and submit a report to the House Committee on Ways and Means and the Senate Finance Committee no less than sixty (60) days before the start of the 2013 Regular Session, and every second year thereafter.
(5) The report required in this section shall include the overall impact of the tax exemption, the amount of art sales and any other factors that describe the impact of the exemption.
SECTION 4. Section 27-65-111, Mississippi Code of 1972, is amended as follows:
27-65-111. The exemptions from the provisions of this chapter which are not industrial, agricultural or governmental, or which do not relate to utilities or taxes, or which are not properly classified as one (1) of the exemption classifications of this chapter, shall be confined to persons or property exempted by this section or by the Constitution of the United States or the State of Mississippi. No exemptions as now provided by any other section, except the classified exemption sections of this chapter set forth herein, shall be valid as against the tax herein levied. Any subsequent exemption from the tax levied hereunder, except as indicated above, shall be provided by amendments to this section.
No exemption provided in this section shall apply to taxes levied by Section 27-65-15 or 27-65-21, Mississippi Code of 1972.
The tax levied by this chapter shall not apply to the following:
(a) Sales of tangible personal property and services to hospitals or infirmaries owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual, and which are subject to and governed by Sections 41-7-123 through 41-7-127.
Only sales of tangible personal property or services which are ordinary and necessary to the operation of such hospitals and infirmaries are exempted from tax.
(b) Sales of daily or weekly newspapers, and periodicals or publications of scientific, literary or educational organizations exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code of 1954, as it exists as of March 31, 1975, and subscription sales of all magazines.
(c) Sales of coffins, caskets and other materials used in the preparation of human bodies for burial.
(d) Sales of tangible personal property for immediate export to a foreign country.
(e) Sales of tangible personal property to an orphanage, old men's or ladies' home, supported wholly or in part by a religious denomination, fraternal nonprofit organization or other nonprofit organization.
(f) Sales of tangible personal property, labor or services taxable under Sections 27-65-17, 27-65-19 and 27-65-23, to a YMCA, YWCA, a Boys' or Girls' Club owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual.
(g) Sales to elementary and secondary grade schools, junior and senior colleges owned and operated by a corporation or association in which no part of the net earnings inures to the benefit of any private shareholder, group or individual, and which are exempt from state income taxation, provided that this exemption does not apply to sales of property or services which are not to be used in the ordinary operation of the school, or which are to be resold to the students or the public.
(h) The gross proceeds of retail sales and the use or consumption in this state of drugs and medicines:
(i) Prescribed for the treatment of a human being by a person authorized to prescribe the medicines, and dispensed or prescription filled by a registered pharmacist in accordance with law; or
(ii) Furnished by a licensed physician, surgeon, dentist or podiatrist to his own patient for treatment of the patient; or
(iii) Furnished by a hospital for treatment of any person pursuant to the order of a licensed physician, surgeon, dentist or podiatrist; or
(iv) Sold to a licensed physician, surgeon, podiatrist, dentist or hospital for the treatment of a human being; or
(v) Sold to this state or any political subdivision or municipal corporation thereof, for use in the treatment of a human being or furnished for the treatment of a human being by a medical facility or clinic maintained by this state or any political subdivision or municipal corporation thereof.
"Medicines," as used in this paragraph (h), shall mean and include any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment or prevention of disease and which is commonly recognized as a substance or preparation intended for such use; provided that "medicines" do not include any auditory, prosthetic, ophthalmic or ocular device or appliance, any dentures or parts thereof or any artificial limbs or their replacement parts, articles which are in the nature of splints, bandages, pads, compresses, supports, dressings, instruments, apparatus, contrivances, appliances, devices or other mechanical, electronic, optical or physical equipment or article or the component parts and accessories thereof, or any alcoholic beverage or any other drug or medicine not commonly referred to as a prescription drug.
Notwithstanding the preceding sentence of this paragraph (h), "medicines" as used in this paragraph (h), shall mean and include sutures, whether or not permanently implanted, bone screws, bone pins, pacemakers and other articles permanently implanted in the human body to assist the functioning of any natural organ, artery, vein or limb and which remain or dissolve in the body.
"Hospital," as used in this paragraph (h), shall have the meaning ascribed to it in Section 41-9-3, Mississippi Code of 1972.
Insulin furnished by a registered pharmacist to a person for treatment of diabetes as directed by a physician shall be deemed to be dispensed on prescription within the meaning of this paragraph (h).
(i) Retail sales of automobiles, trucks and truck-tractors if exported from this state within forty-eight (48) hours and registered and first used in another state.
(j) Sales of tangible personal property or services to the Salvation Army and the Muscular Dystrophy Association, Inc.
(k) From July 1, 1985, through December 31, 1992, retail sales of "alcohol blended fuel" as such term is defined in Section 75-55-5. The gasoline-alcohol blend or the straight alcohol eligible for this exemption shall not contain alcohol distilled outside the State of Mississippi.
(l) Sales of tangible personal property or services to the Institute for Technology Development.
(m) The gross proceeds of retail sales of food and drink for human consumption made through vending machines serviced by full line vendors from and not connected with other taxable businesses.
(n) The gross proceeds of sales of motor fuel.
(o) Retail sales of food for human consumption purchased with food stamps issued by the United States Department of Agriculture, or other federal agency, from and after October 1, 1987, or from and after the expiration of any waiver granted pursuant to federal law, the effect of which waiver is to permit the collection by the state of tax on such retail sales of food for human consumption purchased with food stamps.
(p) Sales of cookies for human consumption by the Girl Scouts of America no part of the net earnings from which sales inures to the benefit of any private group or individual.
(q) Gifts or sales of tangible personal property or services to public or private nonprofit museums of art.
(r) Sales of tangible personal property or services to alumni associations of state-supported colleges or universities.
(s) Sales of tangible personal property or services to chapters of the National Association of Junior Auxiliaries, Inc.
(t) Sales of tangible personal property or services to domestic violence shelters which qualify for state funding under Sections 93-21-101 through 93-21-113.
(u) Sales of tangible personal property or services to the National Multiple Sclerosis Society, Mississippi Chapter.
(v) Retail sales of food for human consumption purchased with food instruments issued the Mississippi Band of Choctaw Indians under the Women, Infants and Children Program (WIC) funded by the United States Department of Agriculture.
(w) Sales of tangible personal property or services to a private company, as defined in Section 57-61-5, which is making such purchases with proceeds of bonds issued under Section 57-61-1 et seq., the Mississippi Business Investment Act.
(x) The gross collections from the operation of self-service, coin-operated car washing equipment and sales of the service of washing motor vehicles with portable high-pressure washing equipment on the premises of the customer.
(y) Sales of tangible personal property or services to the Mississippi Technology Alliance.
(z) Sales of tangible personal property to nonprofit organizations that provide foster care, adoption services and temporary housing for unwed mothers and their children if the organization is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code.
(aa) Sales of tangible personal property to nonprofit organizations that provide residential rehabilitation for persons with alcohol and drug dependencies if the organization is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code.
(bb) Retail sales of an article of clothing or footwear designed to be worn on or about the human body if the sales price of the article is less than One Hundred Dollars ($100.00) and the sale takes place during a period beginning at 12:01 a.m. on the last Friday in July and ending at 12:00 midnight the following Saturday. This paragraph (bb) shall not apply to:
(i) Accessories including jewelry, handbags, luggage, umbrellas, wallets, watches, backpacks, briefcases, garment bags and similar items carried on or about the human body, without regard to whether worn on the body in a manner characteristic of clothing;
(ii) The rental of clothing or footwear; and
(iii) Skis, swim fins, roller blades, skates and similar items worn on the foot.
(cc) Sales of original, one-of-a-kind works of art from an established location with the boundaries of a cultural district as described in Section 3 of this act.
From and after January 1, 2010, the governing authorities of a municipality, for retail sales occurring within the corporate limits of the municipality, may suspend the application of the exemption provided for in this paragraph (bb) by adoption of a resolution to that effect stating the date upon which the suspension shall take effect. A certified copy of the resolution shall be furnished to the State Tax Commission at least ninety (90) days prior to the date upon which the municipality desires such suspension to take effect.
SECTION 5. This act shall take effect and be in force from and after January 1, 2010.
