Bill Text: MS SB3102 | 2023 | Regular Session | Engrossed

Mississippi Senate Bill 3102 (Prior Session Legislation)

Bill Title: Income tax; revise certain provisions relating to electing pass-through entities.

Spectrum: Partisan Bill (Republican 4-0)

Status: (Failed) 2023-03-14 - Died In Committee [SB3102 Detail]

Download: Mississippi-2023-SB3102-Engrossed.html

MISSISSIPPI LEGISLATURE

2023 Regular Session

To: Finance

By: Senator(s) Harkins, Sparks, McMahan, Boyd

Senate Bill 3102

(As Passed the Senate)

AN ACT TO AMEND SECTION 27-7-26, MISSISSIPPI CODE OF 1972, TO REVISE THE METHOD BY WHICH A PARTNERSHIP, S CORPORATION OR SIMILAR PASS-THROUGH ENTITY MAY ELECT TO BECOME AN ELECTING PASS-THROUGH ENTITY FOR INCOME TAX PURPOSES, AND BY WHICH SUCH ELECTION MAY BE REVOKED; TO INCLUDE EACH OWNER'S, MEMBER'S, PARTNER'S OR SHAREHOLDER'S PRO RATA OR DISTRIBUTIVE SHARE OF THE ELECTING PASS-THROUGH ENTITY'S INCOME IN THE COMPUTATION OF SUCH INDIVIDUAL TAXPAYER'S INCOME TAX LIABILITY; TO PROVIDE THAT THE INDIVIDUAL TAXPAYER'S CREDIT SHALL BE EQUAL TO HIS OR HER PRO RATA OR DISTRIBUTIVE SHARE OF TAX DUE BEFORE APPLICATION OF ANY ENTITY-LEVEL CREDITS BY THE ELECTING PASS-THROUGH ENTITY; TO PROVIDE THAT, IF AN OWNER'S, MEMBER'S, PARTNER'S OR SHAREHOLDER'S CREDIT EXCEEDS HIS OR HER INCOME TAX LIABILITY, SUCH EXCESS SHALL BE CREDITED OR REFUNDED TO SUCH PERSON; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 27-7-26, Mississippi Code of 1972, is amended as follows:

27-7-26. (1) (a) For calendar year 2022, and for each calendar year thereafter, any partnership, S corporation or similar pass-through entity may elect to be taxed as an electing pass-through entity and pay the tax imposed under this chapter at the entity level. For the purposes of this section, the term "electing pass-through entity" means a partnership, S corporation or similar pass-through entity that has made an election pursuant to this section.

(b) A partnership, S corporation or similar pass-through entity desiring to be taxed as an electing pass-through entity shall submit the appropriate form to the Department of Revenue at any time during the tax year or on or before the fifteenth day of the third month following the close of that taxable year for which the entity elects to be taxed as an electing pass-through entity. This election shall be binding for that taxable year and all taxable years thereafter and shall not be revoked unless the electing pass-through entity submits the appropriate form to the department at any time during a subsequent taxable year or on or before the fifteenth day of the third month following the close of that taxable year for which the entity elects to no longer be taxed as an electing pass-through entity. Both the election to become an electing pass-through entity and the revocation of that election shall be accomplished by a vote satisfying such threshold required for taking official action as may be specified within the entity's governing documents, within the time prescribed in this subsection. If the entity's governing documents do not contain any such provisions governing the approval of official actions, such election shall be accomplished by * * * a vote by or written consent of the owners, members, partners or shareholders holding greater than fifty percent (50%) of the voting control of the entity, and also, if the entity has a governing body, by a vote by or written consent of the members of the governing body, within the time prescribed in this subsection.

(c) Each owner, member, partner or shareholder of an electing pass-through entity shall report his or her pro rata or distributive share of the income of the electing pass-through entity * * *, and such share shall be used in computing the taxpayer's income tax liability. Each owner, member, partner or shareholder of an electing pass-through entity shall be allowed a credit against the taxes imposed under this chapter in an amount equal to his or her pro rata or distributive share of tax * * * ~~paid~~ due before application of any entity-level credits by the electing pass-through entity with respect to the corresponding taxable year. If an owner's, member's, partner's or shareholder's credit exceeds his or her income tax liability, such excess shall be credited or refunded to such person.

(2) The adjusted basis of the owners, members or partners of an electing pass-through entity in their ownership interests in the electing pass-through entity shall be calculated without regard to the election under this section.

SECTION 2. This act shall take effect and be in force from and after January 1, 2023.