Meridian Star

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April 11, 2014

Bryant signs law changing Miss. tax practices

JACKSON —

JACKSON, Miss. (AP) — Gov Phil Bryant has signed a new law that changes how Mississippi state government collects taxes.

Bryant signed the bill Thursday at the annual meeting of the Mississippi Economic Council. That state chamber of commerce was a prime force in lobbying for changes.

A key part of the bill could make it harder for the state to rule that multistate corporations are paying too little in taxes to Mississippi. It says the Department of Revenue would have to present clear and convincing proof before it could reallocate how a company splits its income among states, and only do so in "limited and unique, nonrecurring circumstances."

Also Thursday, Bryant held a ceremony to promote two laws he signed in March. One aims to fix a tax problem that has harmed McKesson Corp.'s drug distribution facility in Olive Branch. The second law creates a $1 million corporate income tax credit to cover moving expenses for companies that relocate their headquarters to Mississippi.

The tax collection bill is a reaction to a 2013 Mississippi Supreme Court decision that credit bureau Equifax Inc. had to prove that it didn't earn any taxable income in the state. The Revenue Department examined Equifax's income and allocated some to Mississippi, ruling it owed taxes and penalties. Supporters of the bill said that the burden of proof on taxpayers following the Equifax decision was too high.

"Things had just gotten out of whack," Blake Wilson, president of the Mississippi Economic Council, told members Thursday.

The Revenue Department estimates all changes in the bill, including a phase-in of lower interest rates for overdue taxes, will cost Mississippi $100 million a year. The department estimates the restrictions of reallocation would cost $25 million a year. Over a series of years, the law also steps down the interest rate imposed on overdue taxes and penalties from 12 percent a year to 6 percent. The department estimates that change will cut state collections by more than $38 million when it's fully in effect in 2020.

However, Bryant said being friendly to businesses and individuals is more important than state revenue.

"If it's not fair to the taxpayers, it's not worth $100 million," he said.

The measure also makes it easier for taxpayers to appeal Revenue Department rulings.

"We wanted them to have the opportunity for appeal and not put them out of business," Bryant said.

Bryant signed the bill even though Revenue Commissioner Ed Morgan fought sharply against it.

"What I allow Commissioner Morgan to do is what he thinks is right," Bryant said.

Mississippi Development Authority Executive Director Brent Christensen said that the state could again ask Cooper Tire & Rubber Co. to relocate its headquarters from Findlay, Ohio. State and local officials plan to give Cooper as much as $40 million in state money and tax breaks to help the company's plan $140 million modernization plan for its 1,600-employee Tupelo plant. Local governments would own the improvements and lease them to Cooper, Christensen said.

Southaven Mayor Darren Musselwhite said he hoped his city could use the headquarters tax break as well.

 

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