Mississippi Enacts Academic Research Rebate Legislation and Expands Existing Motion Picture Production Rebate Program
State & Local Tax Alert
Mississippi recently enacted two pieces of legislation that should encourage private investment in the state. The Strengthening Mississippi Academic Research Through Business (SMART Business) Act (House Bill 826), which Governor Phil Bryant signed into law on April 23, establishes a rebate for individuals and businesses that invest in research conducted by Mississippi colleges and universities. Senate Bill 2462, signed into law by Governor Bryant on April 12, amends Mississippi’s existing motion picture production rebate program by increasing the total rebate amount available for each motion picture project and adding the production of computer and video games to the program.
SMART Business Act (House Bill 826): Academic Research Rebates
Under the SMART Business Act, which takes effect July 1, 2013, an investor that enters into a research agreement with a Mississippi college or university can qualify to receive a rebate equal to 25 percent of the investor’s research costs.
To obtain a rebate, an investor must submit an application to the Board of Trustees of the Mississippi State Institutions of Higher Learning (IHL) containing a description of the research to be conducted, a proposed budget, and an estimated date for completion of the research. IHL will then issue or refuse to issue a SMART Business certificate within 60 days of receiving the application. An investor that receives a certificate may claim the rebate by submitting to the Department of Revenue the certificate and proof of payment made to the college or university. Rebates must be allocated to investors by the Department of Revenue in the order that the IHL issues certificates.
Rebates are also available under the SMART Business Act for investors in research conducted by a research corporation if the corporation is wholly owned by a Mississippi college or university and all income and profits of the corporation inure to the benefit of the college or university.
An investor incurring research costs may not claim a rebate greater than $1 million in any fiscal year. The total amount of rebates issued under the SMART Business Act in any fiscal year may not exceed $5 million.
A copy of the SMART Business Act may be found here.
Senate Bill 2462: Motion Picture Rebates
With the vast majority of states now offering film incentives, states must be more aggressive than ever in developing and expanding their film incentive programs to attract productions. Mississippi’s film incentive program was originally enacted in 2004 under the Mississippi Motion Picture Incentive Act. The program provides for cash rebates on a percentage of the base investment (local spend) and payroll incurred by a motion picture production company in connection with the production of a motion picture in Mississippi that the Mississippi Development Authority has approved. To qualify, a motion picture production company must expend at least $50,000.
The base investment rebate is equal to 25 percent of the amount expended in Mississippi. The amount of the payroll rebate is 30 percent for Mississippi residents and 25 percent for nonresidents. Senate Bill 2462 adds a 5 percent bonus payroll rebate for employees who have been honorably discharged from the United States Armed Forces.
Senate Bill 2462 increases the total rebate amount available for any motion picture project from $8 million to $10 million (the $20 million aggregate annual cap remains unchanged). The legislation also raises the individual-employee rebate cap to include the first $5 million of any individual’s payroll; previously, the rebate was limited to the first $1 million of payroll.
Finally, the production of computer and video games now qualifies under the program.
A copy of Senate Bill 2462, which took effect April 12, may be found here.
© June 2013. Wendy R. Mullins / Stephen M. Wilson / Charles B. “Trey” Hill, III / Bradley Arant Boult Cummings LLP. All rights reserved.