CORPORATE INCOME AND FRANCHISE TAX INSTRUCTIONS 2018

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FORM 83-100CORPORATEINCOME AND FRANCHISE TAXINSTRUCTIONS2018INCOME AND FRANCHISE TAX BUREAUPO BOX 1033JACKSON, MISSISSIPPI 39215-1033WWW.DOR.MS.GOVDecember 2018

TABLE OF CONTENTSGENERAL INFORMATION AND INSTRUCTIONS3WHAT’S NEW!WHO MUST FILETIME AND PLACE FOR FILINGELECTRONIC FILINGTAXPAYER ACCESS POINT (TAP)WHO MUST SIGNREQUIRED FORMS AND SCHEDULESTAX PAYMENTSESTIMATED TAX PAYMENTSINTEREST AND PENALTY PROVISIONSACCOUNTING METHODSACCOUNTING PERIODROUND TO THE NEAREST DOLLARRECORDKEEPINGTAX RATESAMENDED RETURN3444445555566666FRANCHISE TAX7INCOME TAX8INSTALLMENT SALESINTANGIBLE AND INTEREST EXPENSESARMS-LENGTH TRANSACTIONSLONG TERM CAPITAL GAINS FROM SALES OF STOCKEXTRATERRITORIAL INCOMEAPPORTIONMENT/ALLOCATIONNET OPERATING LOSS (NOL) AND CAPITAL LOSSCOMBINED INCOMEPRODUCERS OF MINERAL OR NATURAL RESOURCE PRODUCTSUNRELATED BUSINESS TAXABLE INCOME – EXEMPT ORGANIZATIONS8888889999INCENTIVE CREDITS AND EXEMPTIONS10SPECIFIC INSTRUCTIONS14FORM 83-105FORM 83-122FORM 83-150FORM 83-155FORM 83-305FORM 83-310141516161718INSURANCE COMPANIES18DISTRICT OFFICES19APPENDIX202

GENERAL INFORMATION AND INSTRUCTIONSImportant tips to help expedite processing of your return:Tax Year 2018 Use black ink when preparing the return.Tax Year 2019 To indicate a loss (negative income), use brackets aroundthe dollar amount.Tax Year 2020 Attach a copy of the federal return behind the state returnincluding returns filed electronically. Combined filers mustattach the consolidated Federal Form 1120 (pages 1-5),Schedule M-3 and a complete Pro-Forma Federal Return.Tax Year 2021Tax Year 2022First 1,000 @ 0% and the next 4,000 @ 3%First 2,000 @ 0% and the next 3,000 @ 3%First 3,000 @ 0% and the next 2,000 @ 3%First 4,000 @ 0% and the next 1,000 @ 3%First 5,000 @ 0%Senate Bill 2858 (2016 Legislative Session) - Miss. CodeAnn. §27-13-1, §27-13-5, §27-13-7 and §27-13-67Beginning with tax year 2018, the franchise tax will becompletely phased out over a nine-year period ending with taxyear 2027 as follows: Additional schedules and attachments should be stapled tothe return.Visit our website at www.dor.ms.gov to download forms by taxyear and tax type.TAXPAYER ACCESS POINT (TAP)Tax Year 2018Remember, TAP is: Easy to use Convenient FreeTax Year 2019Tax Year 2020Tax Year 2021Go Paperless!With TAP, you have the option to Go Paperless. This means thatyou can pay your taxes online and receive certaincorrespondence electronically.Tax Year 2022Tax Year 2023TAP email lets you know that you have new correspondence toview online. You then logon to TAP to read the letter ormessage and take appropriate action on your account. Only youor persons you authorize can see your correspondence.Tax Year 2024Tax Year 2025Tax Year 2026When making payments or updating profile information, youshould always log directly into TAP using your User ID andpassword. TAP does not provide links containing yourtransaction or personal information to any external web site.Tax Year 2027Tax Year 2028Remember, you can pay your bill online through TAP withoutregistering for a TAP account. For more information on TAP,view the Electronic Filing Section of this booklet. 2.50 per 1,000 of capital in excess of 100,000 2.25 per 1,000 of capital in excess of 100,000 2.00 per 1,000 of capital in excess of 100,000 1.75 per 1,000 of capital in excess of 100,000 1.50 per 1,000 of capital in excess of 100,000 1.25 per 1,000 of capital in excess of 100,000 1.00 per 1,000 of capital in excess of 100,000 0.75 per 1,000 of capital in excess of 100,000 0.50 per 1,000 of capital in excess of 100,000 0.25 per 1,000 of capital in excess of 100,000Franchise tax repealed effective January1, 2028Tax Cuts and Jobs Act (TCJA)Mississippi will follow the federal TCJA changes listed below:HB 1566 provides a new credit from income tax for contributionsto qualifying charitable organizations that assist children who areeither already in foster care or at high risk of going into the state’sfoster care system, or serve children with a disability, or thatserve low-income families. Additionally, the legislation increasesthe amount of the tax credit for each child legallyadopted. Effective January 1, 2018Senate Bill 2858 (2016 Legislative Session) - Miss. CodeAnn. §27-7-5 and §27-7-18Beginning with tax year 2018, the 3% tax rate on corporateincome tax will be phased out over a five-year period endingwith tax year 2022 as follows:3 Section 179 expensing amounts increased from 500,000 to 1,000,000. The change in accounting method allowed for taxpayers withaverage gross receipts of less than 25 million for theprevious years to elect to use the cash method of accounting.A copy of the federal Form 3115 is required to be attachedto the Mississippi income tax return. The deduction for entertainment, amusement and recreationexpenses when directly related to a taxpayer’s trade orbusiness is eliminated. Mississippi will also follow the otherTCJA provisions related to food and beverage expenses,transportation fringe benefits, fines, penalties and researchand experimental expenditures. IRC Section 1031 like-kind exchange of property will applyto real property not held primarily for sale and Mississippipersonal property per Miss. Code Ann. §27-7-9(f)(1)(A).

Contractors with average gross receipts less than 25million for the previous three (3) tax years are exempt fromthe requirement to use the percentage of completion forcontracts to be completed within two (2) years. Taxpayerswill be allowed to use the completed contract method.Pursuant to the authority granted to the Department ofRevenue in Miss Code Ann Section 27-3-83 and Title 35, PartI, Chapter 4 of the Mississippi Administrative Procedures Code,the Department of Revenue will require all corporate incomeand franchise taxpayers with assets greater than 5,000,000 tofile electronically beginning with the returns due on or afterJanuary 1, 2018. Failure to file corporate income and franchisetax returns electronically may subject the taxpayer and/or taxpreparer to a penalty of Twenty-five Dollars ( 25.00) for the firstinstance of noncompliance and Five Hundred Dollars ( 500.00)for each additional instance of noncompliance.Every corporation domesticated or qualified to do businessin Mississippi must file a return even if the corporation isinactive or not otherwise engaged in business. Suchcorporation will remain subject to the filing requirementsuntil it is officially dissolved or withdrawn through the Officeof the Mississippi Secretary of State.Please contact the Department of Revenue at 601-972-7700if you are unable to comply with this mandate.Foreign corporations engaged in business in Mississippi orhaving sources of income in this state although not qualifiedto transact business in this state through the Office of theSecretary of State are subject to the measure of the incomeand franchise tax levy.TAXPAYER ACCESS POINT (TAP)TAP provides online access to your tax account information24 hours a day, 7 days a week. TAP is free and convenient!Every exempt corporate organization as described in Miss.Code Ann. §27-7-27 or §27-7-29 and not otherwise exemptfrom the income tax levy is required to make a corporate taxfiling if they have Mississippi unrelated business taxableincome. Refer to the “Unrelated Business Taxable Incomeof Exempt Organizations” section of this booklet for moreinformation.Users of TAP are able to: Make electronic payments of returns and assessments; view previously filed returns and amended returns; make address changes and view tax correspondence; view recent account activity, and; register a new business or add accounts to the business;Title insurance companies and class A burial insurancecompanies should use Form 83-105. Class B burialcompanies, writing life, accident and health, fire andcasualty insurance companies should use Form 83-391.Refer to the “Insurance Companies” section of this bookletfor additional information regarding Form 83-391.Third Party Access for Tax PractitionersTax practitioners can have TAP access to account informationfor each of your clients - from one login. First, create yourown TAP account (only one per FEIN). Once you areregistered in TAP, select "Add Access to Existing Account."Your client (taxpayer) must provide you the Letter ID andAccount ID in order for you to have access to their accounts.All accounts you set up for third party access are found underthe "Other Taxpayers' Accounts" tab in TAP. For moreinformation on TAP, visit our website at www.dor.ms.gov.The Mississippi combination return of corporate income andfranchise tax must be filed on or before the 15th day of the 4thmonth following the close of the accounting year. A shorttaxable year is considered a taxable year and must be filed onthor before the 15 day of the 4th month following the close of theshort fiscal year. If the due date falls on a Saturday, Sunday orlegal holiday, the return is due the next business day. Abusiness day is any day that is not a Saturday, Sunday or legalholiday.Users cannot file Corporate Income and Franchise Tax Returnsin TAP. However, tax preparers have the ability to file the taxreturns electronically through an authorized software provider.A copy of the complete federal return must be submittedelectronically. Please visit our website at www.dor.ms.gov foradditional information on how to file Mississippi returns on-lineand how to access approved on-line software providers.Extension of Time to File ReturnMississippi will follow federal return filing and extended duedates. Taxpayers requesting an extension of time to file thereturn must remit the tax due with Form 83-180 on or beforethe due date of the return. The authorized extension of timeto file does not extend the time for payment of the income orfranchise tax due. Interest and penalty will apply on anyunderpayment of tax.The return must be signed by the president, vice president orother officer of the corporation. A receiver, trustee or assigneemust sign any return which he/she is required to file on behalfof a corporation.Anyone who prepares the return but does not charge thecorporation should not complete the paid preparer section.Generally, anyone who is paid to prepare the return mustlegibly sign it and must also furnish the preparer taxidentification number (PTIN) issued by the Internal RevenueService (IRS).The return should be mailed to:Department of RevenueP.O. Box 23191Jackson, MS 39225-3191Street Address:500 Clinton Center DriveClinton, MS 390564

15th day of the 9th month after year end, and; 15th day of the 12th month after year end.The payment is due on the next business day if the datefalls on a Saturday, Sunday or legal holiday.To be a complete return, the return should contain all therequisite general information, as well as, all summary taxinformation and the basic back up schedules. Examples of therequired general information are complete name, currentaddress, FEIN, officer information and signature and otherinformation relating to the filing entity as requested on page 2 ofForm 83-105.Penalties may apply if the corporation does not make therequired estimated tax payments by the due date. Use Form83-305 to determine the amount of interest and penaltyon underestimate. See detailed instructions for the formunder the “Specific Instructions” for Form 83-305 section ofthis booklet.Examples of the summary tax information are the front page ofthe return, the franchise tax schedule, the computation of netincome, the computation of the apportionment factor (ifapplicable), the balance sheet, nonbusiness income schedule (ifapplicable), the direct accounting income statement (ifapplicable), schedules showing the computation of any tax credittaken (such as jobs credit) and schedules showing thecomputation of any major items on the return. Examples of the basic backup schedules are details of otheradditions or other deductions as requested on the computation ofnet income schedule, details of other additions or otherdeductions as requested on other statements made a part of thereturn, details of other current assets and other assets, and detailsof other current liabilities and other liabilities on the balancesheet as are normally included with the federal return.Late Payment: Interest and penalty are charged ontaxes paid late even if an extension of time to file isgranted. The interest is computed from the due date untilpaid. For taxes assessed on or after January 1, 2015,the rate of interest assessed is computed as follows: 9/10 of 1% per month from 01/01/15 through 12/31/15 8/10 of 1% per month from 01/01/16 through 12/31/16 7/10 of 1% per month from 01/01/17 through 12/31/17 6/10 of 1% per month from 01/01/18 through 12/31/18 1/2 of 1% per month on or after 01/01/19The penalty imposed for failure to pay the tax when dueis 1/2% per month not to exceed 25% in the aggregate. Late or Non-Filer: Penalties are imposed for failure tofile a return when due on the total amount of the taxdeficiency or delinquency. The penalty is 5% per monthnot to exceed 25% in the aggregate. The penalty shall notbe less than 100 for income tax for failure to file a return. Incomplete Returns: A corporation that does not file acomplete return or does not file a return within theprescribed time may be subject to a penalty of 25 perrequired attachment or schedule up to a maximum of 500 per return.The total tax due on the combination return must be paid in fullno later than the 15th day of the 4th month after the end of thetax year.Payment Options: Online Payments: To pay online, go to www.dor.ms.gov,click on Taxpayer Access Point (TAP) and follow theinstructions. Without a MARS account or a TAP login, users areable to make estimate payments online.The purpose of this penalty provision is to ensure thatsufficient information is disclosed on the return. If majorschedules (such as the balance sheet) are omitted orincomplete, or if schedules are consistently omitted orincomplete, then the penalty will be imposed. The moresevere or consistent the omission, the more likely it is thatthe penalty will be imposed. Refer to the Required “Formsand Schedules” section of this booklet for additionalinformation on what constitute a complete return. Check or Money Order Payments: To pay by check ormoney order, complete the payment voucher (Form 83- 300),make the check or money order payable to the Department ofRevenue and mail both to P.O. Box 23192, Jackson, MS 392253192. Credit Card or Electronic Check Payments:To pay by credit card or electronic check go towww.officialpayments.com. There is a 2 1/2% convenience feefor using the credit card service or a 3.00 transaction fee toprocess electronic check payments. Visa, Master Card,Discover and American Express cards are accepted. TheJurisdiction code for Mississippi is 3400.Direct or Separate Accounting Method: Producers ofmineral or natural resource products and constructioncontractors are required to use direct accounting incomputing their taxable income to this state. For moredetails, see Title 35, Part III, Subpart 08, Chapter 06 of theMiss Administrative Code. Other taxpayers may not employa direct accounting or separate accounting method unlessthey have obtained written authority from the Commissionerto do so. Refer to the “Producers of Mineral or NaturalResource Products” section of this booklet for additionalinformation.Every corporate taxpayer with an annual income tax liability inexcess of 200 must make estimated tax payments. At least90% of the current income tax liability must be paid bysubmitting quarterly payments. The remaining of the balance isdue by the due date of the return. The due dates for estimatedtax payments are: 15th day of the 4th month after year end; 15th day of the 6th month after year end;5

When to File: A taxpayer may apply to the Department forrevision of any return filed at any time within 3 years of thedue date; or, if an extension was granted, 3 years from thedate the return was filed. The 3 year period is not applicableto an IRS audit; however, no additional assessment orrefund will be made more than 3 years after the date the IRSdisposes of the tax liability in question.Returns should be filed on the basis of the 12-month accountingperiod established by the corporation. A corporation on a fiscalyear basis must enter the beginning and ending dates of thetaxable year in the appropriate spaces on the return. Noaccounting period, other than calendar year, will be recognized,unless before its close it was definitely established as anaccounting period by the taxpayer and the books of suchtaxpayer were kept in accordance therewith.Net Operating Loss (NOL): Form 83-155 must be filedwith an amended return in order to claim a net operating lossdeduction. Form 83-155 is used to make an irrevocableelection to carryback or carry forward the current year NOL.For more information concerning net operating losses, seethe “Net Operating Loss (NOL) & Capital Loss” section of thisbooklet.All dollar amounts should be rounded to the nearest whole dollar(no pennies). Round down to the next lower dollar amountsunder .50 and round up to the next higher dollar amounts of .50 and over. For example: 2.15 becomes 2.00; 4.75becomes 5.00; and 3.50 becomes 4.00.Internal Revenue Service Audit (RAR): To documentadjustments made as a result of an IRS audit, the RevenueAgent Report should be attached to the Mississippi amendedreturn.Amended Federal: To document adjustments made as aresult of an amended federal return, a copy of the amendedfederal (Form 1120X) should be attached to the amendedMississippi return. If a consolidated amended federal returnwas filed, please attach an amended Pro-Forma FederalReturn, as well as the amended consolidated federal returnto the amended state return.Taxpayers are required to maintain an accurate and completeset of records and other information necessary for theDepartment to determine the correct amount of tax due. Therecords and other information must be available for inspectionby the Department upon request at a reasonable time andlocation.Refusal or delay by the taxpayer to providedocumentation upon the Department’s request will result in anassessment being made from any information available, whichshall be prima facie correct.Any other documentation supporting the adjustments madeshould also be included with the amended Mississippi return.Attach a copy of the original filed return. Overpayments thatare not refunded will be applied to the next period for whichthe corporation makes a filing.Franchise Tax: 2.50 per 1,000, or fractional part thereof, ofcapital, surplus, undivided profits and true reserves employed inMississippi (Minimum tax of 25). For tax year 2018, 2.50 per 1,000 of capital in excess of 100,000.Income Tax: 3% on the first 5,000 of taxable income, 4% onthe next 5,000 of taxable income and 5% on taxable income inexcess of 10,000. For tax year 2018, first 1,000 @ 0% and thenext 4,000 @ 3%.File an amended return to: make adjustments to tax;claim a refund due to an adjustment to tax;claim a net operating loss (NOL) carryback deduction;report federal adjustments (1120X), and;report IRS audit adjustments (RAR).6

FRANCHISE TAXThe franchise tax is measured by the value of capital used,invested or employed in the exercise of any power, privilegeor right enjoyed by the corporation within Mississippi. Themode of measurement is the amount of capital of thecorporation employed or so situated as to be privileged to beemployed in this state. In determining the amount of capital,the net book value as regularly employed in conducting theaffairs of the corporation should be accepted as prima faciecorrect as to the true capital of the corporation, except wherethe Commissioner determines that the book value does notproperly reflect capital employed in this state and in thatsituation the Commissioner's determination of capital shouldbe prima facie correct.Multistate Tax

Beginning with tax year 2018, the 3% tax rate on corporate income tax will be phased out over a five-year period ending with tax year 2022 as follows: Senate Bill 2858 (2016 Legislative Session) - Miss. Code Ann. §27-13-1, §27-13-5, §27-13-7 and §27-13-67 Beginning with tax year 2018, the franchise tax will be

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