Taxes; allow disabled veterans to recapture payments between disability effective date and receipt of VA's decision letter.

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To: Finance
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Senator(s) Fillingane

SENATE BILL NO. 2836

AN ACT TO PROVIDE THAT A TAXPAYER WHO HAS RECEIVED A 1
DISABILITY DETERMINATION FROM THE UNITED STATES DEPARTMENT OF 2
VETERANS AFFAIRS SHALL BE ALLOWED A REBATE FOR ANY PAID AD VALOREM 3
TAXES THAT WERE ASSESSED ON OR AFTER THE EFFECTIVE DATE OF THE 4
DISABILITY AND BEFORE THE TAXPAYER'S RECEIPT OF THE DECISION 5
LETTER, BUT WHICH WOULD NOT HAVE BEEN ASSESSED HAD THE DISABILITY 6
DETERMINATION BEEN AVAILABLE AT THE TIME OF ASSESSMENT; TO SPECIFY 7
THE SUBMISSIONS THAT MUST BE MADE TO THE DEPARTMENT OF REVENUE 8
WITHIN 60 DAYS OF THE ISSUANCE OF THE DECISION LETTER; TO PROVIDE 9
THAT REBATE PAYMENTS SHALL BE MADE BY THE DEPARTMENT OF REVENUE 10
FROM CURRENT TAX COLLECTIONS; TO AUTHORIZE THE DEPARTMENT OF 11
REVENUE TO PROMULGATE RULES AND REGULATIONS TO ADMINISTER THE 12
REBATE; TO AMEND SECTION 27-7-15, MISSISSIPPI CODE OF 1972, TO 13
EXCLUDE REBATE PAYMENTS UNDER THIS ACT FROM THE DEFINITION OF 14
GROSS INCOME FOR PURPOSES OF THE STATE INCOME TAX; TO AMEND 15
SECTION 27-7-49, MISSISSIPPI CODE OF 1972, TO ALLOW A TAXPAYER WHO 16
HAS RECEIVED A DISABILITY DETERMINATION FROM THE UNITED STATES 17
DEPARTMENT OF VETERANS AFFAIRS TO APPLY TO THE COMMISSIONER OF 18
REVENUE FOR REVISION OF ANY STATE INCOME TAX RETURN FILED ON OR 19
AFTER THE EFFECTIVE DATE OF THE DISABILITY AND BEFORE RECEIPT OF 20
THE DECISION LETTER, INSOFAR AS THE MISSISSIPPI INCOME TAX 21
LIABILITY IS AFFECTED BY THE DISABILITY DETERMINATION; AND FOR 22
RELATED PURPOSES. 23
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 24
SECTION 1. (1) A taxpayer who has received a disability 25
determination from the United States Department of Veterans 26
Affairs (VA) shall be allowed a rebate for any paid ad valorem 27
taxes that were assessed on or after the effective date of the 28
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disability and before the taxpayer's receipt of the decision 29
letter, but which would not have been assessed had the disability 30
determination been available at the time of assessment. The 31
decision letter shall be presumed to have been received by the 32
taxpayer five (5) calendar days after its issuance date, but 33
another date of receipt may be established by the taxpayer under 34
rules and regulations promulgated by the Department of Revenue. 35
(2) A taxpayer desiring a rebate under this section must 36
submit a request to the Department of Revenue, on a form 37
prescribed by the department, within sixty (60) days of the VA's 38
issuance of its decision letter. Together with the form, the 39
taxpayer shall submit the VA's decision letter, a copy of the 40
receipts from the tax collector evidencing payment of the ad 41
valorem taxes which are the basis of the claim for the rebate, and 42
any other relevant information required by the department. 43
(3) Upon verification of the taxpayer's eligibility for the 44
rebate, the Department of Revenue shall disburse funds to the 45
taxpayer for the amount of the rebate. Such payments by the 46
department shall be made from current tax collections. 47
(4) The Department of Revenue is authorized to promulgate 48
rules and regulations to administer this section. 49
SECTION 2. Section 27-7-15, Mississippi Code of 1972, is 50
amended as follows: 51
27-7-15. (1) For the purposes of this article, except as 52
otherwise provided, the term "gross income" means and includes the 53
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income of a taxpayer derived from salaries, wages, fees or 54
compensation for service, of whatever kind and in whatever form 55
paid, including income from governmental agencies and subdivisions 56
thereof; or from professions, vocations, trades, businesses, 57
commerce or sales, or renting or dealing in property, or 58
reacquired property; also from annuities, interest, rents, 59
dividends, securities, insurance premiums, reinsurance premiums, 60
considerations for supplemental insurance contracts, or the 61
transaction of any business carried on for gain or profit, or 62
gains, or profits, and income derived from any source whatever and 63
in whatever form paid. The amount of all such items of income 64
shall be included in the gross income for the taxable year in 65
which received by the taxpayer. The amount by which an eligible 66
employee's salary is reduced pursuant to a salary reduction 67
agreement authorized under Section 25-17-5 shall be excluded from 68
the term "gross income" within the meaning of this article. 69
(2) In determining gross income for the purpose of this 70
section, the following, under regulations prescribed by the 71
commissioner, shall be applicable: 72
(a) Dealers in property. Federal rules, regulations 73
and revenue procedures shall be followed with respect to 74
installment sales unless a transaction results in the shifting of 75
income from inside the state to outside the state. 76
(b) Casual sales of property. 77
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(i) Prior to January 1, 2001, federal rules, 78
regulations and revenue procedures shall be followed with respect 79
to installment sales except they shall be applied and administered 80
as if H.R. 3594, the Installment Tax Correction Act of 2000 of the 81
106th Congress, had not been enacted. This provision will 82
generally affect taxpayers, reporting on the accrual method of 83
accounting, entering into installment note agreements on or after 84
December 17, 1999. Any gain or profit resulting from the casual 85
sale of property will be recognized in the year of sale. 86
(ii) From and after January 1, 2001, federal 87
rules, regulations and revenue procedures shall be followed with 88
respect to installment sales except as provided in this 89
subparagraph (ii). Gain or profit from the casual sale of 90
property shall be recognized in the year of sale. When a taxpayer 91
recognizes gain on the casual sale of property in which the gain 92
is deferred for federal income tax purposes, a taxpayer may elect 93
to defer the payment of tax resulting from the gain as allowed and 94
to the extent provided under regulations prescribed by the 95
commissioner. If the payment of the tax is made on a deferred 96
basis, the tax shall be computed based on the applicable rate for 97
the income reported in the year the payment is made. Except as 98
otherwise provided in subparagraph (iii) of this paragraph (b), 99
deferring the payment of the tax shall not affect the liability 100
for the tax. If at any time the installment note is sold, 101
contributed, transferred or disposed of in any manner and for any 102
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purpose by the original note holder, or the original note holder 103
is merged, liquidated, dissolved or withdrawn from this state, 104
then all deferred tax payments under this section shall 105
immediately become due and payable. 106
(iii) If the selling price of the property is 107
reduced by any alteration in the terms of an installment note, 108
including default by the purchaser, the gain to be recognized is 109
recomputed based on the adjusted selling price in the same manner 110
as for federal income tax purposes. The tax on this amount, less 111
the previously paid tax on the recognized gain, is payable over 112
the period of the remaining installments. If the tax on the 113
previously recognized gain has been paid in full to this state, 114
the return on which the payment was made may be amended for this 115
purpose only. The statute of limitations in Section 27-7-49 shall 116
not bar an amended return for this purpose. 117
(c) Reserves of insurance companies. In the case of 118
insurance companies, any amounts in excess of the legally required 119
reserves shall be included as gross income. 120
(d) Affiliated companies or persons. As regards sales, 121
exchanges or payments for services from one to another of 122
affiliated companies or persons or under other circumstances where 123
the relation between the buyer and seller is such that gross 124
proceeds from the sale or the value of the exchange or the payment 125
for services are not indicative of the true value of the subject 126
matter of the sale, exchange or payment for services, the 127
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commissioner shall prescribe uniform and equitable rules for 128
determining the true value of the gross income, gross sales, 129
exchanges or payment for services, or require consolidated returns 130
of affiliates. 131
(e) Alimony and separate maintenance payments. The 132
federal rules, regulations and revenue procedures in determining 133
the deductibility and taxability of alimony payments shall be 134
followed in this state. 135
(f) Reimbursement for expenses of moving. There shall 136
be included in gross income (as compensation for services) any 137
amount received or accrued, directly or indirectly, by an 138
individual as a payment for or reimbursement of expenses of moving 139
from one (1) residence to another residence which is attributable 140
to employment or self-employment. 141
(3) In the case of taxpayers other than residents, gross 142
income includes gross income from sources within this state. 143
(4) The words "gross income" do not include the following 144
items of income which shall be exempt from taxation under this 145
article: 146
(a) The proceeds of life insurance policies and 147
contracts paid upon the death of the insured. However, the income 148
from the proceeds of such policies or contracts shall be included 149
in the gross income. 150
(b) The amount received by the insured as a return of 151
premium or premiums paid by him under life insurance policies, 152
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endowment, or annuity contracts, either during the term or at 153
maturity or upon surrender of the contract. 154
(c) The value of property acquired by gift, bequest, 155
devise or descent, but the income from such property shall be 156
included in the gross income. 157
(d) Interest upon the obligations of the United States 158
or its possessions, or securities issued under the provisions of 159
the Federal Farm Loan Act of 1916, or bonds issued by the War 160
Finance Corporation, or obligations of the State of Mississippi or 161
political subdivisions thereof. 162
(e) The amounts received through accident or health 163
insurance as compensation for personal injuries or sickness, plus 164
the amount of any damages received for such injuries or such 165
sickness or injuries, or through the War Risk Insurance Act, or 166
any law for the benefit or relief of injured or disabled members 167
of the military or naval forces of the United States. 168
(f) Income received by any religious denomination or by 169
any institution or trust for moral or mental improvements, 170
religious, Bible, tract, charitable, benevolent, fraternal, 171
missionary, hospital, infirmary, educational, scientific, 172
literary, library, patriotic, historical or cemetery purposes or 173
for two (2) or more of such purposes, if such income be used 174
exclusively for carrying out one or more of such purposes. 175
(g) Income received by a domestic corporation which is 176
"taxable in another state" as this term is defined in this 177
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article, derived from business activity conducted outside this 178
state. Domestic corporations taxable both within and without the 179
state shall determine Mississippi income on the same basis as 180
provided for foreign corporations under the provisions of this 181
article. 182
(h) In case of insurance companies, there shall be 183
excluded from gross income such portion of actual premiums 184
received from an individual policyholder as is paid back or 185
credited to or treated as an abatement of premiums of such 186
policyholder within the taxable year. 187
(i) Income from dividends that has already borne a tax 188
as dividend income under the provisions of this article, when such 189
dividends may be specifically identified in the possession of the 190
recipient. 191
(j) Amounts paid by the United States to a person as 192
added compensation for hazardous duty pay as a member of the Armed 193
Forces of the United States in a combat zone designated by 194
Executive Order of the President of the United States. 195
(k) Amounts received as retirement allowances, 196
pensions, annuities or optional retirement allowances paid under 197
the federal Social Security Act, the Railroad Retirement Act, the 198
Federal Civil Service Retirement Act, or any other retirement 199
system of the United States government, retirement allowances paid 200
under the Mississippi Public Employees' Retirement System, 201
Mississippi Highway Safety Patrol Retirement System or any other 202
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retirement system of the State of Mississippi or any political 203
subdivision thereof. The exemption allowed under this paragraph 204
(k) shall be available to the spouse or other beneficiary at the 205
death of the primary retiree. 206
(l) Amounts received as retirement allowances, 207
pensions, annuities or optional retirement allowances paid by any 208
public or governmental retirement system not designated in 209
paragraph (k) or any private retirement system or plan of which 210
the recipient was a member at any time during the period of his 211
employment. Amounts received as a distribution under a Roth 212
Individual Retirement Account shall be treated in the same manner 213
as provided under the Internal Revenue Code of 1986, as amended. 214
The exemption allowed under this paragraph (l) shall be available 215
to the spouse or other beneficiary at the death of the primary 216
retiree. 217
(m) National Guard or Reserve Forces of the United 218
States compensation not to exceed the aggregate sum of Five 219
Thousand Dollars ($5,000.00) for any taxable year through the 2005 220
taxable year, and not to exceed the aggregate sum of Fifteen 221
Thousand Dollars ($15,000.00) for any taxable year thereafter. 222
(n) Compensation received for active service as a 223
member below the grade of commissioned officer and so much of the 224
compensation as does not exceed the maximum enlisted amount 225
received for active service as a commissioned officer in the Armed 226
Forces of the United States for any month during any part of which 227
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such members of the Armed Forces (i) served in a combat zone as 228
designated by Executive Order of the President of the United 229
States or a qualified hazardous duty area as defined by federal 230
law, or both; or (ii) was hospitalized as a result of wounds, 231
disease or injury incurred while serving in such combat zone. For 232
the purposes of this paragraph (n), the term "maximum enlisted 233
amount" means and has the same definition as that term has in 26 234
USCS 112. 235
(o) The proceeds received from federal and state 236
forestry incentive programs. 237
(p) The amount representing the difference between the 238
increase of gross income derived from sales for export outside the 239
United States as compared to the preceding tax year wherein gross 240
income from export sales was highest, and the net increase in 241
expenses attributable to such increased exports. In the absence 242
of direct accounting, the ratio of net profits to total sales may 243
be applied to the increase in export sales. This paragraph (p) 244
shall only apply to businesses located in this state engaging in 245
the international export of Mississippi goods and services. Such 246
goods or services shall have at least fifty percent (50%) of value 247
added at a location in Mississippi. 248
(q) Amounts paid by the federal government for the 249
construction of soil conservation systems as required by a 250
conservation plan adopted pursuant to 16 USCS 3801 et seq. 251
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(r) The amount deposited in a medical savings account, 252
and any interest accrued thereon, that is a part of a medical 253
savings account program as specified in the Medical Savings 254
Account Act under Sections 71-9-1 through 71-9-9; provided, 255
however, that any amount withdrawn from such account for purposes 256
other than paying eligible medical expense or to procure health 257
coverage shall be included in gross income. 258
(s) Amounts paid by the Mississippi Soil and Water 259
Conservation Commission from the Mississippi Soil and Water 260
Cost-Share Program for the installation of water quality best 261
management practices. 262
(t) Dividends received by a holding corporation, as 263
defined in Section 27-13-1, from a subsidiary corporation, as 264
defined in Section 27-13-1. 265
(u) Interest, dividends, gains or income of any kind on 266
any account in the Mississippi Affordable College Savings Trust 267
Fund, as established in Sections 37-155-101 through 37-155-125, to 268
the extent that such amounts remain on deposit in the MACS Trust 269
Fund or are withdrawn pursuant to a qualified withdrawal, as 270
defined in Section 37-155-105. 271
(v) Interest, dividends or gains accruing on the 272
payments made pursuant to a prepaid tuition contract, as provided 273
for in Section 37-155-17. 274
(w) Income resulting from transactions with a related 275
member where the related member subject to tax under this chapter 276
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was required to, and did in fact, add back the expense of such 277
transactions as required by Section 27-7-17(2). Under no 278
circumstances may the exclusion from income exceed the deduction 279
add-back of the related member, nor shall the exclusion apply to 280
any income otherwise excluded under this chapter. 281
(x) Amounts that are subject to the tax levied pursuant 282
to Section 27-7-901, and are paid to patrons by gaming 283
establishments licensed under the Mississippi Gaming Control Act. 284
(y) Amounts that are subject to the tax levied pursuant 285
to Section 27-7-903, and are paid to patrons by gaming 286
establishments not licensed under the Mississippi Gaming Control 287
Act. 288
(z) Interest, dividends, gains or income of any kind on 289
any account in a qualified tuition program and amounts received as 290
distributions under a qualified tuition program shall be treated 291
in the same manner as provided under the United States Internal 292
Revenue Code, as amended. For the purposes of this paragraph (z), 293
the term "qualified tuition program" means and has the same 294
definition as that term has in 26 USCS 529. 295
(aa) The amount deposited in a health savings account, 296
and any interest accrued thereon, that is a part of a health 297
savings account program as specified in the Health Savings 298
Accounts Act created in Sections 83-62-1 through 83-62-9; however, 299
any amount withdrawn from such account for purposes other than 300
paying qualified medical expenses or to procure health coverage 301
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shall be included in gross income, except as otherwise provided by 302
Sections 83-62-7 and 83-62-9. 303
(bb) Amounts received as qualified disaster relief 304
payments shall be treated in the same manner as provided under the 305
United States Internal Revenue Code, as amended. 306
(cc) Amounts received as a "qualified Hurricane Katrina 307
distribution" as defined in the United States Internal Revenue 308
Code, as amended. 309
(dd) Amounts received by an individual which may be 310
excluded from income as foreign earned income for federal income 311
tax purposes. 312
(ee) Amounts received by a qualified individual, 313
directly or indirectly, from an employer or nonprofit housing 314
organization that are qualified housing expenses associated with 315
an employer-assisted housing program. For purposes of this 316
paragraph (ee): 317
(i) "Qualified individual" means any individual 318
whose household income does not exceed one hundred twenty percent 319
(120%) of the area median gross income (as defined by the United 320
States Department of Housing and Urban Development), adjusted for 321
household size, for the area in which the housing is located. 322
(ii) "Nonprofit housing organization" means an 323
organization that is organized as a not-for-profit organization 324
under the laws of this state or another state and has as one of 325
its purposes: 326
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1. Homeownership education or counseling; 327
2. The development of affordable housing; or 328
3. The development or administration of 329
employer-assisted housing programs. 330
(iii) "Employer-assisted housing program" means a 331
separate written plan of any employer (including, without 332
limitation, tax-exempt organizations and public employers) for the 333
exclusive benefit of the employer's employees to pay qualified 334
housing expenses to assist the employer's employees in securing 335
affordable housing. 336
(iv) "Qualified housing expenses" means: 337
1. With respect to rental assistance, an 338
amount not to exceed Two Thousand Dollars ($2,000.00) paid for the 339
purpose of assisting employees with security deposits and rental 340
subsidies; and 341
2. With respect to homeownership assistance, 342
an amount not to exceed the lesser of Ten Thousand Dollars 343
($10,000.00) or six percent (6%) of the purchase price of the 344
employee's principal residence that is paid for the purpose of 345
assisting employees with down payments, payment of closing costs, 346
reduced interest mortgages, mortgage guarantee programs, mortgage 347
forgiveness programs, equity contribution programs, or 348
contributions to homebuyer education and/or homeownership 349
counseling of eligible employees. 350
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(ff) For the 2010 taxable year and any taxable year 351
thereafter, amounts converted in accordance with the United States 352
Internal Revenue Code, as amended, from a traditional Individual 353
Retirement Account to a Roth Individual Retirement Account. The 354
exemption allowed under this paragraph (ff) shall be available to 355
the spouse or other beneficiary at the death of the primary 356
retiree. 357
(gg) Amounts received for the performance of disaster 358
or emergency-related work as defined in Section 27-113-5. 359
(hh) The amount deposited in a catastrophe savings 360
account established under Sections 27-7-1001 through 27-7-1007, 361
interest income earned on the catastrophe savings account, and 362
distributions from the catastrophe savings account; however, any 363
amount withdrawn from a catastrophe savings account for purposes 364
other than paying qualified catastrophe expenses shall be included 365
in gross income, except as otherwise provided by Sections 366
27-7-1001 through 27-7-1007. 367
(ii) Interest, dividends, gains or income of any kind 368
on any account in the Mississippi Achieving a Better Life 369
Experience (ABLE) Trust Fund, as established in Chapter 28, Title 370
43, to the extent that such amounts remain on deposit in the ABLE 371
Trust Fund or are withdrawn pursuant to a qualified withdrawal, as 372
defined in Section 43-28-11. 373
(jj) Subject to the limitations provided under Section 374
27-7-1103, amounts deposited into a first-time homebuyer savings 375
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account and any interest or other income earned attributable to an 376
account and monies or funds withdrawn or distributed from an 377
account for the payment of eligible costs by or on behalf of a 378
qualified beneficiary; however, any monies or funds withdrawn or 379
distributed from a first-time homebuyer savings account for any 380
purpose other than the payment of eligible costs by or on behalf 381
of a qualified beneficiary shall be included in gross income. For 382
the purpose of this paragraph (jj), the terms "first-time 383
homebuyer savings account," "eligible costs" and "qualified 384
beneficiary" mean and have the same definitions as such terms have 385
in Section 27-7-1101. 386
(kk) Amounts paid by an agricultural disaster program 387
as compensation to an agricultural producer, cattle farmer or 388
cattle rancher who has suffered a loss as the result of a disaster 389
or emergency, including, but not limited to, the following United 390
States Department of Agriculture programs: 391
(i) Livestock Forage Disaster Program; 392
(ii) Livestock Indemnity Program; 393
(iii) Emergency Assistance for Livestock, Honey 394
Bees and Farm-raised Fish Program; 395
(iv) Emergency Conservation Program; 396
(v) Noninsured Crop Disaster Assistance Program; 397
(vi) Pasture, Rangeland, Forage Pilot Insurance 398
Program; 399
(vii) Annual Forage Pilot Program; 400
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(viii) Livestock Risk Protection Insurance 401
Program; and 402
(ix) Livestock Gross Margin Insurance Plan. 403
(ll) Amounts received as advances and/or grants under 404
the federal Coronavirus Aid, Relief, and Economic Security Act, 405
the Consolidated Appropriations Act of 2021 and the American 406
Rescue Plan Act. 407
(mm) Any and all cancelled indebtedness provided for 408
under the Coronavirus Aid, Relief, and Economic Security Act and 409
the Consolidated Appropriations Act of 2021. 410
(nn) Amounts received as payments under Section 411
27-3-85. 412
(oo) Amounts received as grants under the 2020 COVID-19 413
Mississippi Business Assistance Act. 414
(pp) Amounts received as grants under Section 57-1-521. 415
( * * *qq) Amounts received as grants under the 416
Shuttered Venue Operators Grant Program and Restaurant 417
Revitalization Fund authorized by the Economic Aid to Hard-Hit 418
Small Businesses, Nonprofits, and Venues Act, and amended by the 419
American Rescue Plan Act. 420
( * * *rr) Amounts received as grants under the 421
Mississippi Agriculture Stabilization Act. 422
(ss) Amounts received as rebates under Section 1 of 423
this act. 424
(5) Prisoners of war, missing in action-taxable status. 425
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(a) Members of the Armed Forces. Gross income does not 426
include compensation received for active service as a member of 427
the Armed Forces of the United States for any month during any 428
part of which such member is in a missing status, as defined in 429
paragraph (d) of this subsection, during the Vietnam Conflict as a 430
result of such conflict. 431
(b) Civilian employees. Gross income does not include 432
compensation received for active service as an employee for any 433
month during any part of which such employee is in a missing 434
status during the Vietnam Conflict as a result of such conflict. 435
(c) Period of conflict. For the purpose of this 436
subsection, the Vietnam Conflict began February 28, 1961, and ends 437
on the date designated by the President by Executive Order as the 438
date of the termination of combatant activities in Vietnam. For 439
the purpose of this subsection, an individual is in a missing 440
status as a result of the Vietnam Conflict if immediately before 441
such status began he was performing service in Vietnam or was 442
performing service in Southeast Asia in direct support of military 443
operations in Vietnam. "Southeast Asia," as used in this 444
paragraph, is defined to include Cambodia, Laos, Thailand and 445
waters adjacent thereto. 446
(d) "Missing status" means the status of an employee or 447
member of the Armed Forces who is in active service and is 448
officially carried or determined to be absent in a status of (i) 449
missing; (ii) missing in action; (iii) interned in a foreign 450
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country; (iv) captured, beleaguered or besieged by a hostile 451
force; or (v) detained in a foreign country against his will; but 452
does not include the status of an employee or member of the Armed 453
Forces for a period during which he is officially determined to be 454
absent from his post of duty without authority. 455
(e) "Active service" means active federal service by an 456
employee or member of the Armed Forces of the United States in an 457
active duty status. 458
(f) "Employee" means one who is a citizen or national 459
of the United States or an alien admitted to the United States for 460
permanent residence and is a resident of the State of Mississippi 461
and is employed in or under a federal executive agency or 462
department of the Armed Forces. 463
(g) "Compensation" means (i) basic pay; (ii) special 464
pay; (iii) incentive pay; (iv) basic allowance for quarters; (v) 465
basic allowance for subsistence; and (vi) station per diem 466
allowances for not more than ninety (90) days. 467
(h) If refund or credit of any overpayment of tax for 468
any taxable year resulting from the application of this subsection 469
(5) is prevented by the operation of any law or rule of law, such 470
refund or credit of such overpayment of tax may, nevertheless, be 471
made or allowed if claim therefor is filed with the 472
department * * * within three (3) years after the date of the 473
enactment of this subsection. 474
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(i) The provisions of this subsection shall be 475
effective for taxable years ending on or after February 28, 1961. 476
(6) A shareholder of an S corporation, as defined in Section 477
27-8-3(1)(g), shall take into account the income, loss, deduction 478
or credit of the S corporation only to the extent provided in 479
Section 27-8-7(2). 480
SECTION 3. Section 27-7-49, Mississippi Code of 1972, is 481
amended as follows: 482
27-7-49. (1) Returns shall be examined by the commissioner 483
or his or her duly authorized agents within three (3) years from 484
the due date or the date the return was filed, whichever is later, 485
and no determination of a tax overpayment or deficiency shall be 486
made by the commissioner after the expiration of the three-year 487
period, except as provided in this section and as provided in 488
Section 27-7-307. 489
(2) When an examination of a return made under this article 490
has been commenced, and the taxpayer notified of the examination, 491
either by certified mail or personal delivery by an agent of the 492
commissioner, within the three-year examination period provided in 493
subsection (1) of this section, the determination of the correct 494
tax liability may be made by the commissioner after the expiration 495
of the three-year examination period, provided that the 496
determination shall be made within one (1) year after the 497
expiration of the three-year examination period; however, this 498
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limitation and the limitation contained in subsection (1) of this 499
section shall not apply: 500
(a) To any tax period for which the taxpayer failed to 501
file a return, in which case the tax, including any applicable 502
penalties and interest, may be assessed by the commissioner at any 503
time and the tax, penalties and/or interest so assessed may be 504
collected by the commissioner as otherwise provided by law. 505
(b) In the case of a false or fraudulent return with 506
the intent to evade tax. In such a case the commissioner is 507
authorized to compute, determine and assess at any time the 508
estimated amount of tax due on the return, including any 509
applicable penalties and interest, from any information in his or 510
her possession, and after the tax, penalties and/or interest are 511
assessed, to collect them as otherwise provided by law. 512
(c) In the case of an agreement in writing entered into 513
by the commissioner and the taxpayer, made prior to the expiration 514
of the applicable time periods provided for in subsections (1) and 515
(2) of this section, consenting to the examination of a return. 516
In such a case the determination of a tax overpayment or 517
deficiency and/or the issuance of an assessment may be made within 518
the agreed upon period. The period agreed upon may be extended by 519
subsequent agreements in writing made before the expiration of the 520
previously agreed upon period. 521
(d) In a case in which a taxpayer requests an extension 522
of time for filing any return required by this article, and the 523
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request is granted. In such a case the limitation of time for 524
examining the return and determining any tax overpayment or 525
assessing any tax deficiency from the return shall be extended for 526
a like period. 527
(3) Taxpayers shall keep and maintain an accurate and 528
complete set of records and other information sufficient to allow 529
the department to determine the correct amount of tax due. The 530
records and other information shall be open and available for 531
inspection by the department upon request at a reasonable time and 532
location. Refusal or delay by the taxpayer to provide 533
documentation for examination upon the department's request shall 534
result in an assessment being made from any information available, 535
which shall be prima facie correct. 536
(4) A taxpayer may apply to the commissioner for revision of 537
any return filed under this article at any time within three (3) 538
years from the due date, or if an extension of time to file was 539
granted, three (3) years from the date the return was filed. If 540
the return is not filed by the time authorized by the extension, 541
then the three (3) years begin to run from the final day of the 542
extension period. 543
(5) Where the reported taxable income of a taxpayer has been 544
increased or decreased by the Internal Revenue Service, the 545
three-year examination period provided in subsection (1) of this 546
section shall not be applicable, insofar as the Mississippi income 547
tax liability is affected by the specific changes made by said 548
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Internal Revenue Service. However, no additional assessment or no 549
refund shall be made under the provisions of this article after 550
three (3) years from the date the Internal Revenue Service 551
disposes of the tax liability in question. 552
(6) Where the reportable taxable income of a taxpayer has 553
been decreased by the carryback of a net casualty loss deduction 554
under Section 27-7-20 or the carryback of a net operating loss 555
deduction under Section 27-7-17, the three-year examination period 556
provided under subsection (1) of this section shall not be 557
applicable insofar as the Mississippi income tax liability is 558
affected by the carryback of the net casualty loss deduction or 559
the carryback of the net operating loss deduction. 560
(7) Where a taxpayer has received a disability determination 561
from the United States Department of Veterans Affairs (VA), the 562
three-year examination period provided under subsections (1) and 563
(4) of this section shall not apply insofar as the Mississippi 564
income tax liability is affected by the disability determination. 565
After the taxpayer has received a decision letter from the VA, the 566
taxpayer may apply to the commissioner for revision of any return 567
filed under this article on or after the effective date of the 568
disability and before receipt of the decision letter. The 569
decision letter shall be presumed to have been received by the 570
taxpayer five (5) calendar days after its issuance date, but 571
another date of receipt may be established by the taxpayer under 572
rules and regulations promulgated by the commissioner. 573
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ST: Taxes; allow disabled veterans to recapture
payments between disability effective date and
receipt of VA's decision letter.
SECTION 4. This act shall take effect and be in force from 574
and after January 1, 2026. 575