Clarifying the taxation of consultant fees and defining qualifications for the Mississippi Advantage Jobs Act are top priorities for the state’s IT industry during the 2002 legislative session.
“Out of one side of the mouth, the state says it wants to grow technology because of higher paying jobs and because it builds infrastructure to continue to recruit new corporations,” said Randy Russell, who monitors legislative affairs for CIT.ms and owns an IT company, 1-2-1Micro, in metro Jackson.
“Then, out of the other side of the mouth, the state wants to handicap and burden tech companies by taxing consultant fees. If the state wants to build an economic system in which technology and communications and knowledge flourish, then lawmakers should take at look at the tax laws,” Russell said.
Several Mississippi IT execs have complained about being audited and charged for taxes on consulting fees, which, they insist, are not taxable. If it stands, Mississippi IT firms will be at a competitive disadvantage because out-of-state consulting firms that sell services in Mississippi are not required to collect sales tax. Corporations that buy the services from out-of-state are not required to pay a use tax.
“If this is upheld after appeals and the Legislature can’t do something about it, then office space in New Orleans starts to look appealing,” Russell said. “Louisiana doesn’t look at the tax law the way Mississippi does. In New Orleans, they are begging to recruit tech companies and the city is dedicated to fostering their growth. At the University of New Orleans, they’re building a huge incubator at the lakefront.
“Don Hutchinson, the Secretary of Economic Development in Louisiana, says they will not burden us with this, that our professional services will not be taxable there. If my business was in New Orleans, I could close the doors in Mississippi and open up in New Orleans and turn around and sell the same service back to my Mississippi customers and not have to charge sales tax. The only problem is, I love Mississippi.”
Russell said IT companies are not blaming the tax commission.
“They’re doing their job,” he said. “I firmly believe someone has told them to go out and get more money. I think it’s the Legislature’s responsibility to get this cleared up because it’s a huge issue to this industry. The real reason we’re having this mess is that the tax codes involving technology have been on the books for years. The IT industry changes rapidly. It’s like dog years. We move forward seven years for every year of traditional business.”
Dr. Angeline “Angie” Dvorak, president and CEO of the Mississippi Technology Alliance, said redefining “a full-time job” so the telecom industry can take advantage of the Mississippi Advantage Jobs Act is an important issue.
The Mississippi Advantage Jobs Act allows qualified businesses and industries to receive a rebate of up to 4% of the businesses’ gross payroll. Businesses and industries must create jobs that pay salaries equal to 125% of the most recently published average annual state or county wage, whichever is less, with Mississippi Development Authority-approved benefits. Businesses and industries in counties with unemployment at 125% of the state rate must create at least 10 high-paying jobs, while businesses and industries in other counties must establish at least 25 high-paying jobs.
“In technology-related areas, it becomes an issue because sometimes hour-wise, a person might not reach a level of full time because of the nature of some science-based industries and some tech work,” Dvorak said. “It’s hard to classify them based on hours alone because of the type of work they do. Under Advantage Mississippi, employees have to be considered full-time to take advantage of some of the tax credits. This has been a concern to the tech industry.”
House Bill 269, introduced by Rep. John Eads (D-Oxford), redefines a full-time job as “any job, regardless of the number of hours per week, which meets the salary requirements.”
“This would expand the definition to part-time employees,” Eads said. “It would be a pro-rata share but it would allow an incentive if the employee is part-time.”
House Bill 539, introduced by Rep. Bobby Moak (D-Bogue Chitto), would prohibit stalking via electronic communication devices.
“Other states have a similar law and this one has been patterned after model laws,” said Moak. “I had a call from a district attorney last year about some problems they were having and they didn’t have a way to handle it, so we want to give them the tools to do so. This would make it a crime at the onset instead of after the fact.”
Senate Bill 2048, introduced by Sen. Gray Tollison (D-Oxford), would prohibit renting or selling violent video games to minors without parental consent.
“We passed it out of Judiciary today,” Tollison said last week. “A constituent brought to my attention last year that there have been recent studies showing that extremely violent video games have become a risk factor for aggressive behavior among children. This is different than passive television watching. In the video games, you’re doing the killing and maiming yourself. I know parents ought to handle it, but just like the government acts to keep alcohol out of the hands of children, we should also keep some control over this for children under 18 unless the parents have knowledge of them having the games.”
House Bill 624, introduced by Rep. Joey Fillingane (R-Sumrall), would prohibit telemarketers from making unsolicited calls by blocking consumers’ use of caller identification services.
“I’ve been getting complaints from my constituents about telephone solicitors calling and blocking Caller ID so that the calls can’t be screened,” Fillingane said. “Many states are going to a registration system on Caller ID to show who is calling and what company they’re representing. It also allows people who want to block calls from solicitors to do so. We had a version that got pretty far last year, but then AT&T and some other phone companies who wanted an exception for this and that watered it down. Then it got bogged down and the bill died. We’re going to try to keep all the exceptions out as much as possible this year so we can have a bill that does something.”
Contact MBJ contributing writer Lynne Wilbanks Jeter at firstname.lastname@example.org</a.