Section 27-65-29 - Computer software, computer software services, information and data processing services; allocation of fee or payment that includes both taxable and nontaxable items or services; safe harbor methods for allocation of taxable fee or payment for items or services both within and without Mississippi; provision of items or services to commonly owned, related or affiliated entities; credit for tax paid to another state(1) For purposes of this chapter the following definitions shall apply: (a) "Computer software" shall mean any computer program or routine, or any set of one or more programs or routines, which are used or intended to cause one or more computers, pieces of computer-related peripheral equipment, automatic processing equipment, or any combination thereof, to perform a task or set of tasks. Computer software may be contained in or on magnetic tapes, discs or other tangible or electronic media or downloaded online. "Computer software" does not include charges for the use of or right to use physical computer equipment, infrastructure, servers, platforms and other tangible computer devices, including, but not limited to, items commonly referred to as "platform as a service" or "infrastructure as a service."(b) "Computer software service" shall mean the technical design and programming of computer software and includes installing, configuring, debugging, modifying, testing, or troubleshooting computer hardware, networks, programs or computer software. Computer software service does not include the following nonexclusive list of services: (i) The use of or right to use physical computer equipment, infrastructure, servers, platforms and other tangible computer devices, including, but not limited to, items commonly referred to as "platform as a service" or "infrastructure as a service";(ii) Information and data processing services;(iii) Services that use a computer, computer equipment, or computer software as a tool to perform or complete that service;(iv) Internet access services or charges;(v) Payment processing or banking services;(vi) Real estate listing or pricing services;(vii) Electronic advertising and marketing services; and(viii) Social media services.(c) "Information and data processing services" include, but are not limited to, automated or nonautomated services where the primary object of the service is the systematic performance of operations by the service provider to enter, store, sort, analyze, aggregate, classify, manipulate, convert, retrieve, extract and/or compile the required information into an appropriate form, usable information, or report. Information and data processing services include, but are not limited to, the following services: (i) Check or payment processing services;(ii) Image processing services;(iii) Form processing services;(v) Transcription services;(vi) Word processing services;(vii) Survey processing services;(viii) Payroll processing services;(ix) Claim processing services;(x) Research database services; and(xi) Accounting and tax compliance services.(2) If a single license fee or other payment encompasses taxable computer software and/or computer software services, along with other nontaxable items or services, the seller, service provider, user or consumer may allocate such fee or payment between the taxable and nontaxable items based on a reasonable allocation of the payment to each separately identifiable item or service encompassed by the fee or payment, if properly supported by the books and records of the seller, service provider, user, or consumer. If such information is not available from a seller or service provider, or such information is not otherwise obtainable after reasonable efforts by the user or consumer, the user or consumer may make such allocation based on the best information available to the user or consumer if properly supported by the books and records of the user or consumer. There shall be no presumption that the entire fee or payment is taxable because it encompasses both taxable and nontaxable elements. If the commissioner shall challenge or contest the allocation method utilized by a seller, service provider, user, or consumer, the commissioner must establish by a preponderance of the evidence (a) that the allocation method utilized by the seller, service provider, user, or consumer was not a reasonable method of allocation, and (b) that the allocation method proposed by the commissioner is the most reasonable of all available or alternative methods.(3) If a single license fee or other payment encompasses taxable computer software and/or computer software services both within and without this state, the seller, service provider, user or consumer may apportion to this state, for taxation, that portion of the license fee or payment attributable to computer software located within the state or to computer software services which are actually performed within the State of Mississippi. Such allocation may be made on the following safe harbor methods, if applicable to the circumstances, each of which shall be deemed to be a reasonable method if properly supported by the books and records of the seller, service provider, user or consumer:(a) With respect to computer software physically loaded, stored or maintained both within and without the state:(i) Based on the specific identification of the locations within and without Mississippi that the software is loaded, stored or maintained;(ii) Based on a ratio calculated by reference to the number of computers or devices within and without Mississippi on which the software is loaded, stored or maintained;(iii) Based on a ratio calculated by reference to the number of persons actually using the computer software within and without Mississippi; or(iv) Based on a ratio calculated by reference to the number of persons licensed to use the computer software within and without Mississippi.(b) With respect to computer software services actually performed within and without the state: (i) Based on the specific amount of time spent by each person performing the services while physically within the state; or(ii) Based on a ratio calculated by reference to the actual time spent within and without Mississippi by all persons performing the services. If none of the above safe harbor allocation methods fairly reflect the allocation of taxable computer software or computer software services to the state, the seller, service provider, user or consumer may make such allocation based on the best information available to such person if properly supported by the books and records of the seller, service provider, user or consumer. If the commissioner shall challenge or contest the allocation method utilized by a seller, service provider, user or consumer, the commissioner must establish by a preponderance of the evidence 1. that the allocation method utilized by the seller, service provider, user, or consumer was not a reasonable method of allocation, and 2. that the allocation method proposed by the commissioner is the most reasonable of all available or alternative methods.
(4) Notwithstanding any other provision in this chapter or Title 27, Chapter 67, Mississippi Code of 1972, and for purposes of the tax levied in this chapter and the tax levied in Chapter 67, Mississippi Code of 1972, computer software or computer software services provided by one legal entity to another commonly owned, related or affiliated entity shall be treated as nontaxable transfers between different segments of one (1) legal entity, with proper credit allowed for Mississippi sales or use tax paid and/or credit for sales or use tax paid to another state as provided in this section or in Section 27-67-7, regardless of which affiliated entity paid the sales or use tax for which credit is taken. Nothing in this subsection shall be interpreted to exclude from taxation the purchase or payment by such organization to a third party seller or provider for any computer software or computer software services otherwise taxable under this chapter or Title 27, Chapter 67, Mississippi Code of 1972.(5) A taxpayer, upon proof that a sales or use tax was paid to another state or local taxing jurisdiction on any computer software or computer software service that is taxable under this chapter or Title 27, Chapter 67, Mississippi Code of 1972, shall be allowed a credit against the tax imposed under this chapter or Title 27, Chapter 67, Mississippi Code of 1972, on such computer software or computer software service to the extent that the amount of the other tax was actually paid in the other state or local taxing jurisdiction, and to the extent that the rate of sales or use tax imposed by and paid in the other state or local taxing jurisdiction does not exceed the rate of sales or use tax imposed under this chapter or Title 27, Chapter 67, Mississippi Code of 1972.Added by Laws, 2023, ch. 445, SB 2449,§ 6, eff. 7/1/2023.Repealed by Laws, 1978, ch. 347, § 1, eff. 7/1/1978.Codes, 1942, § 10116; Laws, 1932, chs. 90, 91; Laws, 1934, ch. 119; Laws, 1936, ch. 158; Laws, 1938, ch. 126; Laws, 1946, ch. 262, § 5; Laws, 1950, ch. 530, § 4; Laws, 1955, Ex Sess, ch. 109, § 16; Laws, 1957, Ex Sess, ch. 20, § 1; Laws, 1958, ch. 574; Laws, 1962, ch. 602, §§ 1, 3; Laws, 1964, ch. 532, § 5; Laws, 1965, Ex Sess, ch. 22, § 4; Laws, 1968, ch. 588, § 8; Laws, 1972, ch. 506, § 4; Laws, 1975, ch. 435