Understanding MFLEX & its Program Objective
MFLEX, or Mississippi Flexible Tax Incentive, is a streamlined tax incentive program designed to simplify the application process for all statutory incentives into a single procedure. However, it requires an annual report of investment numbers to maintain eligibility. Despite its potential, nearly half of the companies fail to fully leverage this benefit due to lapses in compliance with these reporting requirements. The program’s primary objective is to encourage businesses to invest in Mississippi by providing a simplified and integrated tax incentive structure. McGuire Sponsel’s Location Advisory team leverages its extensive experience to ensure clients maintain complete compliance and maximize the benefits derived from this program.
Eligibility for MFLEX
The program covers a broad range of industries, manufacturing, logistics, corporate management, and technology and research industries. The oil and gas industry, too, can be considered depending on the qualified sectors and how they file their taxes.
The MFLEX program has the potential to boost job growth in Mississippi significantly. By requiring a minimum of 10 new full-time jobs or a $2.5 million investment, the program serves as a catalyst for companies to expand their workforce. While it’s important to consider the challenges, such as financial viability and clean tax records for companies, MFLEX represents an opportunity for businesses and job seekers to thrive in Mississippi’s growing economy.
Utilization of MFLEX Tax Incentives
According to state statute, Mississippi Flexible Tax Incentive credits can be utilized by the entity or identified affiliates to offset income, franchise, sales, use, and payroll withholding taxes. Once certified, the credit amounts can be incorporated into all tax returns filed by the applicant or its identified affiliates post-certification. However, there is a cap in place; a maximum of 20 percent of the total credit awarded may be applied to payroll withholding tax liability per year. It is important to note that these credits cannot be used to offset tax liabilities incurred prior to the certification date.
Additionally, companies must not have any pending legal or regulatory actions against them that could significantly impact their ability to fulfill the terms of the MFLEX program. This includes bankruptcy proceedings, ongoing investigations, or lawsuits that could hinder the company’s operations. Any such issues must be disclosed in the application and may be subject to further review by MDA staff.
Essential Local Support
It is crucial to have local support for the MFLEX application to be successful. This typically includes an incentive from the local community or county for the project. Without this support, the MFLEX application will likely be rejected. A local abatement is commonly used when the investment is less than $60 million. This process involves a few steps, such as obtaining approval from the Board of Supervisors, providing details about the equipment and its operational schedule, which can lead to potential savings of about one-third, excluding school property taxes.
MFLEX is a versatile program that allows you to add other state discretionary or regional programs. If you invest more than $60 million, you can achieve greater savings through a Fee in Lieu of Tax (FILOT). Regional programs also offer local training support, which provides funds for advanced skill training beyond basic company safety training, such as OSHA. McGuire Sponsel can help you identify your training needs and opportunities to address skills gaps. Many companies forget about the utility riders offered for economic development, which can provide great opportunities. For instance, Cooperative Energy is a big supporter of economic development in Mississippi and offers grants for product development and eligible economic development projects, in addition to energy discounts that may be available. McGuire Sponsel’s Location Advisory team can help you identify and secure the most appropriate and beneficial credits and incentives for your company.