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Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update


1. Basis for taxation:    
True value, which shall mean and include, but not limited to, market value, cash value, actual cash value, proper value and value for the purposes of appraisal for ad valorem taxation. (Mississippi Code Annotated, Section 273-550.) For railroad and utility property, it is generally market value.

2. Property subject to taxation:

Real property, plus both tangible and intangible personalty. Gross receipts taxes are also levied on both railroads and utilities. Nuclear power facilities pay in lieu of taxes. The major exemption applies to railroads which have transferred title at arm's length, whereby increases in assessed value are limited to 10 percent annually over the assessment in the roll year immediately prior to transfer.

3. Classification (if applicable):     Mississippi has five classes of property. The number in parentheses indicates the percent of full value at which the property in each class is assessed.

Mississippi classification
Class 1    Single family residences (10)
Class II     All other property except those in
Classes I and IV. This class includes railroad
real property, as directed by 4-R Act
Class III     Personalty, except motor vehicles and
personalty included in Class IV
Class IV     Public utilities, except railroads and airlines,
and motor vehicles
Class V     Motor vehicles (30)

4. Level of government which determines basis for tax liability

ad valorem property tax:     The Mississippi State Tax Commission centrally assesses operating property of railroads and utilities. Telecommunications companies which operate in six counties or less, rural electric cooperatives (much of which is exempt from ad valorem taxation), and nonoperating property of railroads and utilities are assessed and taxed at the county level.

5. Report filing and valuation method(s) required by statute for ad valorem taxation:

Centrally assessed railroad and utility companies are required to annually submit financial and physical inventory information to the tax commission under oath. A period is available for owners to file objections to the proposed values. Once finalized, the rolls are sent to the respective counties, and placed into the appropriate property class. Also, financial and physical inventory information on nonoperating property must be filed with the respective county or counties.

There are no statutory guidelines for ad valorem taxation, other than the requirement that centrally assessed railroad and utility companies be valued as units.

6. Practical application of valuation method(s):

The income approach is generally given the greatest weight in valuation, especially with railroads. Given second emphasis is the historical cost approach, especially with rate-regulated utilities. The third approach, market value (stock and debt) is generally assigned little weight, primarily because relatively little subject property is publicly traded.

7. Valuation treatment of large facilities such as power plants, dams, or rail yards:

Property owned or used by a utility or railroad would be part of the unit value. Independently owned power plants, dams or rail yards are assessed locally by county tax assessor.

8. Apportionment method(s) required by statute:

Statutes are generally vague on how value is to be apportioned, other than that the Tax Commission has authority to require submission of data on that enables state appraisers to value railroads and utilities as units (and thus requiring interstate information in many instances).

9. Practical application or apportionment requirements:

System property value is allocated to the state primarily according to the approaches as discussed above. Apportionment of value within the state is based on miles of track adjusted for density and use, gross revenues, and historical cost of physical plant. Other property is allocated primarily by historical cost of plant.

10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:

Centrally assessed property would be apportioned on the basis of historical cost of physical plant.

11. Description of assessment appeals system:

Plaintiff may appeal to State Tax Commission first. If ruling is adverse, plaintiff may file suit in court. If property contested is locally assessed, first level of appeal is with could board of assessment review.

12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:

At this time deregulation/restructuring activity is on hold, with little impact on valuation and apportionment procedures.

13. State Government Staffing:

Staff consists of two employees (full-time equivalent basis).

Law Source(s):     Mississippi Code of 1972,
Ch. 35, Articles 1, 3, 5, 41

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