MDOR ISSUES GUIDANCE ON ERC AND GEER FUNDS

            The Mississippi Department of Revenue (MDOR) issued the following statements below to MSCPA regarding Mississippi tax treatment of the Employee Retention Credit (ERC) and the Governor’s Emergency Education Response Fund (GEER).  Please note the taxability of the ERC credit itself differs from what MDOR previously advised MSCPA in a meeting.  Wages are deductible, but the credit is taxable under current law.

          Regarding GEER funds, if the funds were received in GEER I, the advances/grants are not taxable. Most of the money was distributed in round 1 from the CARES Act, the Consolidated Appropriations Act of 2021 and American Rescue Plan which were covered in our bills.  However, funds received from the Coronavirus Response and Relief Supplement Appropriations Act (CRRSA) round 2 are currently taxable. These funds were not covered in our legislation.

MDOR GUIDANCE STATEMENT:

EMPLOYEE RETENTION CREDIT (ERC):

            Mississippi does not have statutory authority to follow the federal Employee Retention Credit.  Therefore, the full amount of wages paid to employees are deductible for state purposes.  Miss Admin Code Title 35.III.5 Chapter 7 provides that Mississippi does not recognize federal regulations under Section 280 or 44B regarding tax credits allowed for work incentive programs or the employment of certain new employees.

             The amount of the federal credit received is considered taxable income for Mississippi purpose as there is no exemption available for it.

  GOVERNOR’S EMERGENCY EDUCATION RESPONSE FUND (GEERS):

              Legislation passed in 2020 and 2021 excluded amounts received as advances and / or grants from the CARES Act, the Consolidated Appropriations Act of 2021 and the American Rescue Plan.  It does not include the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA).  The CARES Act provided the majority of the funding for GEER Funds but the CRRSA Act provided some additional funding.  These supplemental funds are identified as GEER II and are not exempt from income