Does a Mississippi bank have to pay the city's local business privilege tax, or does the statewide finance-company privilege tax exempt it?

Plain-English summary

The City of Collins asked whether a bank inside its city limits has to pay the local privilege tax that the city imposes under Miss. Code § 27-17-9, or whether the statewide finance-company privilege tax in § 27-21-3 (which expressly excludes banks) means banks are exempt across the board.

The Attorney General's answer: the bank exclusion in § 27-21-3 only operates against the statewide tax it is part of. It does not carry over to the separate local privilege tax framework in chapter 17. Cities can require banks to obtain a local privilege license and pay the local tax, provided the city's governing body (mayor and board of aldermen) makes the threshold finding that the bank is a "business" under the broad definition in § 27-17-3. That definition reaches "all activities or acts, personal, professional or corporate, engaged in or caused to be engaged in with the object of gain, profit, benefit or advantage."

The opinion is short, but the practical implication is real: every Mississippi municipality that levies a local privilege tax can pursue banks the same way it pursues other businesses.

What this means for you

Municipal tax collectors and city clerks

The opinion holds that the bank exclusion in § 27-21-3 applies only to the statewide finance-company privilege tax and does not exempt banks from the local privilege tax under § 27-17-9. Per the opinion (and the earlier Campbell opinion), whether a particular bank is a "business" under § 27-17-3 is a question of fact for the mayor and board of aldermen on a case-by-case basis; if they so determine, the bank must obtain a privilege license and pay the local tax in § 27-17-9(2).

Bank compliance and finance officers

Under the opinion, the § 27-21-3 exclusion of "banks, state or national" reaches only the statewide tax; it does not relieve a bank of the municipal privilege tax under § 27-17-9 where the city's governing body finds the bank is a "business."

Municipal attorneys and city managers

The opinion confirms existing authority: a city may impose its § 27-17-9 privilege tax on a bank, subject to the mayor-and-aldermen finding that the bank is a "business" under the § 27-17-3 definition. The opinion notes only the statutory framework and does not opine on any specific ordinance.

Businesses other than banks

The opinion illustrates that the statewide and local privilege-tax systems are separate, and that an exclusion in one (here, § 27-21-3) does not carry into the other absent a cross-reference, consistent with the rule that tax exemptions are construed strictly in favor of the taxing authority.

Common questions

Q: Does this mean banks pay both state and local privilege taxes?
A: No. The statewide privilege tax under § 27-21-3 explicitly excludes banks. Banks pay only the local privilege tax under § 27-17-9 (assuming the city has adopted that tax and has imposed it on banks).

Q: Does the city need a special ordinance to tax banks specifically?
A: The opinion does not require a bank-specific ordinance. The city's existing privilege-tax ordinance (consistent with chapter 17) is the vehicle. The mayor and aldermen just need to determine, on the facts, that the bank is conducting "business" in the municipality.

Q: What is the definition of "business" the city has to apply?
A: From § 27-17-3: "all activities or acts, personal, professional or corporate, engaged in or caused to be engaged in with the object of gain, profit, benefit or advantage, either direct or indirect, or following or engaging in any trade, calling or profession, and all things which occupy the time, attention and labor of individuals for the purpose of a livelihood or profit." That definition obviously sweeps in normal banking operations.

Q: How much is the local privilege tax for a bank?
A: It depends on the rate schedule in § 27-17-9(2) and how the bank's activity is classified. The AG opinion does not give a dollar amount; it just confirms that some amount in the schedule applies.

Q: Can the bank challenge the determination that it is a "business"?
A: The opinion frames the determination as a fact question for the mayor and board of aldermen "on a case by case basis." A bank that disputes the classification can raise the issue at the local level (in the privilege-license proceeding) and, if necessary, through whatever judicial review is available under Mississippi law.

Q: What about credit unions and savings institutions?
A: This opinion is specifically about "banks, state or national." Other depository institutions may or may not fit within the § 27-21-3 carve-out. The local privilege tax analysis would be similar (does the local definition of "business" cover the institution?) but the exemption arguments differ. Consult the relevant statutes and local counsel.

Background and statutory framework

Mississippi has long maintained two parallel privilege-tax systems. One operates statewide and is administered by the Department of Revenue. The other operates municipally under chapter 17 of Title 27 and is administered by the city's tax collector.

Section 27-21-3 sits inside the statewide finance-company privilege tax. It levies a state-level tax on finance companies and explicitly excludes "banks, state or national." That exclusion makes sense in context: banks are heavily regulated and taxed under separate state and federal frameworks, so the legislature carved them out of the finance-company classification.

Chapter 17 is the local privilege-tax framework. Section 27-17-9 requires "[e]very person desiring to engage in any business" to "apply for, pay for and procure from the tax collector of the municipality, a privilege license" and to pay the schedule's local privilege tax. The "business" definition in § 27-17-3 is intentionally broad. As the AG's earlier Campbell, Jr. opinion (March 25, 2005) recognized, whether a particular activity rises to the level of a "business" is a fact question for the city's governing body.

There is no cross-reference in either statute that would extend the bank exclusion in chapter 21 into chapter 17. Reading the bank exclusion narrowly is consistent with the rule, which Mississippi courts have applied repeatedly, that exemption statutes are construed strictly in favor of the taxing authority. Banks must "come strictly within" any exemption they claim.

Citations and references

Statutes:

• Miss. Code Ann. § 27-17-3 (Definition of business)
• Miss. Code Ann. § 27-17-9 (Municipal privilege tax)
• Miss. Code Ann. § 27-21-3 (Finance-company statewide tax with bank exclusion)

Prior AG opinion:

• MS AG Op., Campbell, Jr. (Mar. 25, 2005) (whether a bank is a "business" under § 27-17-3 is a factual determination for the mayor and board of aldermen)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2026/03/T.-Rogers-March-30-2026-Municipal-Privilege-Tax-on-Banks.pdf

Original opinion text

March 30, 2026

Tommy Bott Rogers, Esq.
Attorney, City of Collins
Post Office Box 1415
Collins, Mississippi 39428

Re: Municipal Privilege Tax on Banks

Dear Mr. Rogers:

The Office of the Attorney General has received your request for an official opinion.

Question Presented

Is a bank located within a municipality liable for the payment of a privilege tax to the municipality under Mississippi Code Annotated Section 27-17-9, or is it exempt under Section 27-21-3?

Brief Response

Section 27-21-3 levies a statewide privilege tax on finance companies but specifically excludes "banks, state or national." It does not exempt banks from the local privilege tax mandated by Section 27-17-9.

Applicable Law and Discussion

Section 27-17-9 requires "[e]very person desiring to engage in any business" to "apply for, pay for and procure from the tax collector of the municipality, a privilege license authorizing him to engage in the business" and to pay the local privilege tax set forth in that section.

"Business" is defined as "all activities or acts, personal, professional or corporate, engaged in or caused to be engaged in with the object of gain, profit, benefit or advantage, either direct or indirect, or following or engaging in any trade, calling or profession, and all things which occupy the time, attention and labor of individuals for the purpose of a livelihood or profit." Miss. Code Ann. § 27-17-3. Whether a particular bank "constitutes a business for the purpose of obtaining a privilege license under" Section 27-17-3 "is ultimately a question of fact to be determined by the Mayor and Board of Aldermen of the City on a case by case basis." MS AG Op., Campbell, Jr. at *1 (Mar. 25, 2005). If the Mayor and Board of Aldermen determine that a particular bank constitutes a business under the definition of Section 27-17-3, the bank is required to obtain a privilege license to conduct business in the municipality and pay the local privilege tax specified in Section 27-17-9(2).

You ask whether Section 27-21-3 provides an exemption for banks from the local privilege tax set forth in Section 27-17-9. Section 27-21-3 levies a statewide privilege tax on finance companies but specifically excludes "banks, state or national." Section 27-21-3 only exempts banks from the statewide privilege tax. It does not provide an exemption for banks from the local privilege tax mandated by Section 27-17-9.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Kristi D. Kennedy
Kristi D. Kennedy
Special Assistant Attorney General