When you’re making sales to customers in Mississippi, you need to be sure you’re aware of the state’s sales tax regulations in order to remain compliant with them. That means first determining if you are required to collect and remit sales tax based on your business’s nexus status, as well as whether what you’re selling is taxable under Mississippi law.
The state sales tax rate in Mississippi is 7%. Two cities impose their own additional tax, making the effective rate in Tupelo 7.25%, and the effective rate in Jackson 8%. The base state rate is the only one in effect in the rest of the state, although other cities have the option to add their own local tax at some point in the future if they choose. There are no taxes imposed at the county level in Mississippi.
While a broad sales tax is not common in Mississippi cities, many of them do impose Tourism and Economic Development taxes at varying rates. These generally impact restaurants, bars, hotels, and motels, so while they are related to sales, their impact is concentrated, and they’re not something most types of retail businesses need to worry about. There are some special statewide rates for particular types of items, however, and these include farm tractors, farm implements, and manufacturing machinery, among others.
To be liable for collecting and remitting sales tax in Mississippi, your business must have a nexus, or significant physical presence, in the state. This is constituted by:
As Amazon does not currently have a fulfillment center in Mississippi, using fulfillment by Amazon to service your Mississippi customers will not trigger a nexus condition for you. However, Amazon recently began collecting sales tax on sales it makes to Mississippi customers, and this move is seen as part of a trend towards a more flexible definition of substantial business presence that accounts for the prevalence of online sales in today’s economy.
All sales of tangible personal property are subject to sales tax in Mississippi unless specifically exempted. Some of these exemptions include:
Some sales of items that would otherwise be taxable are exempt under certain circumstances. For example, a sale of tangible personal property may be exempt if:
Shipping is taxable in Mississippi as long as the item being shipped is taxable. Many services are also taxed under the state sales tax statute, including car repair, air conditioning installation, plumbing, pest control, and more.
There are two annual sales tax holidays in Mississippi. These are the Clothing Tax Holiday, which is held on the Friday and Saturday of the last weekend in July, and the Second Amendment Tax Holiday, which occurs on Friday through Sunday of the last weekend in August.
During these periods, specific items that would otherwise be subject to sales tax are sold tax-free across the state. The Clothing Tax Holiday applies to clothing and footwear, but not accessories like jewelry, watches, handbags, or wallets. To qualify, each individual item must have a retail price that is under $100.
The Second Amendment Tax Holiday applies to firearms, ammunition, and certain hunting supplies, including:
Anyone making sales to customers in Mississippi is required to participate in these tax holidays, and that includes out-of-state sellers shipping into the state as well.
Before you can collect sales tax from your Mississippi customers, you must register with the state. Registration can be completed online or by mail, and it can take two weeks from the time your application is approved for you to receive your permit in the mail. You may not do business in the state until you’ve received the actual permit, and so you’ll have to register a few weeks before you plan on making any sales in Mississippi.
Registration is free, but you may be required to submit a bond depending on the nature of your business and other particulars. Your permit will never expire or need to be renewed, and you must file a zero return for as long as you have an active permit even if you make no sales in the state over the period in question.
Filing online is preferred, although mailing your returns is also an option. In order for mailed returns and payments to be considered timely, they must be postmarked by the due date. The frequency with which you must file will be determined by the state when you apply for your sales tax permit. Generally, businesses with an average monthly tax liability of over $300 must file monthly, while those with an average monthly tax liability of $50 to $300 will file quarterly. Sellers with a liability of less than $50 per month on average will file annually.
Returns and payments are due on the 20th of the month following the close of the period in question. If that falls on a weekend or holiday, the due date moves to the next business day. If filing and paying by mail, you can remit your returns to:
Department of Revenue
P.O. Box 960
Jackson, MS 39205
|January – March (Q1)||April 20|
|April – June (Q2)||July 20|
|July – September (Q3)||October 20|
|October – December (Q4)||January 20|
Returns and payments are due on January 20th for annual filers.
If your return or payment is late, the state will assess a penalty of 10% of the total tax due, or they will charge interest on the payment at the rate of 0.7% per month, or both. That interest rate will stay consistent on payments due in 2017, and it will decrease by 0.1% per year for taxes due in that year until at least 2019.
Whether you’re selling only to customers in Mississippi, or you ship your goods to multiple states, you need to make sure you can keep up with the regulations and requirements covered under the state’s sales tax statute. That means making sure you’re charging your customers at the right rate and only for taxable items or services, and it also means filing your returns and submitting your payments on time.
All of this can quickly become overwhelming, particularly if you have to keep track of sales and returns for multiple states. Fortunately, TaxTools combines all of the necessary software to make the process of tracking your taxable sales and filing your returns as streamlined as possible. It can produce a variety of reports whenever you need them, and it integrates smoothly with all ecommerce platforms, so you don’t have to change anything about the way you do business in order to take advantage of its many benefits. TaxTools will periodically check for changes to local and state tax laws to make sure you’re always up to date, and it will determine the appropriate rate to collect at from each of your customers based on their delivery address.
If you’re ready to learn more about the ways TaxTools can help your business grow while simultaneously relieving the burden of worrying about sales tax compliance, click here to sign up for a free trial today.