Should you collect sales tax in Mississippi?
Sales tax is levied on the retail sale of tangible personal property to your customers, including leasing or renting. However, you will collect the sales tax if you determine the nexus in Mississippi. A nexus is a presence that may come physically or economically.
A physical nexus is typically created when your business has a Mississippi store, warehouse, or office. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
Let’s explore if your business has a Physical nexus in Mississippi.
A physical nexus is integrated when your business is engaged in the following in Mississippi:
- Selling tangible personal property in Mississippi.
- Maintaining, occupying, or using a place of business or an office in Mississippi.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Mississippi.
Is it constituting an Economic nexus in Mississippi?
If you are a remote seller (i.e., don’t have a physical presence in the state) or a marketplace seller, and your business sales in Mississippi exceed $250,000 during the current or previous calendar year, you must comply with and register under sales tax rules.
You may also refer to the Mississippi Revenue Department advisory to learn more about business activities that may create a nexus within the state.
How can you Register for Sales tax in Mississippi?
To get a sales tax permit in Mississippi, you need to apply online at the Mississippi taxpayer access point. Your application will be processed in 2 weeks.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- FEIN and Social Security numbers of all officers, partners, or owners.
- Address details (physical and mailing).
- Business incorporation dates in Mississippi.
- Contact information.
- Nature of business.
Once you apply for the sales tax permit in Mississippi, you will receive a confirmation number and other registration details. Please note that if you don’t have a permanent place of business within the state, you must post a sales tax bond. Kindly refer to the registration requirements on the Department of Revenue website.
Is your product or services liable to Sales tax in Mississippi?
Tangible Property: Sales tax in Mississippi is imposed primarily on the retail sale of tangible personal property, such as Furniture, giftware, toys, etc.
Services: Many services are subject to tax in Mississippi such as installation, cleaning, repair, etc. For more information, click here.
Digital Product: Mississippi charges sales tax on digital products. So, you must collect sales tax if you sell digital products such as software, streaming services, e-books, etc. Please see the Mississippi Revenue Department advisory (pg. 46) on digital transactions and software here.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. It is non-taxable in Mississippi.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, newspapers/ magazines, and manufacturing equipment. To see what exemptions are covered, please click here.
You can also visit the Mississippi Department of Revenue website for more information about taxability in Mississippi.
How should you collect and calculate state taxes in Mississippi?
Collecting and computing accurate sales tax to be remitted to the state may not involve those boisterous efforts. The sales tax is origin-based in Mississippi, which means you must collect taxes at the rate where your business is located. However, if you are not based in Mississippi and create a business relationship through economic nexus in the state, you’ll have to collect and remit the sales tax.
Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Mississippi has a base sales tax rate of 7%, followed by local tax rates, which can be up to 1% depending on the cities and municipalities.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (7% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
If non-taxable items are sold, shipping charges associated with such sale are not liable to sales tax. However, when the sale includes both taxable and non-taxable items, shipping charges need to be apportioned between the taxable and non-taxable parts of the sale, and accordingly, sales tax is applicable on the taxable portion of the sale. This link will take you to the official guidance issued by the state on shipping charges.
How should you file sales tax in Mississippi?
E-file: You can e-file your return using TAP.
Paper filing: You can complete the paper return and file through mail. The department issues this form before 30 days of the due date.
Payment of sales tax is also required when filing.
Filing frequencies and due dates
You need to file the monthly sales tax due on the 20th day of the following month. However, when your monthly sales & use tax liability is between $600 and $3,599, you will get the quarterly filing status. In that case, file your sales tax by the 20th day of the month from the end of the relevant quarter.
Suppose your filing frequency is annual (which is assigned when your sales tax collection is below $600 annually). Then, please file your sales tax by 20th January of the following year.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official website of the Mississippi Revenue Department, where you can see what the state has to say about sales tax filing due dates.
Are there any fines or penalties for default when filing or paying sales tax?
The state levies a penalty of 10% of sales tax due if you file or pay after the due date.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the guidelines provided by the Mississippi Department of Revenue on penalty and interest.
Sales tax holiday in Mississippi
The Mississippi sales tax holiday applies to clothing, footwear, accessories, and specified school items with a selling price of less than $100. It requires sellers to charge the sales tax at reduced or zero rates. For detailed information on the sales tax holiday, refer to the Mississippi Revenue Department advisory here.