RATE OF SALES TAX:
7.00%
LOCAL & COUNTY MAXIMUM RATES:
1.00%
What are the taxable goods and services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Mississippi.
Traditional Products and Services
Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Mississippi.
Prescription drugs and fuel are both tax-free.
In addition, the Mississippi Department of Revenue has released a detailed reference on sales tax exemptions and exclusions.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Mississippi compels firms to collect sales tax on digital items sold.
How to Apply for Mississippi Sales Tax
If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
Name of the company and postal address
Sole proprietors must provide their Social Security number or ITIN, whereas corporations/partnerships/LLCs must provide their Secretary of State business ID, if available, as well as their FEIN.
A Resale Certificate might help you save money.
When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Store Sales Shipping Within-State Sales Outside-State Sales
Retail Sales
For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.
Here’s an illustration of how this situation may look:
In Jackson, Mississippi, Mary owns and operates a bookshop. Because books are taxable in Mississippi, Mary charges her clients a flat-rate sales tax of 8% on all purchases. This includes Mississippi’s 7% state sales tax and Jackson’s 1% local sales tax.
Sales inside the state
Mississippi has what is known as an origin-based sales tax regime. This implies that long-distance transactions inside Mississippi are taxed based on the seller’s address. This regulation applies to sales taxes levied by the state, county, and city.
Consider the following scenario:
Steve operates his own eBay electronics company from his home in Adaton, Mississippi. A buyer from Jackson, Mississippi discovers Steve’s eBay website and buys a $350 set of headphones. Steve calculates the sales tax for this transaction using Mississippi’s 7% state tax rate since Adaton does not have any further levels of sales taxation. The entire cost is $374.50 ($24.50 sales tax) at a total sales tax rate of 7%.
Out-of-State Purchases
Mississippi firms must only pay sales tax on out-of-state sales if they have a presence in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your Mississippi seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in Mississippi are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.
Annual filing: If your company receives less than $50 in sales tax each month, you should submit returns on an annual basis.
Quarterly filing: If your company collects between $50 and $300 in sales tax every month, you should choose to submit quarterly returns.
Monthly filing: If your company receives more than $300 in sales tax every month, you must submit returns on a monthly basis.
Deadlines for Filing
The deadline for all Mississippi sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day. The following are the filing deadlines for this year:
Penalties for Filing Late
Mississippi imposes a late filing penalty of 10% of the tax stated on the tax return.
Mississippi additionally levies a late payment penalty depending on the amount of late payments your company has made for sales tax reporting. A 10% penalty is applied to the tax owing for the first infraction. A 15% penalty is applied to the bill for the second infraction. A 25% penalty is added for the third offense, and any subsequent offenses are penalized with a 50% charge.
The state levies any unpaid tax or penalty at a compounding interest rate of 9.6% each year or 8/10 of 1% (0.8%) every month or partial month.