SALES TAX RATE:
MAXIMUM LOCAL & COUNTY RATES:
Which Goods and Services are Taxable?
Determining whether or not the products or services your company sells are taxable in Mississippi is the first step in sales tax compliance.
Traditional Goods or Services
Goods that are subject to sales tax in Mississippi include physical property, like furniture, home appliances, and motor vehicles.
Prescription medicine and gasoline are both tax-exempt.
The Mississippi Department of Revenue has also published a comprehensive guide to sales tax exemptions and exclusions.
Digital Goods or Services
A digital good or service is anything electronically delivered, such as an album downloaded from iTunes or a film purchased from Amazon.
Mississippi requires businesses to collect sales tax on the sale of digital goods.
How to Register for Mississippi Sales Tax
If you determined that you need to charge sales tax on some or all of the goods and services your business sells, your next step is to register for a seller's permit. This allows your business to collect sales tax on behalf of your local and state governments.
In order to register, you will need the following information:
- Business name and mailing address
- Sole-proprietors need their Social security number or ITIN
- Corporations/partnerships/LLCs need their Secretary of state business ID, if applicable and their FEIN
Save Money with a Resale Certificate
With a resale certificate, also known as a reseller's permit, your business does not have to pay sales tax when purchasing goods for resale.
Collecting Sales Tax
After getting your seller's permit and launching your business, you will need to determine how much sales tax you need to charge different customers. To avoid fines and the risk of costly audits, it's important for business owners to collect the correct rate of sales tax.
When calculating sales tax, you'll need to consider the following kinds of sales:
- Store Sales
- Shipping In-State
- Out-of-State Sales
For traditional business owners selling goods or services on-site, calculating sales tax is easy: all sales are taxed at the rate based on the location of the store.
Here's an example of what this scenario looks like:
Mary owns and manages a bookstore in Jackson, Mississippi. Since books are taxable in the state of Mississippi, Mary charges her customers a flat-rate sales tax of 8% on all sales. This includes Mississippi’s state sales tax rate of 7% and Jackson’s city sales tax rate of 1%.
The state of Mississippi follows what is known as an origin-based sales tax policy. This means that long-distance sales within Mississippi are taxed according to the address of the seller. This policy applies to state, county, and city sales taxes.
Consider the following example:
Steve runs his own business selling electronics on eBay out of his home in Adaton, Mississippi. A customer living in Jackson, Mississippi finds Steve’s eBay page and purchases a $350 pair of headphones. When calculating the sales tax for this purchase, Steve applies the 7% state tax rate for Mississippi due to Adaton not having any additional levels of sales taxation. At a total sales tax rate of 7%, the total cost is $374.50 ($24.50 sales tax).
Mississippi businesses only need to pay sales tax on out-of-state sales if they have nexus in other states. Nexus means that the business has a physical presence in another state.
Common types of nexus include:
- A physical location, such as an office, store, or warehouse
- An employee who works remotely or who is a traveling sales representative
- A marketing affiliate
- Drop-shipping from a third party seller.
- A temporary physical location, including festival and fair booths.
File Your Sales Tax Return
Now that you’ve registered for your Mississippi seller's permit and know how to charge the right amount of sales tax to all of your customers, you are all set to file your sales tax return. Just be sure to keep up with all filing deadlines to avoid penalties and fines.
Recommended: Accounting software can help simplify your business tax returns as well as help with payroll and bookkeeping. Try our recommended accounting service today to save thousands of dollars on your taxes.
How to File
Mississippi requires businesses to file sales tax returns and submit sales tax payments online.
How Often Should You File?
How often you need to file depends upon the total amount of sales tax your business collects.
- Annual filing: If your business collects less than $50 in sales tax per month then your business should elect to file returns on an annual basis.
- Quarterly filing: If your business collects between $50 and $300 in sales tax per month then your business should elect to file returns on a quarterly basis.
- Monthly filing: If your business collects more than $300 in sales tax per month then your business should file returns on a monthly basis.
Note: Mississippi requires you to file a sales tax return even if you have no sales tax to report.
All Mississippi sales tax return deadlines fall on the 20th day of the month, unless it is a weekend or federal holiday, in which case the deadline is moved back to the next business day. Below is a list of this year’s filing deadlines:
Annual filing: January 22
- Q1 (Jan. - Mar.): Due April 20
- Q2 (April - June): Due July 20
- Q3 (July - Sept.): Due October 22
- Q4 (Oct. - Dec.): Due January 22
Monthly filing: The 20th of the following month, or the next business day, e.g. April 20th for the month of March, or May 22nd for the month of April.
Penalties for Late Filing
Mississippi charges a late filing penalty equal to 10% of the tax that is reported on the tax return.
Mississippi also charges a late payment penalty that is based on the number of late payments your business has made for filing the sales tax. For the first offense, a 10% penalty is added to the tax that is due. For the second offense, a 15% penalty is added to the bill. For the 3rd offense, a 25% penalty is added and any additional offenses will be penalized with a 50% additional charge.
The state assesses the unpaid tax with a compounded interest rate of 9.6% per year or 8/10 of 1% (0.8%) per month or partial month for any unpaid tax or penalty.