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Mississippi Sales Tax 2022 for Businesses: A Complete Guide

“The statewide sales tax for businesses in Mississippi is 7%”

What Does The Sales Tax For Businesses In Mississippi Mean?

Unless the law exempts the item or provides a reduced rate of tax, all sales of tangible personal property in Mississippi are subject to the ordinary retail rate of sales tax (7%). Depending on the nature of the business, the tax is calculated on gross sales proceeds or gross revenue.

A permission or registration license from the Mississippi Department of Revenue is required before engaging in any sales tax-exempt company. Each location requires a separate permit. The permit does not expire and does not need to be renewed as long as the holder continues to operate at the same site.

How Much Is The Sales Tax For Businesses In Mississippi?

Mississippi has a 7% statewide sales tax that has been in effect since 1930.

Municipal governments in Mississippi can additionally levy a local-option sales tax, which can range from 0% to 1% across the state, with an average local tax of 0.065 percent (for a total of 7.065 percent when combined with the state sales tax). Mississippi law allows for a maximum local tax rate of 1%.

Mississippi Sales Tax  Threshold Limit
7% $250,000 economic sales threshold limit

Do You Need To Collect Mississippi Sales Tax For Your Ecommerce Business?

If you have a nexus in Mississippi, you must collect sales tax. There are two ways in which nexus can exist between sellers and a state: physically or economically. In order to be entitled to sales tax in a state, a company must have a physical presence in that state. Passing a state’s economic threshold for total income or number of transactions is referred to as economic nexus.

Therefore, this is what the business sales tax in Mississippi is all about. Now, the question arises: what types of goods and services are taxable under Mississippi sales tax? Let’s see.

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Read More: Louisiana Sales Tax 2022 for Businesses: A Complete Guide

What Types Of Goods and Services Are Taxable Under Mississippi Sales Tax?

Transactions

Sales tax is legally required to be collected from all tangible, physical things sold to a consumer in Mississippi. Some medical devices, certain prescription pharmaceuticals, and some commodities utilized in the manufacturing industry are examples of exemptions from this levy.

This means that a person selling computer equipment or video games in Mississippi must charge sales tax, but a person selling manufacturing equipment must charge sales tax.

Services

Services are not normally considered taxed in Mississippi. There are a few exceptions to the tax-free status of most services. For example, a service that comprises making or manufacturing a product, as well as installing or fixing any already sold goods, is almost certainly taxable, and you will be required to pay sales tax on the service. The following table shows the taxability of various goods and services in Mississippi.

Goods Taxability
Clothing 7%
Groceries 7%
Prepared Foods 7%
Prescription Drugs 7%
OTC Drugs 7%

Therefore, if you are dealing in any of these goods and services, you are subject to pay sales tax in Mississippi. Now, let’s review the tax collection and filing procedure in Mississippi.

Tax Collection

The sale of tangible products and some services in Mississippi is subject to sales tax. The vendor is responsible for collecting the tax and remitting it to the state tax authorities. De facto, the vendor is a collector.

Start by completing the following three questions to see if you need to collect sales tax in Mississippi:

  • Do you have a Mississippi nexus?
  • Are you selling Mississippi residents taxed goods or services?
  • Do your customers have to pay sales tax?

If you answered yes to all three questions, you must register with the state tax authorities, collect the correct amount of sales tax per transaction, file returns, and remit to the state.

If you meet the requirements for collecting sales tax but choose not to, you will be held liable for the tax due, as well as any penalties and interest that may apply.

It’s critical to set up tax collection at the point of sale because collecting sales tax from customers after a transaction is complete is very difficult.

Tax Filing

You must remit sales tax to the Mississippi Department of Revenue by a specific date after collecting it. After that, the Mississippi Department of Revenue will disperse it as needed.

The process of filing a Mississippi sales tax return consists of submitting the appropriate sales data (filing a report) and remitting the collected tax dollars (if any) to the Mississippi Department of Revenue (DOR). You must identify your total sales in the state, the amount of sales tax received, and the location of each sale as part of the filing procedure.

You can file directly with the Mississippi Department of Revenue by visiting their website and manually entering your transaction data. Although this is a free service, preparing Mississippi sales tax returns takes time, especially for bigger businesses.

How often do you need to file Mississippi sales tax return?

You will be assigned a filing frequency by the Mississippi Department of Revenue. You can define this as the amount or volume of sales your company generates. Larger companies usually have to file more frequently with state governments.

Mississippi sales tax returns and payments must be submitted together, and both are due on the same day.

What If You Fail To File Your Tax Return Before The Due Date?

Late Filing

Late filing of a Mississippi sales tax return can result in a penalty as well as interest on any unpaid taxes.

The Mississippi DOR may give you an extension if you miss a sales tax filing date due to circumstances beyond your control (e.g., weather, accident). However, you may be required to provide evidence to support your claim.

Penalty and Interest

The penalty for late filing is assessed 30 days after the report’s due date. The penalty for late reporting is an additional ten percent of the tax due. A late payment penalty is assessed 60 days after the due date or when a warrant for collection is issued.

Need Assistance With Mississippi Sales Tax

At Freecashflow.io, we help eCommerce businesses with their tax and accounting issues. We’ve worked with Warner Brothers, Ernst & Young, and Paramount Pictures, in addition to multibillion-dollar corporations. We can assist you with accounting and tax issues. Please contact us if you have any queries or issues.

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