What are sales tax used for
Does Mississippi impose a sales tax?
What is the difference between sales and use tax?
What is the difference between real property and tangible personal property?
Real property is land, including all buildings and improvements on the land. Tangible personal property is property that may be seen, touched or is in any manner perceptible to the senses. Tangible personal property includes electricity, water, gas, steam, pre-written software, and digital and electronic goods. Tangible personal property does not include real estate, bank accounts, stocks, bonds, mortgages, insurance certificates or policies.
What is the difference between gross proceeds of sales and gross income?
The sales tax rate is applied against either the gross proceeds of sales or the gross income of the business, depending on the type of sale or service provided. “Gross proceeds of sales” is the full sales price of tangible personal property including, but not limited to, installation charges and delivery charges. Gross income is the total receipts or total income of the business before any deductions.
Are services taxable?
Certain types of labor performed in connection with the sale and installation of tangible personal property are taxable. Other miscellaneous services are taxable (see Miss. Code Ann. 27-65-23.)
What is subject to sales tax?
Unless specifically exempt or excluded, all sales of tangible personal property are subject to the sales or use tax. Here are some examples of sales or services subject to sales tax (this list is not all-inclusive):
• Repairs of tangible personal property
• Rental or lease of personal property like motor vehicles or equipment
• Charges for admission to an amusement, sport, or recreation
• Providing taxable services such as pest control services, plumbing, electrical work, heating and air conditioning work, computer software services, dry cleaning and parking lots
• Rental of accommodations in hotels, motels and campgrounds
If you are unsure whether your business is required to register to collect sales tax, please contact the Department of Revenue.
What is exempt from sales tax?
Some of the more common items which are exempt f rom sales tax include:
• Prescription drugs
• Insecticides and fungicides when used for agricultural purposes
• Feed for livestock and poultry, seeds and fertilizer
• Sales made directly to the federal government, the state of Mississippi and counties and cities within Mississippi (this exemption does not include other states or foreign countries)
• Sales made directly to non-profit and public schools (not daycares) in Mississippi
• Sales made to some non-profit agencies that are specifically exempt from tax by the Legislature. Examples include the American Red Cross, Salvation Army, and Boy Scouts & Girl Scouts of America.
• Qualifying purchases of food paid for with food stamps
• Wholesale Sales (sales for resale, with the exception of beer and alcohol)
How do I get a sales tax number or register to collect sales tax?
You may apply online through TAP.
If you or other owners, partners, officers, members or trustees have a history of filing or paying sales tax late, you must pay the outstanding liabilities and/or post a bond before receiving a new sales tax license.
How long does it take to get a sales tax number?
The length of time to process your application depends on the completeness of the information included on the application, and whether or not there are any existing tax liabilities owed by the applicant. Once your application has been reviewed and approved, you should receive your permit in the mail within 2 weeks.
Is there a fee charged to obtain a sales tax number?
No, there is no fee to obtain a sales tax permit. The sales tax number represents a permit issued to the applicant for the privilege of operating a business in Mississippi. The privilege is conditioned upon the permit holder collecting and remitting sales tax to the state.
Depending upon the nature of the business, or past history of the applicant, a bond may be required to be posted before a permit is issued.
May I open my business and start selling merchandise before I receive my sales tax permit?
No, the law requires that a person have a sales tax permit before beginning or operating a business subject to collecting sales tax.
Why are corporate officers required to provide their social security numbers when applying for an account number?
Does this mean that I can be held responsible for the debts of a corporation?
What can I buy tax-free with a sales tax permit?
A business can purchase merchandise for resale free from sales tax by giving their supplier the business’ sales tax permit information.
What if I move my business location?
Sales tax permits are location specific and you may need to get a new permit. Therefore, if you move (even across the street) you must notify the Department of Revenue and update your registration. You should notify the Department of Revenue if your mailing address or any other contact information changes. You may provide that information by completing an amended application.
If the sales tax permittee is a corporation or partnership and there are any changes in the membership, you should file an updated application with the Department of Revenue.
When are my returns due?
Sales tax returns are due the 20th day of the month following the reporting period. If a due date falls on a weekend or holiday, the due date becomes the next business day.
Are extensions available if I can't file my sales tax return by the due date?
No. The Commissioner of Revenue is authorized to provide an extension of time to file the return for good cause, as example when a natural disaster creates a hardship for filing the return on time. In these cases, the tax remains due and interest may apply for late payment.
Can I file my sales and use tax return and pay the tax online? What is the fee for filing online?
Yes, online filing for sales and use tax is available. You may register for FileMS on the Department of Revenue website.
Online filing is free of charge. All that is needed to file your return is a computer, internet access, and your bank account information.
Is the seller allowed a discount for timely reporting and paying sales tax?
Yes, a discount is allowed if the tax is paid by the 20th day of the month in which the tax is due. The sales tax discount is 2% of tax due, not to exceed $50.
Am I considered on-time if my return is postmarked by the due date?
Yes, a return is considered to have been filed with and received by the Department of Revenue on the date shown by the post office cancellation mark on the envelope.
Accelerated payments are required to be filed each June by taxpayers whose total average sales tax liability exceeds $50,000 per month for the preceding calendar year. Accelerated payments must be received by the Department of Revenue no later than June 25 in order to be considered timely made.
Do I need to file a sales tax return for a period in which I had no sales?
Yes, a tax return must be filed for each reporting period even though no tax is due. If you have no sales, enter a zero on the total tax due line. Please don’t forget to sign and date the return.
Why did I receive a billing notice when I had no sales?
Every sales tax permittee must file returns with the Department of Revenue on a timely basis, according to your filing frequency, even if sales tax was not collected for that month, quarter, or year.
Failing to file returns on time can result in penalties, interest and eventually could result in liens against your property.
Can my sales tax permit be revoked?
Your sales tax permit may be revoked if you fail to file sales tax returns or you fail to pay the tax when due. If your permit is revoked, continuing in business is a violation of law that may result in criminal charges.
Do I have to collect sales tax? This is just a hobby.
Do I need a sales and use tax account number to sell tangible personal property at a retail miscellaneous or one-time event?
Yes. All sales of tangible personal property are subject to sales tax unless the law has provided a specific exemption from the tax.
Do flea market vendors need to be registered?
Why has my filing frequency changed?
Are wholesale merchants required to file a return?
A person who engages exclusively in the business of making wholesale sales is not required to register for a sales tax permit and file a return. A person who makes taxable sales to users, consumers, or non-registered merchants must collect sales tax and file returns.
If I have a seasonal business, can I file just for those months that I operate?
No, you must file a return for every tax period, even if no tax is due.
If I am presently registered as a proprietorship or partnership, what do I need to do if I incorporate?
If I purchase an existing business, may I use the sales tax number of the previous owner?
No, a sales tax permit is issued to a specific person or entity and it may not be transferred to another person or entity.
If I have several locations in the state, do I need a separate sales tax number for each location?
How do I amend a return?
If you discover that you have made an error on a sales tax return previously filed with the Department of Revenue, you should file an amended return. Amended returns are not accepted through the online filing system. Online filers must send amended returns to the Department of Revenue by mail or hand delivery.
Are churches exempt from sales tax?
No, churches must pay sales tax. However, churches are exempt from use tax on the use, storage or consumption of literature, video tapes and photographic slides used by religious institutions for the propagation of their creed or for carrying on their customary nonprofit religious activities, and on the use of any tangible personal property purchased and first used in another state by religious institutions.
Is a nonprofit organization registered with the IRS as 501(c)(3) corporation exempt from Mississippi sales and use tax?
Unless the organization is specifically exempt by Mississippi law, nonprofit organizations are subject to Mississippi sales and use tax. Please contact the Sales Tax Bureau to determine those organizations that qualify for exemption.
How do I get a sales tax exemption certificate for a religious or charitable organization?
Mississippi does not issue sales tax exemption certificates. Religious organizations are not exempt from sales or use tax and not all charitable organizations are exempt. The Department of Revenue does provide an organization that is specifically exempt under Mississippi law with a letter (upon their request) to provide to vendors verifying the organization’s tax exempt status. Vendors making sales to exempt organizations should request a copy of that document and keep it on file.
Are items taken out of resale inventory and donated to a nonprofit organization subject to sales and use tax?
Yes. The tax is required to be paid by the donor on the cost of the donated item.
Do out-of-state companies doing work in Mississippi need to register with the Mississippi Department of Revenue?
Yes. Any company doing taxable work in Mississippi must register with the Mississippi Department of Revenue before the work begins. You may register online through TAP.
Contractors who perform work on a project over $10,000 may be subject to the 3.5% Contractor’s Tax imposed on the gross receipts of the contract. The contractor is required to qualify the contract with the Department of Revenue prior to beginning work on the project.
Are out-of-state companies required to charge Mississippi sales or use tax on items shipped into Mississippi?
Persons operating a place of business in this State are liable for sales tax on all non-exempt sales delivered into Mississippi by the out-of-state business. Persons who do not maintain a place of business in Mississippi but own business property located in Mississippi, or who are represented in this state by employees or agents of the business who service customers in Mississippi or solicit or accept orders for merchandise that is subsequently delivered into this state, are liable for collection of Mississippi Use Tax.
Nexus means a business has established a presence in the state. Having nexus requires a seller to collect and remit certain taxes, including sales and use tax. Nexus is created for sales and use tax when a business either owns business property located in Mississippi or when the business is represented in this state by employees or agents of the business who service customers in Mississippi or solicit or accept orders for merchandise.
Are sales to federal, state, county, and city governments exempt from sales tax?
Sales of property, labor or services sold to, billed directly to, and payment is made directly by the United States Government, the state of Mississippi and its departments, institutions, counties and municipalities or departments or school districts of its counties and municipalities are exempt from sales tax. Sales to government employees are taxable regardless of the fact that the employees may be reimbursed by the government for the expenses incurred.
The exemption from sales tax does not apply to sales of tangible personal property, labor or services purchased by contractors in the performance of contracts with the United States, the state of Mississippi, counties and municipalities.
Is the sale of tangible personal property to a private college or university subject to Mississippi sales and use tax?
Sales of tangible personal property and services used exclusively for educational purposes by private colleges and universities in this state are exempt from sales tax. The item must be sold to, billed directly to, and payment made directly by the institution. Sales to booster clubs, alumni associations or student groups are not exempt. This exemption does not apply to items that are not used in the ordinary operation of the school nor does it apply to items that are resold to students.
Are sales to a Mississippi public school subject to sales and use tax?
Sales of tangible personal property and services to a Mississippi public school are not subject to sales and use tax. The item must be sold to, billed directly to, and payment made directly by the institution. This exemption does not apply
to items that are not used in the ordinary operation of the school nor does it apply to items that are resold to students. Parent Teacher Associations (PTA), Parent Teacher Organizations (PTO), athletic and band boosters and other similar support organizations are not exempt from sales tax even on purchases made to benefit the school or that will be given to the school. Sales of merchandise are taxable when the vendor sells to and receives payment directly from the individual students.
Are private not-for-profit schools exempt from sales tax?
Yes, sales to non-profit elementary and secondary grade schools, junior and senior colleges are exempt from sales tax IF the school is owned and operated by a corporation or association where no part of the net earnings inures to the benefit of any private shareholder, group or individual and the organization is exempt from state income taxation. This exemption does not apply to sales of property or services that are not used in the ordinary operation of the school or is resold to the students or the public.
Are sales to hospitals exempt?
Hospitals operated by the Federal Government or the State of Mississippi or any of Mississippi’s political subdivisions including counties and cities are exempt from Mississippi sales tax. Non-profit hospitals are also exempt from Mississippi sales tax. Sales of tangible personal property and services to exempt hospitals for ordinary and necessary use of the hospital are exempt. Any department or division of an exempt hospital that performs services that are ordinary and necessary to the operation of the hospital, including but not limited to, home health care, hospice, outpatient cancer treatments, and surgery are exempt from sales tax.
Any department or division of an exempt entity, regardless of where it is located, which is not ordinary and necessary to the operation of the exempt entity, is not exempt and is subject to the tax on its purchases. This includes, but is not limited to, wellness centers, physician’s offices, and clinics.
Are sales of automobiles by Mississippi dealers to out-of-state customers taxable for Mississippi sales tax?
Sales of automobiles, trucks, truck-tractors, semi-trailers, trailers, boats, travel trailers, motorcycles, and all-terrain cycles that are exported from this state within 48 hours, registered, and first used in another state are exempt from sales tax. A properly executed Certificate of Interstate Sale (Form 72-315) must be maintained to substantiate sales of boats, all-terrain cycles, or other equipment not required to be registered for highway use. Sales of mobile homes and aircraft do not qualify for the export provision and are taxable unless the dealer can provide factual evidence that the dealer was required, as a condition of the sale, to deliver or ship to an out-of-state location and that the delivery or shipment did take place.
When a Mississippian purchases a vehicle out-of-state and brings it to Mississippi, is use tax due on the vehicle?
Persons who purchase vehicles that will be registered and used in this state from dealers located in other states (and these dealers are not registered with the Mississippi Department of Revenue) are liable for the payment of use tax at the same rate and on the same basis as sales tax. The Mississippi Use Tax is payable to the county Tax Collector if not previously paid to an authorized out-of-state dealer at the time of purchase. No credit is allowed for sales tax paid to the dealer in the other state against Mississippi Use Tax on purchases of automobiles, motor homes, trucks, truck-tractors and semi-trailers, trailers, boats, travel trailers, motorcycles and all-terrain cycles when the first use of the vehicle occurs in Mississippi. First use of the vehicle is considered to occur where the vehicle is first tagged or registered (does not include temporary tags.)
Do I owe sales tax on the purchase of a used car from a person who is not a dealer of used cars?
Sales of motor vehicles made by persons not regularly engaged in business are subject to sales tax. The tax is collected by the county Tax Collector when the new owner of a vehicle titles and tags the vehicle. The sales tax due is calculated by a pre-determined value for that kind of car. The purchase price is not used to determine the value of the vehicle.
Is installation labor taxable?
Yes, installation labor is taxable in connection with the sale of tangible personal property.
Is repair labor taxable?
Are transportation, freight or delivery charges in connection with the sale of goods taxable?
Yes, the total gross proceeds of rental agreements are taxable.
Is a charge for meeting rooms taxable?
An itemized charge for a meeting room is generally not subject to sales tax. However, if the charge is bundled together with other taxable items, the tax would apply to the total invoice amount.
Is a manufacturer’s coupon applied toward the total sales price before or after sales tax is calculated?
What is a direct pay permit?
How do I obtain an exemption for machinery used in a manufacturing facility?
Are repair parts exempt from Mississippi sales and use tax when used on exempt machinery?
What are export sales and are they subject to Mississippi sales tax?
Export sales are sales made to customers located outside the state of Mississippi. They are not subject to Mississippi sales tax if the seller is required, as a condition of the sale, to ship or deliver the property to a location outside this state. If the goods are picked up or otherwise received by the customer in Mississippi, the sale is subject to Mississippi sales tax.
Are phone cards taxable?
Phone cards are taxable at the location where the phone card is purchased.
What is a place of amusement?
A place of amusement includes all forms of entertainment including sports, recreation, shows, exhibitions, contests, displays and games, or other similar events. Admission charges are subject to sales tax.
Are any types of amusement exempt from the sales tax?
Yes, the sales tax rate is reduced to 3% on the gross income from admissions charges to publicly owned enclosed coliseum or auditorium and livestock, agriculture and other facilities owned and operated by cities and counties.
The law provides exemption from the tax for a number of organizations or events. Please review the law and regulations for a complete listing and the qualifications for those exemptions. Examples of exemptions include:
• Admissions charges at a place of amusement operated by religious, charitable or educational organizations or by nonprofit civic clubs or fraternal organizations
• Admissions charges for high school or grade school athletic games
• Admissions charges to county, state or community fairs
• Admissions charges or fees charged by any county or municipally owned and operated swimming pools, golf courses and tennis courts
Are non-reusable items furnished to guests in hotels and motels taxable?
The non-reusable items of tangible personal property in hotels and motels furnished to guests in their rooms without charge are subject to sales tax when the hotel/motel purchases them. Non-reusable items include (but are not limited to) soap, shampoo, tissue, other toiletries, food, or confectionery items provided in the guest rooms.
What types of medical equipment and/or drugs are exempt/taxable?
Prescription drugs that may only be legally dispensed by a licensed pharmacist upon written authority from a practitioner licensed to administer the prescription are exempt from sales tax. All over-the-counter medications are taxable regardless if a physician provided a prescription for the medications.
Examples of other exemptions include sales of insulin, sutures (whether or not permanently implanted,) bone screws, bone pins, pacemakers and other articles permanently implanted in the human body to assist the functioning of any natural organ, artery, vein or limb and which remain or dissolve in the body.
Hearing aids and hearing aid supplies, eyeglasses, contact lenses, bedpans, and incontinent pants are subject to tax.
Is medical grade oxygen subject to Mississippi sales tax?
What types of farm machinery are exempt from sales tax?
Does Mississippi offer a sales tax exemption for manufacturers?
Raw materials used in the manufacturing process are exempt. The law provides for a reduced 1.5% rate of tax on the purchase of certain manufacturing machinery used directly in the manufacturing process.
Is the sale of animals taxable?
The sale of livestock is exempt. Sales of animals or poultry for breeding or feeding purposes, as part of a business enterprise, are not subject to tax. The sale of domestic animals is subject to tax when sold by persons regularly engaged in the business of selling domestic animals and other related products, as example, pet stores.
Are there any local sales taxes in Mississippi?
There are numerous tourism and economic development taxes levied in many cities and counties typically imposed on hotels, motels, restaurants and bars. Please review the listing on the Department of Revenue website to determine if your business is subject to any of these taxes.
What are local tourism and economic development taxes?
Many counties and municipalities have enacted additional taxes on food, beverages and accommodations. A listing of all tourism or economic development taxes is included on the Department of Revenue website for your review.
Are items withdrawn from inventory and used by myself or the business subject to sales tax?
Items that were purchased at wholesale but are withdrawn from inventory for use of the business are subject to sales tax. This includes any items that are purchased tax free for resale, but are withdrawn from inventory and used by the owner/employees instead of being sold.
What if I collect too much sales ta x?
If you are unable to refund the tax directly to the customer that paid the tax, Mississippi law requires that any over-collection of sales tax by a retailer from the customer must be paid to the State.
What records should I keep and how long should I keep them?
Records should be retained for a minimum 4-year period, although it is recommended that you keep the records longer. You must keep adequate records of business transactions to enable you and the Department of Revenue to determine the correct tax due. The required records include, at a minimum, records of beginning and ending inventories, purchases, sales, canceled checks, receipts, invoices, bills of lading, and all other documents and books pertaining to the business.
The seller has the burden of proving that a sale of tangible personal property or a taxable service is exempt. Records must be kept to substantiate any claimed exemptions or reduced tax rates authorized by law. Minimum information should include the name and address of the person to whom the sale was made, the date of sale, the article sold, and the amount of exemption or reduced rate. If you are making sales out-of-state, your records should clearly show that the item was delivered out-of-state. If you do not keep these records, you will be subject to the 7% tax, interest, and penalty charges on those sales.
If you are engaged in some other non-taxable business, occupation, or profession, you must keep records to separately show the transactions of that other business. If separate records are not kept, sales tax may be imposed upon the total receipts from all of your business operations.
Is landscaping and lawn care service taxable?
Landscaping services are subject to Sales Tax. Landscaping services include, but are not limited to, planting flowers, shrubs and trees, laying sod, establishing lawns and any earth moving performed during landscaping activities.
Mowing grass, trimming of shrubs, bushes and trees and weeding are not taxable services.
Are sales of equipment and supplies to doctor and dentist offices exempt?
The sales of equipment and supplies to doctor and dentist offices are taxable. These items are consumed by them in the performance of their professional service.
Are warranties, maintenance agreements, or service contracts subject to the sales tax?
Extended warranties, maintenance agreements, and service contracts sold in connection with the sale of tangible personal property are taxable as part of the gross proceeds of the sale even when the agreement is separately stated.
Extended warranties, maintenance agreements, and service contracts unrelated to the purchase of the property covered by the agreement are not subject to sales tax if the agreement only provides service when the customer requests service. Agreements that provide a pre-determined maintenance schedule are considered the pre-payment of a taxable service and taxed at the time of sale of the agreement.
Extended warranties sold in connection with the sale of motor vehicles (cars and trucks) are not taxed at the time of the sale, and any resulting repair work is subject to tax on the cost of providing the repair.
Do I need to charge Mississippi sales tax to people purchasing my products from out-of-state?
There is no sales tax due when the seller is required, as a condition of the sale, to ship or deliver the product directly out-of-state or out of the country. A copy of the sales slip and shipping invoice will need to be retained showing that sale was shipped directly out-of-state or out of the country.
What is the contractor’s tax rate?
The Contractors Tax r ate is 3 1/2% of the total receipts received by the contractor.
When is the contractor’s tax due?
Contractors with contracts that exceed $75,000, or the contractor is an out-of-state contractor are required to either prepay the full amount of the contractor’s tax or post a bond for the tax prior to beginning work on the contract to avoid penalties on the tax. The contractor is required to report and pay 3.5% contractor’s tax on monthly sales tax returns for monthly contract receipts if a job or blanket bond is posted to cover the tax.
Can the owner of a construction project pay the contractor’s tax or send in the check for payment of the contractor’s tax?
Apartments and condominiums are not treated as residential property for purposes of the contractor’s tax. Contracts for the construction, renovation or repair of apartments and condominiums are subject to the 3.5% contractor’s tax unless the job is $10,000 or less. Contractors performing contracts on residential homes pay the regular 7% rate on materials and taxable services.
What dollar amount must a job or blanket bond cover?
A job bond does not have a posted amount of money. A job bond is designed to cover all taxes that the contractor would incur related to performing the contract.
Blanket bonds have a stated amount that may be used to cover the contractor’s tax for multiple jobs. A blanket bond must be for an amount equal to a least 4% of the total estimated receipts of all the jobs or projects performed under that particular bond.Source: www.dor.ms.gov