Mississippi moves to turn marketplace facilitators into tax collectors

Following the lead of more than 39 other states, Mississippi lawmakers want to make marketplace facilitators responsible for collecting and remitting the tax due on their third-party sales.

There’s strong support for the proposed marketplace facilitator law in the legislature, where on February 25, 2020, the House of Representatives approved House Bill 379 in a 106–13 vote. The measure creates a sales tax collection obligation for marketplace facilitators that have nexus with the state. Nexus can be established by having a physical presence in the state or, for remote sellers and facilitators, having more than $250,000 in sales in any consecutive 12-month period.

The bill passed by the House expands the definition of “doing business” in the state to “any person selling or facilitating the sale of services or tangible personal property.” This is in line with Mississippi’s economic nexus law, which includes services (both taxable and exempt) in the economic nexus threshold. An earlier version of the bill left out sellers and facilitators of services.

When calculating the $250,000 threshold, sales made through a marketplace are considered sales made by the marketplace facilitator, not the marketplace seller. Thus, remote sellers who sell through multiple platforms would only count their direct sales when determining whether they have economic nexus and an obligation to collect Mississippi sales tax.

The bill doesn’t specify whether marketplace sellers that sell only through registered marketplaces must register with the tax department. Some states, including California and New York, require all marketplace sellers to register, even if they make no direct sales in the state. In other states, such as Minnesota, marketplace sellers don’t have to register if they only sell through collecting marketplaces.

If enacted as written, marketplace facilitators would be required to collect and remit sales tax on behalf of their third-party sellers as of July 1, 2020.

To learn more about sales tax obligations for marketplace facilitators and marketplace sellers, check out our state-by-state guide to marketplace facilitator laws and state-by state registration requirements for marketplace sellers.

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