Mississippi lawmakers move on marketplace legislation

Update 6.30.2020: HB 379 was signed into law on June 30. Marketplace facilitators with annual in-state revenues above $250,000 must collect and remit sales tax on behalf of third-party sellers starting July 1.

The new law includes an exemption for third-party food delivery and an election for marketplace sellers with more than $1 billion in national revenue (including sales of affiliates and franchised entities) to directly collect sales and use tax.It also codifies the current remote seller rules, which are currently only in a regulation. 

The Mississippi Senate has passed HB 379, a marketplace facilitator bill, by a vote of 43-0. The bill requires marketplace facilitators with annual in-state revenues above $250,000 to collect and remit sales tax. The Senate amended the House bill – adding an exemption for third-party food delivery and adding an election for marketplace sellers with more than $1 billion in national revenue (including sales of affiliates and franchised entities) to directly collect sales and use tax. The amended bill must now be re-considered by the House, which passed the original bill in late February by a vote of 106-13. If signed into law, the marketplace facilitator rule will be effective July 1, 2020.

A bill requiring marketplace facilitators to collect and remit sales tax on behalf of third-party sellers has been unanimously approved by the Mississippi Senate. If the House of Representatives approves the Senate’s amendments and the governor signs his name, the new collection requirement will take effect July 1, 2020. More than 40 states have already established a sales tax collection requirement for marketplace facilitators.

The Mississippi House overwhelmingly approved an earlier version of House Bill 379 back in February. The original version imposes the third-party sales tax collection obligation on marketplace facilitators that have economic nexus with Mississippi or a physical presence in the state.

Two significant changes were made to the version passed by the Senate:

• Sales made by third-party food-delivery platforms that deliver food from an unrelated restaurant to a customer (e.g., DoorDash or Grubhub) are excluded from the definition of “retail sale,” regardless of whether the customer orders and pays for the food through the delivery service or the delivery service adds fees or upcharges to the price of the food
• Marketplace sellers that are registered in Mississippi and have more than $1 billion in combined U.S. annual revenue may opt to collect sales and use tax themselves (a contractual agreement must be made with the facilitator, and the Mississippi Department of Revenue must be notified)

Additional clarifications include:

• “Doing business” includes any person selling or facilitating the sale of services or tangible personal property
• A remote seller should not include sales made through a marketplace facilitator when calculating the economic nexus threshold

See HB 379 for additional details.

If enacted as written, marketplace facilitators and sellers won’t have much time to adapt. Marketplace facilitators with economic nexus or a physical presence in Mississippi would be required to collect sales tax on behalf of their sellers starting July 1, 2020.

Not sure whether you have economic nexus with Mississippi? Get a free sales tax risk assessment and find out.