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Mississippi Consumer Use Tax

  • Dec 19, 2013 | Gail Cole

 Mississippi wants taxpayers to know about--and pay--consumer use tax.

Consumer use tax is a twin to sales tax, except that it is not collected by the vendor. In Mississippi, both individual taxpayers and businesses are required to report and remit use tax to the Tax Commissioner. Businesses--subject to state audit more frequently than individuals--tend to be more compliant than individuals.

Online purchases

The Mississippi Department of Revenue nexus in Mississippi to collect sales tax; “However, some out-of-state retailers voluntarily collect the Mississippi tax as a convenience to their customers.”

Purchases made in other states

The FAQs also make clear that “[i]tems of tangible personal property purchased in another state for use, storage or consumption in Mississippi are subject to Mississippi use tax.” If the buyer takes possession of a taxable item in another state and pays that state’s sales tax, the sales tax paid to the other state is credited toward Mississippi sales tax when “invoices clearly and correctly” show the amount of tax paid to the other state. However, credit is not allowed for another state’s sales tax “if the item is shipped or delivered to a Mississippi location by the out-of-state seller.” When there are shipping and handling costs, they too are subject to use tax.

Big brother is watching

Mississippi businesses must file and pay use tax on the 20th day of the month following the reporting period. “Individuals who are not registered to regularly report use tax may pay on taxable purchases at the county Tax Collector’s offices or at any of the Tax Commission District offices.”

The Mississippi Tax Commission uses “various methods” to determine use tax liability, including:

  • Audits,
  • Complaints, and
  • Cooperative vendors and taxing authorities in other states.

Online sales tax

Last spring, the Mississippi house passed a bill expanding the definition of physical presence; had it become law, Mississippi might now have an Amazon Tax. Instead, it died in committee and Secretary of State Delbert Hosemann was asked to create the Mississippi Revenue Fairness Study Group to study issues surrounding online sales tax and evaluate its potential as a new stream of revenue for the state.

As of this writing, no findings have yet been revealed.

A federal solution

Last spring, the Senate passed the Marketplace Fairness Act of 2013, which would allow states that simplify their sales tax laws to require certain remote vendors to collect sales tax. This legislation has not yet been taken up by the House, although Chairman of the House Judiciary Committee Bob Goodlatte (R-VA) has released seven basic principles to guide the discussion on remote sales tax.

While many states think federal lawmakers should solve the remote sales tax issue, others are passing their own Amazon Tax laws.

Sales tax changes happen all the time. Is your business prepared?

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.