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Mississippi governor wants internet sales tax

  • Nov 17, 2016 | Gail Cole

 Mississippi governor calls for voluntary use tax compliance program for out-of-state sellers.

Earlier this month, Mississippi Attorney General Jim Hood and ten other state attorneys general urged the Supreme Court of the United States to overturn Quill Corps. v. North Dakota; the 1992 decision affirmed previous rulings that out-of-state sellers lacking a substantial physical presence (nexus) in a state cannot be compelled to collect that state's tax. Fearing that untaxed internet sales put Mississippi merchants at a disadvantage, Hood also called on the Legislature to adopt an internet sales tax. Now Mississippi Governor Phil Bryant (R) is also voicing support for a tax on remote sales.

In his FY 2018 Executive Budget Recommendation, Gov. Bryant pointed out that Mississippi is losing somewhere between $67.2 million and $134 million annually by not collecting tax on remote sales. He acknowledged two potential solutions:

  • “Congress could step in and pass legislation requiring online sellers to collect state taxes and remit them to the state of destination.”
  • “[T]he U.S. Supreme Court could reverse its 1992 ruling in Quill v. North Dakota, opening the door for Mississippi and other states to enforce their sales and use tax laws against businesses that currently lack a physical presence.”

Since Mississippi has little control over either of these possibilities, the governor is proposing a third option: “a voluntary remittance program for out-of-state online sellers.” Under a similar program in Alabama (the Simplified Seller Use Tax Remittance Program), participating remote vendors are entitled to collect, report, and remit a flat 8% seller’s use tax on all sales made into Alabama. This does simplify compliance, given that combined state and local sales and use tax rates in Alabama vary considerably. And it does seem to be encouraging remote vendors to voluntarily collect — Amazon began collecting the flat 8% tax on Alabama transactions on November 1, 2016.

Not a new tax

Governor Byrant reminds in his recommendation that any tax on remote sales would not be a new tax: consumers already owe use tax whenever sales tax isn't collected on taxable transactions at the time of sale. However, as he notes, “compliance is low.”

This isn't the first time a Mississippi governor has voiced support for collecting tax on remote sales. Former Governor Haley Barbour (R) was a strong proponent of online sales tax. In his farewell address, he urged the federal government “to allow Mississippi and every other state to choose to enforce our laws and to collect these taxes.” After initially opposing remote sales tax, Governor Bryant has now taken up that call.

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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.