Mississippi Sales Tax Guide
Chapter 8: Understanding Mississippi sales tax rules for shipping & handling
Mississippi’s 7 percent sales tax can go as high as 7.25 percent in some areas of the state, since local taxes can be added onto the rate based on local laws. Unlike some other states, food and clothing purchases aren’t exempt in Mississippi, even when those purchases are made at the grocery store. With more customers than ever purchasing items online, many businesses are researching whether or not this charge applies to shipping costs.
When it comes to shipping and delivery charges in Mississippi, the laws are fairly consistent across the board. Most businesses will pay sales tax on shipping, handling, and delivery costs, with very few exceptions. Those exceptions are explained in detail below.Is Shipping Taxable in Mississippi?
When tax is imposed on the sale of goods, businesses must pay sales tax on the shipping, handling, and delivery charges associated with getting those goods to customers. This is limited to sales within Mississippi, however. Businesses that ship products to buyers outside of Mississippi are not required to pay sales tax on the shipping costs. The business needs to retain a copy of the sales receipt as proof that the item was shipped directly to the out-of-state customer.
Mississippi makes no concessions for itemization of shipping charges on an invoice. Whether the shipping, handling, and delivery charges are stated separately or as part of the purchase price, businesses will be required to pay sales tax on the cost.Sales Across State Lines
Out-of-state businesses receive a break on sales tax when selling to Mississippi residents. As long as the business doesn’t have nexus in the state, no Mississippi sales tax is required on purchases or delivery costs. However, a business may be required to pay those taxes in its own state, so it’s important to check into how those laws apply.
If a business has a presence in Mississippi, though, that business will be required to pay sales tax on purchases and shipping in accordance with the state’s laws. This applies to businesses that either own property in the state or have representatives acting on behalf of the company there.Are There Exemptions?
Businesses do get one break on sales tax in the state. Mississippi exempts some shipping supplies from sales tax, including packaging, containers, and pallets sold with finished goods. Sales of containers and shipping materials used in international commerce shipments are also exempt.
Mississippi has a large number of other items that are exempt from sales tax in the state. Those include sales to nonprofit organizations and retail sales of prescription medications. When a tax-exempt item is shipped, the delivery and handling charge is exempt, as well, whether the business is located in Mississippi or in another state or country.Words of Caution
The Mississippi Department of Revenue emphasizes that the state charges sales tax on the full amount of any sale of tangible property, including the delivery costs required to get items to buyers. The state defines a delivery charge as any expense incurred by the seller to get merchandise ready to sell, including freight in or transportation costs in, and any charges made by the seller for delivery of the property to the purchaser.
“The total sales amount should be reflected on the sales tax return and should include any charges for delivery,” department spokesperson Kathy Waterbury says. “Persons remitting use tax on property brought into this state owe tax on the purchase price or sales price, which also includes freight charges to the point of use within the state.”
When charging for delivery, businesses with a presence in Mississippi must remit sales tax on all charges, including delivery, shipping, and handling. When a Mississippi business ships a taxable item, sales tax will need to be paid.