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Sales Tax Obligations of Sellers in Mississippi

April 13, 2006

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Mississippi imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. In Mississippi, exemption certificates are not formally used. If your sales invoice includes the following information it will be considered acceptable for exclusion for resale sales:

• the date
• your name and address as the seller (vendor)
• the name and address of your purchaser
• the items sold
• the price

The invoices must be filed in chronological order and retained for at least three years from the date of sale.

Procedure for accepting blanket certificates. As a seller you have no formal way of accepting a blanket certificate from your purchaser if you repeatedly sell the same type of property or service for processing or resale. However, if the invoice has the information required above for resale exemption certificates, that will in effect act like a blanket certificate.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Mississippi has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Mississippi. To determine if you have physical presence, ask yourself the following:

• Do I have retail facilities, a warehouse, or any office space in Mississippi? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
• Do my employees or I enter Mississippi for purposes of taking and transmitting orders from Mississippi? If your employee or independent contractor goes into Mississippi to take or transmit orders, your business may have physical presence in Mississippi. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
• Do my delivery vehicles frequently enter Mississippi for purposes of delivering property? Frequent deliveries in Mississippi by your trucks will give you physical presence in Mississippi.

Sales tax "bracket system." The bracket system may be followed by sellers in computing the sales tax. The 7 percent tax is computed on each dollar and/or fraction of a dollar according to the following table:

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Mississippi it is against the law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.

Claiming refund for excess tax payments. You are normally allowed to take credit for an overpayment on a subsequent sales tax return or file for a refund. You may apply to the Mississippi Tax Commissioner for a revision of the tax liability. The application for refund or credit must be made within 36 months from the date of the assessment or the date the return was filed.

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