United States

Mississippi finalizes economic sales tax nexus rule

Remote seller sales tax collection to begin Dec. 1

TAX ALERT  | 

On Dec. 1, 2017, the Mississippi Department of Revenue’s final version of its economic nexus sales tax rule became effective. Mississippi Rule 35.4.03.09 establishes a “substantial economic presence” to qualifying remote sellers, creating an obligation for those sellers to collect and remit the Mississippi sales tax on sales to Mississippi customers.

Remote sellers without physical presence in Mississippi must register, collect and remit the Mississippi sales tax when 1) the remote seller’s Mississippi sales exceed $250,000 in the prior twelve months and 2) the remote seller purposefully or systematically exploits the Mississippi market. For purposes of the new rule, “purposefully or systematically exploiting the market” includes, but is not limited to the following activities:

1.    Television or Radio advertising on a Mississippi station;
2.    Telemarketing to Mississippi customers;
3.    Advertising on any type of billboard, wallscape, bus bench, interiors and exteriors of buses or other signage located in Mississippi;
4.    Advertising in Mississippi newspapers, magazines or other print media;
5.    Emails, texts, tweets and any form of messaging directed to a Mississippi customer;
6.    Online banner, text or pop up advertising directed toward Mississippi customers;
7.    Advertising to Mississippi customers through applications “apps” or other electronic means on customer’s phones or other devices; or
8.    Direct mail marketing to Mississippi customers.

The rule applies to those sales occurring on or after Dec. 1, 2017. The tax must be separately stated from the sales price and accounted for separately on the seller’s records.

Takeaways

Mississippi becomes the latest state to adopt an economic sales tax nexus law. A number of other states have passed economic sales tax nexus statutes or promulgated regulations, but many of the laws were quickly challenged and enjoined through litigation. Remote sellers making sales into Mississippi should continue to monitor the regulation for updates.

Through November of 2017, Indiana, Maine, North Dakota, Pennsylvania, Tennessee, Vermont, Washington, and Wyoming have addressed economic sales tax nexus. Several of those laws are either not yet effective, or currently enjoined from enforcement due to litigation. A statute enacted by South Dakota establishing sales tax nexus for remote sellers was challenged and recently overturned by the South Dakota Supreme Court. The state subsequently filed a petition with the U.S. Supreme Court to review the state court decision on Oct. 2, 2017. For more information on the efforts to overturn the physical presence standard for sales tax nexus, please read our alert, South Dakota takes aim at Quill.

For more information on economic sales and use tax laws generally, please see RSM’s economic sales tax nexus white paper, Economic sales and use tax nexus laws.

 

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