Mississippi to enforce marketplace facilitator nexus on July 1, 2020
TAX ALERT |
On June 30, 2020, Mississippi Gov. Tate Reeves signed House Bill 379, requiring marketplace facilitators to register with the state and collect and remit sales and use tax beginning July 1, 2020. The new law will require marketplace facilitators that exceed $250,000 in sales in any 12-month consecutive period to collect. Unlike many states, there is no transaction threshold that gives rise to collection and remittance requirements. For purposes of determining sales tax nexus, a sale made through a marketplace facilitator is a sale of the marketplace facilitator and not the sale of a marketplace seller.
A marketplace facilitator is defined broadly as any person who facilitates a retail sale by listing or advertising for sale goods or services subject to Mississippi sales tax and collecting payment from customers and transmitting payments to the marketplace seller. A person can be a marketplace facilitator without receiving compensation for its services. The law provides relief to facilitators from liability for failure to collect and remit if the failure was due to inaccurate information received from an unrelated seller.
Noteworthy, the law includes a provision exempting third-party food delivery services from the definition of ‘retail sale.’ The law also allows marketplace facilitators and sellers to contractually agree to have the marketplace seller continue collection and remittance if the seller has annual U.S. sales of at least $1 billion, is registered in the state and notifies the Mississippi Department of Revenue that it is collecting the tax instead of the facilitator.
Remote sellers with more than $250,000 in sales have been required to collect and remit sales and use tax in Mississippi since 2018. The new law leaves only three states with a general sales tax – Florida, Kansas and Missouri – that do not require a marketplace facilitator to collect and remit tax. Louisiana recently enacted marketplace facilitator nexus, also beginning on July 1, 2020.
For more information on the status of remote seller nexus, please read RSM’s article, Wayfair nexus settles in after two years, but questions remain. Additional multistate state nexus information and developments are available on RSM’s nexus portal.