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S.A.L.T. Select Developments: Mississippi

Baker Donelson's S.A.L.T. Select Developments will identify important state and local tax developments from Mississippi.

State and local taxes impact almost every taxpayer. S.A.L.T developments in any one jurisdiction can be frequent and sometimes confusing. Where multiple jurisdictions are involved, staying current with state and local tax developments can be overwhelming for any taxpayer.

To assist you with staying current on a periodic basis, Baker Donelson's S.A.L.T. Select Developments will identify one or more recent state and local tax developments from Mississippi.

August 2021

Contractors Required to Have Sales Tax Permit: By Notice 72-21-04 issued by the Mississippi Department of Revenue (Department), the Department noted that effective April 15, 2021, all residential and commercial contractors who do not maintain a permanent place of business in Mississippi and do not have a contractor's license issued by the Mississippi Board of Contractors, must have a sales tax permit issued by the Department prior to obtaining a building permit from any Mississippi municipality. The notice also stated that contractors who maintain a permanent place of business in Mississippi or who have a contractor's license from the Board of Contractors, are not required to have such a sales tax permit in order to apply for and obtain a building permit. Questions can be addressed to the Department at the contact information provided in the notice. More information can be found here.

July 2021

Revised Regulations Involving Alcohol Beverage Control: The Mississippi Department of Revenue (Department) has published various proposed regulations which are effective July 23, 2021 pertaining to the control of alcoholic beverages. Some of those revised regulations as proposed by the Department can be found here, here, here, here, and here.

June 2021

Sales Tax Holidays: The Mississippi Department of Revenue (Department) has recently issued Official Guides addressing sales tax holidays currently scheduled to take place between July 30, 2021 and July 31, 2021, and August 27, 2021 and August 29, 2021. Generally, in the first holiday the sales tax is not due on the sale of articles of clothing, footwear or school supplies if the sales price of a single item is less than $100; and the sales tax is not due during the second holiday on the sale of firearms, ammunition, and certain hunting supplies. Both Official Guides set forth the terms and details of the items that can acquired free of tax. More information can be found here and here.

Nonsettling Manufacturer Fee Rate Increase: The Department issued Notice 72-21-09, dated June 1, 2021, announcing a nonsettling manufacturer fee rate increase on returns filed for the July 2021 filing period forward. According to that Notice, the fee rate will be increased by 3%, and will result in an increase of 10¢ per impacted cigarette carton. More information can be found here.

May 2021

Accelerated Tax Payments No Longer Required: The Mississippi Department of Revenue (Department) recently issued Notice 72-21-07, dated May 3, 2021, advising that taxpayers are no longer required to submit accelerated payments for sales, use, and withholding tax. The Department stated in that Notice that House Bill 1139 of the 2021 Regular Session repealed these requirements. The Notice provides contact information in the event additional information is needed. More information may be found here.

April 2021

Extension to May 17: On March 22, 2021, the Mississippi Department of Revenue (Department) issued Notice 80-21-002 stating that Mississippi will follow the federal extension to file the 2020 individual income tax returns from April 15, 2021 to May 17, 2021. The Department's Notice states that the extension only applies to the filing of the individual income tax return and payment of tax due, and that penalty and interest will not accrue on returns filed and payments made on or before May 17, 2021. The Notice also states that the extension does not apply to quarterly estimated payments due April 15, 2021. More information can be found here.

March 2021

Updates Reported – On February 1, 2021, the Mississippi Department of Revenue issued Notice 72-21-01, as updated March 1, 2021, addressing the type of equipment qualifying for the reduced 1 ½% rate for sales tax, which is available to professional loggers. According to this Notice, Mississippi Code Annotated Section 27-65-17 was amended during the 2020 Regular Session of the Legislature to remove the requirement that equipment be "permanently" attached to other equipment drawn by a vehicle which is self-propelled in order to qualify for the reduced rate. As of June 23, 2020, the Notice states that such equipment must simply be "attached" to other equipment drawn by a vehicle which is self-propelled in order to qualify for the reduced rate. However, equipment that is mounted to other equipment which is self-propelled is still required to be permanently attached in order to qualify. The Notice goes on to state that the reduced rate is available to professional loggers with respect to equipment used in logging, pulpwood operations or tree farming, and parts and labor used to maintain and/or repair such equipment, within the conditions for the reduced rate. The Notice also references that loggers must meet certain federal education requirements in order to be considered as professional loggers. Further, the Notice states that retailers selling equipment used in logging to professional loggers must maintain adequate records to substantiate charging the reduced rate and that invoices should clearly identify the equipment, parts and repairs that were sold. Retailers, according to the Notice, must maintain a copy of the purchaser's Professional Logger's Permit, and that retailers are required to keep sales records for a minimum of three years. The Notice goes on to give examples of some equipment and parts qualifying for the reduced rate, as well as items that are not eligible for the reduced rate. More information can be found here.

February 2021

Updates Reported – Although occurring last year, it is important to remember that the Mississippi Legislature passed and Governor Reeves signed House Bill 1748 in June 2020 addressing the Mississippi income tax consequences for borrowers under the federal Paycheck Protection Program. That law excludes from gross income advances and cancelled indebtedness provided for under the CARES Act. The law also conformed Mississippi law to federal law with respect to the deductibility of expenses paid with funding received under the federal Paycheck Protection Program. The exclusion from gross income was enacted as an amendment to Section 27-7-15 of the Mississippi Code and the provision related to deductibility was codified as new Section 27-7-109. The new statute reads as follows:

There shall not be allowed a deduction for otherwise deductible payments paid with funds received under the Paycheck Protection Program (PPP) established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but only to the extent those payments are not allowed as deductions for federal income tax purposes. To the extent such payments are allowed as deductions for federal income tax purposes, those expenses shall be deemed to have been incurred in connection with earning and distributing taxable income, notwithstanding that such payments resulted in forgiveness of loans received.

Both the changes to the definition of gross income and the provision conforming Mississippi law for purposes of deductibility to federal law were effective January 1, 2020. More information as to 2020 House Bill 1748 can be found here.

January 2021

Updates Reported – On December 4, 2020, the Mississippi Department of Revenue published Notice 80-20-05, addressing the Children's Promise Act – 2021. Under that Act, a business can take an increased credit for donations made to an Eligible Charitable Organization (ECO) based upon the aggregate credits that may be allocated to ECOs. As stated in that Notice, up to $5 million of the tax credits allocated during a calendar year may be allocated for contributions to ECOs that are either licensed by, or under contract, or have an agreement with the Mississippi Department of Child Protection Services related to adoption and/or foster care related activities, provided that not more than 25 percent of such credits are allocated for contributions to a single ECO. That Notice also stated that up to $5 million of the tax credits allocated during a calendar year may be allocated for contributions to ECOs certified by the Department as educational services, job training, or workforce development charitable organizations, with no more than 5 percent of such credits being allocated to a single ECO certified as such. Applications for such credit must be submitted in accordance with that Notice. As of the date of publication of this alert, the Department has not issued public notice advising that applications for credits exceeding the maximum available amount have been received. Last year such a notice was issued on January 2. More information can be found here.

December 2020

Updates Reported – Mississippi is considering the phase out of its individual income tax, and at the same time is anticipating a new wine purchase law to be effective January 1, 2021. As to the potential phase out, and in a press conference on November 16, 2020, Mississippi Governor Tate Reeves called for a phase out of Mississippi's income tax on individuals by 2030. Governor Reeves characterized the State's current income tax on individuals as a speed bump for long term economic growth. He also pointed to the population growth experienced in nearby states that currently do not have an individual income tax, namely Texas, Tennessee and Florida. Given budget uncertainties due to the COVID-19 pandemic, the likelihood appears to be that the proposal may attract attention and be studied as part of the upcoming 2021 Legislative Session, but that serious consideration of how to phase out the income tax and how to replace the lost revenue will probably be deferred until 2022. More information can be found here.

As to the new wine purchase law effective on January 1, 2021, individuals in Mississippi will be allowed to purchase wine directly from a winery and have it shipped to a permitted Mississippi package store. There is a limit of ten cases of wine per year and all Mississippi taxes and surcharges must be paid when the wine is received by the consumer. For more information on this new law, see the guidance issued by the Mississippi Department of Revenue here.

November 2020

Updates Reported – On October 9, 2020, House Bill 1810 became effective without the signature of Governor Reeves. This new legislation is known as the Rental Assistance Grant Program and was enacted so as to assist renters making their rent payments as a result of the public health emergency from COVID-19. Further, this new legislation revises the definition of "gross income" for Mississippi income tax purposes in order to exclude amounts received as grants from the Rental Assistant Grant Fund. More information can be found here.

October 2020

Updates Reported – In a recent opinion addressing the application of Mississippi's franchise tax (which is assessed on the basis of the value of capital employed in Mississippi), the Mississippi Supreme Court recognized a taxpayer's right to "deviate from the statutorily prescribed apportionment method when the value does not properly reflect capital employed in this state." To avail itself of this right the taxpayer must overcome the presumption of correctness that attaches to an assessment by the Department by presenting evidence to show that the prescribed apportionment method produces a result that is distortive or unreasonable and, as a result, does not properly reflect capital employed in this state. The taxpayer had prevailed at the Board of Tax Appeals and in Chancery Court before the case reached the Supreme Court. That Court's decision can be found here.

September 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (September 30): The Mississippi Department of Revenue recently issued Notice 72-20-09, dated September 16, 2020, which addresses the application of the sales tax to food delivery service providers. As referenced in the Notice, the Mississippi Marketplace Facilitator Act of 2020 was enacted during this year's regular legislative session and became effective July 1, 2020. Pursuant to that new law, the Notice states that the sale of food made through a third-party delivery service is removed from the definition of a "retail sale" for sales tax purposes. Thus, the Mississippi sales tax will no longer be due on the sale of food through third-party delivery services which allow customers to order food to be delivered from a restaurant of the customer's choosing and to pay for the food through the delivery service's app or website. According to the Notice, the restaurant will charge the regular retail rate of tax and any applicable local taxes, and tips paid to the delivery drivers are not subject to the tax. The Notice further stated, however, that any food delivery service that maintains its own inventory of items for sale or performs a combination of third-party deliveries and direct sales of items to customers is required to register and collect and remit the sales tax on sales to its customers from its own inventory. The Notice states that registration applications can be completed online in the Taxpayer Access Point at www.dor.ms.gov. The Notice further states that sales tax also applies to delivery charges and any other charges added to the delivery service related to sales of items from their own inventory; however, tips that are not required but are paid at the discretion of the customer are not subject to the tax. More information can be found here.

August 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (August 20): On August 12, 2020, the Mississippi Department of Revenue announced via Twitter that, as of August 20, 2020, the Department will resume issuing audit assessments and will end the period of suspension of accrual of penalty and interest. That suspension period began on March 26, 2020. According to this Twitter announcement, audit staff will be resuming normal audit functions but will continue to work with taxpayers who are negatively affected by the pandemic. That Twitter announcement can be found here.

July 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (July 27): On June 30, 2020 Governor Reeves signed into law H.B. 379, The Mississippi Marketplace Facilitator Act. Under the terms of the Act marketplace facilitators with annual Mississippi sales in excess of $250,000 for any consecutive 12-month period will be required to collect and remit sales tax on sales facilitated for a third party. The Act went into effect on July 1. Details on the Act can be found here. On July 13, 2020 the Mississippi Department of Revenue published Notice 72-20-04 providing registration information for facilitators. That Notice can be found here.

June 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (June 25): On May 29, 2020, the Mississippi Department of Revenue published information regarding the recently enacted "Mississippi COVID 19 Relief Payment Fund" which has been established to assist Mississippi small businesses impacted by the COVID-19 outbreak. According to this publication, eligible taxpayers must be a Mississippi resident or have permanent permitted location in the state prior to March 1, 2020. Further, eligible taxpayers must have 50 or fewer employees and have an active sales or withholding account with the Department. Eligible taxpayers must also have filed income tax returns in 2018, 2019 "or intends to file for 2020." The business must have been subject to a COVID-19 related business closure required by the state, municipality or county. The publication also lists the types of industries in which the taxpayer must be involved. There is no application process for this $2,000 relief payment; rather, the Department will issue the payments to eligible businesses based on tax returns filed with the Department or other information verified by other state agencies. Separately, the Department advised that there is a grant program which is administered through the Mississippi Development Authority that does require an application process, and the amount of the grant will depend upon the number of employees but may not exceed $25,000. This publication also sets forth various additional information regarding the relief payment. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (June 2): On May 29, 2020, the Mississippi Department of Revenue published guidance on its website regarding the recently created "Mississippi COVID 19 Relief Payment Fund" which is intended to assist Mississippi small businesses impacted during the pandemic. The Department is in the process of determining which businesses will be eligible for payments under this Relief Payment Fund, and the article sets forth some basic guidelines and answers. For instance, the Department states that no action is necessary to receive the $2,000 payment, and that the Department will issue payments to eligible businesses based upon tax returns filed with the Department and other information verified by other Mississippi state agencies. The Department also states in this article that the checks will be issued the week of June 1. More information can be found here.

May 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Further Due Date Changes Reported (May 8): On May 5, 2020 the Mississippi Department of Revenue issued Notice 80-20-02 announcing that Mississippi has extended the due date for filing income tax returns and making first and second quarter estimated payments until July 15, 2020. The new due date applies to individual, corporate and fiduciary income tax returns. More information can be found here.

March 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Further Due Date Changes Reported (March 30): In a press release issued on March 26, 2020, the Mississippi Department of Revenue stated that although the Department has not extended the time for filing sales/use tax and local tax levies, the Department is agreeing to delay the imposition of interest and penalties on any unpaid tax balance for the period covered by presidentially declared national emergency. Further, the Department noted that while it does not have the authority to extend deadlines for property taxes which are assessed and collected at local levels within the State, the Department was granted approval to extend certain other deadlines referenced in the press release. Further, the Department stated it has taken steps to suspend the accrual of interest and penalties on all new assessments and all prior liabilities, effective March 15, 2020, and will continue until the end of the national emergency. The Department also agreed to abate any penalties and interest on any audits closed during the period of the national emergency where the taxpayer agrees to settle the audit without appeal and pay the tax due. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities - Due Date Changes Reported (March 25): On March 23, the Mississippi Department of Revenue issued Notice 2020-01, which provides relief to individual and business taxpayers due to the COVID-19 pandemic. Under this Notice, the deadline to file and pay the 2019 individual income tax and corporate income tax is extended until May 15, 2020, and the first quarter 2020 estimated tax payment is also extended to May 15. The Notice states that penalty and interest will not accrue on the extension period through May 15. Further, withholding tax payments for the month of April are extended until May 15. The Notice specifically states that this extension does not apply to sales tax, use tax, or any other tax types, and that these returns for such taxes should be filed and paid on the normal due date. Further, the Notice states that the extension does not apply to payments on prior liabilities. However, the Notice acknowledges that the Department will consider an extension of time to file and pay on a case-by-case basis for taxes not extended to May 15, and that these requests should be directed to the Department's customer service line at 601.923.7700. While recognizing that these extensions do not coincide with the federal extensions, the Notice states that the Department cannot extend the deadlines beyond the fiscal year end of June 30. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities - No Information Reported (March 19): No information at the present time, but we continue to monitor.

February 2020

Sales and Use Tax: House Bill 379 has been introduced in the Mississippi Legislature. If passed, the bill will modify the definitions of "retailer," "retail sales" and "doing business" to make sales made or facilitated by a person regularly engaged in the sale or facilitation of sales of tangible personal property subject to sales tax. The bill provides other necessary definitions and authorizes the Mississippi Department of Revenue to audit marketplace facilitators. The bill can be found here.

November 2019

Income Tax: The Children's Promise Act made an income tax credit available for business enterprises engaged in commercial, industrial or professional activities operating as a corporation, limited liability company, partnership or sole proprietorship. The credit is allowed against the taxes imposed by Miss. Code Ann. Sections 27-7-5, 27-15-103, 27-15-109 and 27-15-123, for voluntary cash contributions during the taxable year to eligible charitable organizations. The amount of credit that may be utilized in a taxable year is limited to an amount not to exceed 50 percent of the total tax liability of the business enterprise for the taxes imposed by such sections of law. The aggregate of amount of tax credits available for calendar year 2019 was $5,000,000. The Mississippi Department of Revenue recently announced that all available credits for 2019 have been allocated. The Department will begin accepting applications for allocations of the 2020 credit amount after January 1, 2020. The Department has published a bulletin explaining the details of the credit that can be found here.

October 2019

Income Tax: The Mississippi Department of Revenue has proposed changes to its regulations related to the taxation of dividends. Under the new proposed regulation, dividends issued by a holding company are included in the shareholder's gross income "if such dividends have not already borne a tax in Mississippi or another state prior to the receipt of same by such shareholders." The current regulation purported to exclude from income only those dividends that had been taxed in Mississippi. The portion of the underlying statute that provided support for the current regulation (specifically by limiting the exclusion to dividends taxed in Mississippi) was held unconstitutional by the Mississippi Supreme Court in Mississippi Department of Revenue v. AT&T Corp. (No. 2015-CA-00600-SCT, Oct. 27, 2016). The proposed regulation also provides additional guidance on the taxation of dividends paid after stock is sold and when stock dividends may be taxable. The full text of the proposed regulation can be found here.

September 2019

Income Tax: The Mississippi Department of Revenue has issued Notice 80-19-002 providing guidance on changes to the Military Spouses Residency Relief Act enacted by Congress in 2018. The changes to federal law allow spouses of military personnel who move to Mississippi due to the service member spouse being posted in Mississippi for military duty to elect to use the same state of residence as the service member. The notice sets out details on how to make the election and also how to claim refunds of Mississippi taxes paid in prior open years. The full Notice is available here.

July 2019

Sales Tax: The Mississippi Sales Tax Holiday is scheduled to take place between 12:01 a.m. Friday, July 26, 2019 and 12:00 a.m. on Saturday, July 27, 2019. During the holiday period, sales tax is not due on the sale of articles of clothing, footwear, or school supplies if the sales price of a single item is less than $100.00. The Mississippi Department of Revenue has published an official guide to the Sales Tax Holiday, which is available here.

June 2019

Incentives: Sunset dates for several tax incentives were recently extended by Mississippi Legislature. These include the corporate income tax credit for certain costs incurred to relocate corporate headquarters employees into Mississippi (extended until July 1, 2022 by House Bill 695) and sales and use tax incentives created under the Major Economic Impact Act and the Growth and Property Act (extended until July 1, 2023 by Senate Bill 2133). The Mississippi Department of Revenue publishes a guide to Mississippi Tax Incentives, Exemptions and Credits that can be found here.

For more information about state and local tax developments in Mississippi, please contact:

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