March 2024

Updated Electing Pass-Through Entity FAQs: As reported in our September 6, 2023, Newsletter, the Mississippi Department of Revenue (Department) issued frequently asked questions (FAQs) regarding the amended laws pertaining to the election of pass-through entity status for Mississippi income tax purposes. On March 4, 2024, the Department published updated FAQs regarding the election to be treated as an electing pass-through entity. These updated FAQs cover a wide range of issues, including what type of entity can elect to be treated as an electing pass-through entity; how does a pass-through entity make such elections; when is the pass-through entity election required to be made; the impact of the election with respect to multiple layers of ownership; are electing pass-through entities required to make estimated tax payments; how is the tax credit for taxes paid on the electing pass-through entity calculated; and does a non-resident partner have to file a Mississippi Non-Resident Individual Income Tax Return if his/her only income in Mississippi is from the electing pass-through entity? More information can be found here.

February 2024

Fair Market Value for Cannabis Excise Tax: On January 1, 2024, the Mississippi Department of Revenue (Department) issued Notice 72-24-01 addressing the fair market values for cannabis excise tax beginning January 1 through July 1, 2024. The Department states in this Notice that a five percent excise tax is applied to the sales price of a cultivation facility's first sale or transfer of cannabis flower or cannabis trim to a medical cannabis establishment with no common ownership; and that a five percent excise tax is calculated using the fair market value of the cannabis flower or cannabis trim on the first sale or transfer of the cannabis flower or cannabis trim to a medical cannabis establishment having common ownership with the cultivator. The Department states in this Notice that the fair market value is only used when the cultivator shares common ownership with the medical cannabis establishment. The Department also sets forth in the Notice the fair market value of cannabis flower and trim sold to a common interest establishment effective on January 1, 2024. The Department notes in this Notice that the fair market value of cannabis flower and cannabis trim will be recalculated and adjusted twice per calendar year on January 1 and July 1. More information can be found here.

January 2024

2024 Charitable Contribution Credits FAQs: The process for applying for Charitable Contribution Tax Credits will be different from prior years. The Mississippi Department of Revenue (Department) recently issued Frequently Asked Questions for the 2024 charitable contribution credits. These FAQs cover a wide variety of topics including: when will the Taxpayer Access Point online application be available; when will the application screen time out; will the Department confirm receipt of the application; and how long the donor has to donate. These and other questions regarding the 2024 charitable contribution credits are addressed here.

November 2023

Charitable Contribution Credits Notice: The Mississippi Department of Revenue (Department) recently issued Notice 80-23-002 addressing the charitable contribution credits that are available to Mississippi taxpayers. According to the Department in this Notice, there are four charitable credits available for individual taxpayers and six charitable credits available for business taxpayers. According to this Notice, as the Department's charitable contribution programs grow, so does the number of applications received by the Department. The Department states in this Notice that it is committed to ensuring applications are efficiently processed; and, therefore, the Department is implementing a new online system that will require users to submit applications online. In particular, beginning with the 2024 calendar year, applications according to the Department will only be accepted through the new online system, and the Department will not accept paper applications for any calendar year after 2023. For the 2024 calendar year, the Department stated in this Notice that it will begin accepting applications on January 2, 2024. The Department will also allow users, according to this Notice, to become familiar with the online application process prior to the filing of an application; and starting November 1 and ending December 1, users will be allowed to "test" the online application by going to the web address in the Notice. More information can be found here.

October 2023

Revised Depreciation Methods: On October 20, 2023, the Mississippi Department of Revenue (Department) published Notice 80-23-003 (Notice) addressing the revised methods of depreciation that may be used for certain expenditures and property for State income tax purposes resulting from legislation enacted this year and effective from and after January 1, 2023. As noted by the Department in this Notice, and for tax years beginning after December 31, 2022, a taxpayer may treat specified research or experimental expenditures that were paid or incurred by the taxpayer during the tax year in connection with the taxpayer's trade or business as expenses that are not chargeable to the capital account, and may elect to take a full and immediate deduction for such expenditures and/or depreciate the expenditures in accordance with Section 174 of the Internal Revenue Code as it existed on January 1, 2021 (Code). Additionally, and also for tax years beginning after December 31, 2022, the Department in this Notice states that expenditures for business assets that are qualified property or qualified improvement property shall be eligible for 100 percent bonus depreciation and may be deducted as an expense incurred by the taxpayer during the tax year in which the property was placed in service, with the term "qualified property" having the same meaning as in Section 168(k) of the Code and the term "qualified improvement property" having the same meaning as defined in Section 168(a)(6) of the Code. Other information regarding these revised depreciation methods is set forth in this Notice, which can be found here.

September 2023

Electing Pass-Through Entity FAQs: On April 13, 2023, the Mississippi Department of Revenue (Department) published Notice 80-23-002 addressing House Bill 1668 of the 2023 Legislative Session that was signed into law on March 27, 2023, such law amending the method by which a partnership, S corporation or other similar pass-through entity may elect to become an "electing pass-through entity" for state income tax purposes. (See our April 19, 2023, Newsletter.) On September 11, 2023, the Department issued frequently asked questions (FAQ) regarding this new law. Such questions addressing a wide variety of issues such as: what entity types can elect to be treated as a pass-through entity; how does a pass-through entity make an election to be treated as an electing pass-through entity; when is a pass-through entity required to make an election; and will the entity be penalized if estimated tax payments are not made, are among many other issues addressed in this FAQ. More information can be found here.

August 2023

Second Amendment Weekend Sales Tax Holiday: On August 1, 2023, the Mississippi Department of Revenue (Department) issued an Official Guide to the Second Amendment Sales Tax Holiday which takes place between August 25, 2023, and midnight on August 27, 2023. According to the Official Guide, sales tax is not due during that holiday period on the sale of firearms, ammunition, and certain hunting supplies as defined in the Guide. Additionally, the Guide sets forth eligible and non-eligible items for the sales tax holiday, as well as sets forth guidelines regarding terms and conditions under which the sales tax holiday applies. More information can be found here.

July 2023

2023 Sales Tax Holiday: On July 7, 2023, the Mississippi Department of Revenue (Department) published the Official Guide to the Sales Tax Holiday for articles of clothing, footwear or school supplies, which this year will take place on July 28 and 29, 2023. According to the Official Guide, the holiday will apply to articles of clothing, footwear, or school supplies if the sales price of a single item is less than $100. The Guide defines the term "clothing", "footwear", and "school supplies" among other definitions. The Guide also addresses the applicability of the tax holiday in situations involving special sales promotions and discounts, and other retail promotion activities. Additionally, the Guidance sets forth a listing of eligible and non-eligible items for clothing, footwear and accessories, as well as a listing of eligible school supplies. More information can be found here.

June 2023

Further Notice to Medical Cannabis Establishments: In late April 2023, the Mississippi Department of Revenue (Department) issued Notice 72-23-04 in which the Department stated that with respect to the sales tax return requirements for medical cannabis establishments, those establishments should use the rate code eighty-three (83) for reporting medical cannabis sales and should use rate code seventy-four (74) to report all other sales. The Department stated that items reported under rate code eighty-three (83) include all medical cannabis products; whereas items reported under rate code seventy-four (74) would include any items sold but do not contain medical cannabis. For any questions, contact information for the Department is provided in this Notice. More information can be found here.

May 2023

Sales Tax Exemption for Certain Motor Vehicle Transfers: On May 1, 2023, the Mississippi Department of Revenue (Department) issued Notice 72-23-04 addressed to all county tax collectors. In that Notice, the Department states that as a result of Senate Bill 2011 which was passed in the 2023 Regular Session of the Legislature, there is an exemption from the sales tax on transfers of motor vehicle titles between a trustee and a beneficiary of a trust, between a corporation and one of its shareholders in a transaction which qualifies for nonrecognition of gain or loss pursuant to Section 351 of the Internal Revenue Code, and transfers of legal ownership of motor vehicles between a partnership or limited liability company and one of its partners or owners within the State of Mississippi. The Department notes that this exemption is effective July 1, 2023, and transferors must complete the Affidavit of Motor Vehicle Title Transfer and provide the original Affidavit to the local county tax collector. Contact information is provided in this Notice for questions or further assistance. More information can be found here.

April 2023

Updated Guidance on Pass-Through Entity Election: On April 13, 2023, the Mississippi Department of Revenue (Department) published Notice 80-23-002 addressing House Bill 1668 of the 2023 Legislative session that was signed into law on March 27, 2023. According to the Department's Notice, this legislation amended the method by which a partnership, S corporation or other similar pass-through entity may elect to become an "electing pass-through entity" for state income tax purposes, and provided that additional income tax credits generated by the electing pass-through entity, shall be passed through to the owners on a pro rata basis and that any excess credit may be carried forward as an overpayment or refund. Additionally, the Notice stated that limitations applicable to credits generated by the electing pass-through entity shall apply to the owner, member, partner, or shareholder. This new legislation is effective, according to the Notice, from and after January 1, 2023, and applies to any income tax return with an original due date on or after January 1, 2023. The Notice then addresses various topics such as eligibility for the pass-through entity election; making or revoking the pass-through entity election; filing an electing pass-through entity return; estimated tax payments; composite returns; and pass-through entity credits. More information can be found here.

March 2023

Fair Market Value Notice for Cannabis Excise Tax: The Mississippi Department of Revenue (Department) issued Notice 72-23-01, dated January 1, 2023, regarding the cannabis excise tax. The Department stated in this Notice that a 5 percent excise tax shall be applied to the sales price of a cultivation facility's first sale or transfer of cannabis flower or cannabis trim to a medical cannabis establishment with no common ownership. The Department also stated in this Notice that with respect to the first sale or transfer of cannabis flower or cannabis trim to a medical cannabis establishment having common ownership with the cultivator, the 5 percent excise tax shall be calculated using the fair market value of the cannabis flower or cannabis trim with respect to such first sale or transfer. For such purposes, the fair market value of medical cannabis flower or medical cannabis trim is set by the Department in regard to levying the excise tax on the first sale or transfer of medical cannabis flower or medical cannabis trim between cultivators and other common ownership medical cannabis establishments. The Department then provides in this Notice the fair market value that will be assigned to flower sold to common interest establishment and to trim sold to common interest establishment. That fair market value will be recalculated by the Department twice per calendar year, on January 1 and July 1. The Notice contains contact information for any questions. More information can be found here.

February 2023

New Commercial Farmer Affidavit: On January 24, 2023, the Mississippi Department of Revenue (Department) announced that a new, single use Commercial Farmer Affidavit is now available. According to the Department, this single transaction Affidavit is to be used when claiming the reduced 1.5 percent rate for farmers purchasing farm tractors and farm implements to be used in the production of agricultural products on a commercial scale for market. The original copy of the Affidavit is to be submitted to the Department with the sales tax return and a copy is to be maintained for the seller's records. The Affidavit states that if sales tax returns are filed electronically, copies should be mailed to the address shown on that Affidavit. More information can be found here.

January 2023

2023 Tax Credit from the Children's Promise/Pregnancy Resource Acts: In October 2022, the Mississippi Department of Revenue (Department) issued Notice 80-22-003, which addresses the tax credits available in 2023 under the Children's Promise Act, as well as under the Pregnancy Resource Act. According to the Notice, the Children's Promise Act authorizes a credit for businesses that donate to an Eligible Charitable Organization or an Educational Services Charitable Organization. These credits, according to the Notice, have been amended to increase the aggregate amount that may be allocated for contributions to such Organizations to $18 million for the 2023 calendar year, with the aggregate credit amount being applicable up to $9 million for the Eligible Charitable Organizations and $9 million for the Educational Services Charitable Organizations. Further, the Notice stated that the Pregnancy Resource Act authorizes a credit for businesses that donate to a Pregnancy Resource Charitable Organization, with the aggregate credit amount for the 2023 calendar year being $3.5 million. The Notice reviews terms and conditions with respect to using these credits. The Department noted that application for the credit must be made on official forms, which are referenced in the Notice. The Department also noted that the credit caps are expected to be reached quickly. More information can be found here.

October 2022

Third Party to Operate New Alcoholic Beverage Control Warehouse: On September 15, 2022, the Mississippi Department of Revenue (Department) issued an announcement that Senate Bill 2844, effective July 1, 2022, authorizes the Department to contract with a third-party operator for its Liquor Distribution Center in Gluckstadt, Mississippi. The Department stated in this announcement that procurement laws require it to first obtain approval from the Public Procurement Review Board before issuing a Request for Proposals (RFP). It further stated that it is seeking permission from the Board to issue an RFP for the operator and, after the RFP is issued, it will schedule a pre-bid conference with all interested potential operators. Proposals will be due from potential operators at the end of November, and the selection of the operator should occur in December. The Department stated that it will provide an update on the RFP process following the Board's October meeting. More information can be found here.

September 2022

Water Crisis/Extension of Return Due Date: On September 7, 2022, the Mississippi Department of Revenue (Department) issued Notice 80-22-002 addressing relief for victims of the Mississippi water crisis. As stated in this Notice, the Department will follow the federal extension due date of February 15, 2023, granted to victims of the water crisis beginning August 30, 2022. The Notice also provides that taxpayers that reside, have a business, or whose records are located in Hinds County have until February 15, 2023, to file individual income tax returns, corporate income and franchise tax returns, pass-through entity tax returns, and quarterly estimated payments due between August 30, 2022, and February 15, 2023. Taxpayers located within this area, according to the Notice, that have a valid extension to file their 2021 tax returns will now have until February 15, 2023, to file such returns. The Notice further states that this extension does not apply to any other tax types or payments due on prior liabilities. Further, the Notice states that any disaster-area taxpayer who receives a penalty notice should contact the Department's office at the number set forth in the Notice to receive abatement. More information can be found here.

August 2022

Guidance On Pass-Through Entity Election: On July 28, 2022, the Mississippi Department of Revenue (Department) published Guidance with respect to the pass-through entity election that was signed into law by the 2022 Legislative Session on April 14, 2022. This Guidance addresses various areas pertinent to the pass-through entity election, which is effective from and after January 1, 2022, including areas such as: eligibility for the election; making or revoking the election; filing an Electing Pass-Through Entity Return; estimated tax payments; composite returns and credits for taxes paid in other states by the electing pass-through entity; and the amount of the credit allowed with respect to individuals and businesses that are owners, members, partners, or shareholders of an electing pass-through entity. More information can be found here.

June 2022

Individual Income Tax Reductions: On April 6, 2022, Mississippi Governor Reeves signed House Bill 531 into law, known as the Mississippi Tax Freedom Act of 2022 (the Act), accomplishing the largest individual tax cut in state history. The Act provides for the elimination of the four percent bracket for calendar year 2023 and all calendar years thereafter, resulting in no tax being levied on the first $10,000 of taxable income for an individual. For calendar years 2024 through 2026, the five percent rate is gradually reduced to four percent. Taking into account current exemptions under Mississippi law, after the first year a single person with no dependents would pay no tax on the first $18,300 of taxable income. A married couple would pay no tax on the first $36,600 of taxable income. More information can be found here.

May 2022

Sales Tax Account Required for All Medical Cannabis Dispensary License Applicants: On May 17, 2022, the Mississippi Department of Revenue (Department) issued a news release stating all Medical Cannabis Dispensary License applicants will be required to have a sales tax account and a sales tax permit prior to applying for a license. The Department stated in the news release applicants should visit the Department's website referenced in the news release, and select 'Register for Taxes' to create a profile; and, after completing the set-up of the profile, the site will allow applicants to then 'Register a New Account' to apply for an account. The Department warned that this process could take up to three weeks, so applicants should address this matter at their earliest convenience. Additionally, a list of NAICS Codes is provided in the news release for applicants. More information can be found here.

April 2022

Pass-Through Entities Can Elect Taxation: On April 14, 2022, Governor Tate Reeves signed into law House Bill No. 1691, which authorizes pass-through entities to elect to be taxable for Mississippi income tax purposes and pay income tax at the entity level. The Act states in part that for calendar year 2022, and for each calendar thereafter, any partnership, S corporation or similar pass-through entity may elect to be taxed as an electing pass-through entity and pay the income tax at the entity level. The term "electing pass-through entity" means a partnership, S corporation or similar pass-through entity has made an election pursuant to the Act. The Act further provides that, to be taxed as an electing pass-through entity, the entity shall submit the appropriate form to the Mississippi Department of Revenue (Department) at any time during the tax year or on or before the 15th day of the third month following the close of that taxable year for which the entity elects to be taxed as an electing pass-through entity. This election shall be binding, according to the Act, for that taxable year and all taxable years thereafter and shall not be revoked unless the entity submits the appropriate form to the Department at any time during a subsequent taxable year on or before the 15th day of the third month following the close of that taxable year for which the entity elects to no longer be taxed as an electing pass-through entity. Various conditions and requirements are set forth in the Act relative to this election. The Act is effective and shall be enforced from and after January 1, 2022. More information can be found here.

March 2022

Mississippi Medical Cannabis Act: The Mississippi Department of Revenue (Department) issued an Immediate Release on February 4, 2022, addressing the anticipated rollout of the Department’s involvement with respect to the Mississippi Medical Cannabis Act signed into law on February 2, 2022. In the Release, the Department stated under the Act the Department will be responsible for licensing, regulating, and enforcing the law for medical cannabis dispensaries; and the Department is committed to meeting the statutory deadlines and requirements of the Act. Further, the Department stated Alcoholic Beverage Control Enforcement will be the point division for licensing and regulating dispensaries; and licensed cultivators will be responsible for collecting and remitting excise tax to the Department. Further, all licensed dispensaries will be responsible for collecting and remitting the standard sales tax. Further questions about the Act may be addressed to the Department at the site referenced in the Release. More information can be found here.

February 2022

Income Tax Return Due Date Extension: The Mississippi Department of Revenue (Department) recently issued Notice 80-21-005 stating Mississippi will follow the extended federal due date of February 15, 2022, extended from January 3, 2022, to file income tax returns for victims of Hurricane Ida. The Department states in the Notice this updated relief covers the entire State of Mississippi and applies to any individual income tax returns, corporate income and franchise tax returns, partnership tax returns, S corporation tax returns and quarterly estimated payments originally due between August 28, 2021 and February 15, 2022. Further, the Department states in the Notice taxpayers who had a valid extension to file their 2020 tax returns on October 15, 2021, will now have until February 15, 2022 to file their returns. However, the Department further states in the Notice the federal extension does not apply to the payments for these returns because the tax payments were due on the original due date. Further, this extension does not apply, according to the Notice, to other tax types or payments on prior liabilities. The Notice provides contact information for any taxpayer who receives a penalty notice. More information can be found here.

January 2022

Income Tax Credit for Qualifying Charitable/Foster Care Organizations: The Mississippi Department of Revenue (Department) has recently updated Income Tax Technical Bulletin TB 80-501-21-2, dealing with the income tax credit available for voluntary cash contributions to a qualifying charitable organization or a qualifying foster care charitable organization. As referenced in that Bulletin, the tax credit may be carried forward for five years, and the aggregate amount of credits that may be awarded shall not exceed $1 million, together with other required conditions. Separately, the Department has published Notice 80-21-02 entitled Children's Promise Act Notice – 2022 pertaining to the credit authorized for businesses that donate to an Eligible Charitable Organization or an Educational Services Charitable Organization. More information regarding the referenced credits can be found here and here.

October 2021

Proposed Rule Dealing with Sales Tax Treatment of Computer Software: On October 12, 2021, the Mississippi Department of Revenue (Department) filed a Notice with the Mississippi Secretary of State advising of a proposed Rule amendment to clarify the sales tax treatment of computer software sales and services when delivered through cloud computing. According to this Notice, relevant definitions were added; and, additionally, the definition of "computer program" was deleted and included as part of the "computer software" definition. Other provisions are also included. The Notice states that an oral proceeding is scheduled for this proposed Rule on November 3, 2021. More information can be found here.

September 2021

Filing Extensions Due to Hurricane Ida: On September 10, 2021, the Mississippi Department of Revenue (Department) issued Notice 80-21-003 announcing that the Department will follow the federal extended due date of November 1, 2021 within which to file certain income tax returns for victims of Hurricane Ida. According to the Notice, the extension applies to any individual income tax returns, corporate income and franchise tax returns, partnership tax returns, S corporation tax returns, and quarterly estimated payments that were originally due between August 28, 2021 and November 1, 2021. The Notice further states that taxpayers that have a valid extension to file their 2020 tax returns will now have until November 1, 2021 to file their returns. The Notice did state, however, that the federal extension does not apply to the payments for these returns because tax payments were due on the original due date. Also as referenced in the Notice, the Department automatically provides the extension relief for the postponed period; and, as a result, taxpayers do not need to contact the Department to get this relief. The Notice cautioned, however, that the extension does not apply to any other tax types or payments on prior liabilities. Contact information is provided in the Notice in the event that a disaster area taxpayer receives a penalty notice from the Department. Additionally, the Department references in the Notice that it will work with any taxpayer who resides elsewhere but whose books, records or tax professionals are located in the disaster area. More information can be found here.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.