This post is for online sellers with ties (either actual or potential) to Mississippi. Hopefully this will give you a better idea of when you’re required to collect sales tax in Mississippi and how much to collect. I’ve based the following cases on the most common scenarios we see with our TaxJar customers. As always, if you and your business don’t fit into any of the following scenarios, your best option to is contact a tax professional and get some guidance.
Online sellers without any ties to Mississippi
If you’re an online seller living in a state other than Mississippi and your business has no presence in the state (no inventory, no salespeople) then you can stop reading this post. Go treat yourself and do something fun because you’re not required to collect sales tax in Mississippi.
Online sellers living in Mississippi
If you’re an online seller living in Mississippi then it’s probably safe to assume that your business is also based there as well. If that’s true then your business has sales tax nexus to the state. That means you’re required to register the business with the Department of Revenue. Registration is free. This also means you need to begin collecting sales tax on orders shipped to addresses in Mississippi. I’ll go through how to determine how much sales tax you’re required to collect a bit later in the post.
Out-of-state online sellers using a fulfillment service
Let’s say you live in Nevada (or any state other than Mississippi) and you use a fulfillment service that warehouses and ships your inventory from a location in Mississippi. According to Mississippi, that inventory gives your business nexus to the state. That means you’re required to register your business with the state and collect sales tax on taxable items shipped to customers in Mississippi – just like if you actually lived and operated your business within state lines. In a discussion I had with the state’s Department of Revenue, I was directed to read Mississippi statue 27-67-3, part “j” (below) as proof that inventory counts as nexus:
Collecting sales tax in Mississippi (Hint: it’s easy!)
If you’re still reading this post you’re about to get good news. Unlike a lot of other states, the fine state of Mississippi has made calculating the correct sales tax rate simple. All you need to do is remember the number 7.0. No matter where you’re business is located, or where your taxable items are being shipped within the state, all you need to do is collect 7.0 percent. Why? Because Mississippi does not impose a local sales tax. So the rate never changes.
So, for example. Let’s say you live and operate your business in Biloxi and you ship an item to Lexington, Mississippi. You’re required to collect sales tax at a rate of 7.0 percent.
Now let’s say you live in Charlotte, North Carolina and use a fulfillment service with a warehouse in Starkville, MS. You’ll collect sales tax at a rate of 7.0 percent on items that get shipped from that warehouse to customers in Mississippi. Summary: if your business has nexus, collect 7.0 percent
If you live and operate your business in Mississippi or your business has nexus in the state (most often through third-party fulfillment), then you’re required to register your business with the state and collect sales tax on taxable items shipped to customers in the state. The sales tax rate you charge is always 7.0 percent.