Dash of SALT

Mississippi State Tax Updates

Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Mississippi.

September 18, 2023

Mississippi Department of Revenue Releases Sales Tax Notice Regarding New Tourism Tax in Eupora City

Authored by: Brandon Vance, CPA and Katie Szymanski Nguyen, CPA

On September 5, 2023, the Mississippi Department of Revenue issued Miss. Dep’t of Revenue Notice 72-23-16, which introduces a new tourism tax for the city of Eupora. Beginning October 1, 2023, hotels, motels, Airbnb accommodations, and restaurants located within Eupora, Mississippi, will be required to collect a two percent (2%) Eupora Tourism Tax in addition to the State’s seven percent (7%) retail sales tax. Consequently, this will result in a cumulative tax of nine percent (9%) on lodging and restaurant meals in the city.

If you have questions about whether your business is subject to additional sales taxes related to tourism, please reach out to a member of the Withum SALT Team.

July 24, 2023

Mississippi Issues Guidance on Purchases of Computer Software and Computer Software Services

Authored by: Brandon Vance, CPA and Katie Szymanski Nguyen, CPA

The Mississippi Department of Revenue (DOR) issued Notice 72-23-12 regarding the taxability of computer software and computer software services. Effective July 1, 2023, there is a new exemption for remotely accessed software hosted on servers located outside of Mississippi. This means that such software will no longer be subject to taxation.

Furthermore, when an invoice for software or computer software services includes both taxable and nontaxable items, purchasers can now allocate the fee or payment between these items based on a reasonable and separate identification.

Computer software and computer software service purchasers are now eligible to apply for a direct pay permit using their Mississippi Taxpayer Access Point (TAP) account. This allows purchasers to handle the tax payment directly.

Finally, Mississippi has provided further clarity by refining the definition of computer software and computer software services.

For additional detail, please refer to Notice 72-23-12.

If you have questions about whether your business needs to pay sales tax on purchases or collect and remit sales tax on sales, please reach out to a member of the Withum SALT Team.

July 18, 2023

Mississippi Annual Sales Tax Holiday

Authored by: Breea Boylan, CPA and Courtney Easterday, MS

Mississippi’s annual sales tax holiday will take place from 12:01 A.M. Friday, July 28, 2023, to Midnight Saturday, July 29, 2023. During this two-day sales-tax holiday, clothing, footwear, and/or school supplies are exempt from sales tax, provided the item’s sales price is less than $100. Items costing more than $100 remain subject to tax. The sales tax holiday is strictly for articles of clothing, footwear, or school supplies and does not apply to any accessories or other items. The following definitions apply:

  • Clothing – any article of apparel designed to be worn on the human body, including pants, shirts and blouses, dresses, coats, jackets, belts, hats, undergarments, and multiple-piece garments sold as a set.
  • Footwear – any article of apparel for human feet except for skis, swim fins, roller blades, skates, and any similar items.
  • School Supplies – items that are commonly used by a student in a course of study.

If you have questions about state sales tax holidays, please reach out to a member of the Withum SALT Team.

April 8, 2022

Mississippi Authorizes City of Fulton Restaurant Tax

On April 1, 2022, Mississippi Governor signed a bill that enables the City of Fulton to collect an additional 3% sales tax from restaurants. This act is effective immediately and will expire on and after July 1, 2026. The city of Fulton is required to place the proceeds of the restaurant tax in a dedicated to tourism promotion and the maintenance of city park and recreation properties.

February 8, 2022

Mississippi Governor Legalizes Medical Cannabis

Effective February 2, 2022, Governor Tate signed legislation authorizing the use of medical cannabis by patients with debilitating conditions. The bill provides for sales tax on purchases of medical cannabis, allows ordinary and necessary business expense deductions for expenses incurred in producing/distributing medical cannabis, and excludes medical cannabis establishments from receiving tax credits.

Excise Tax: The bill imposes an excise tax on medical cannabis cultivation facilities at a rate of 5% of the fair market value, which will be determined by the Department of Revenue no later than November 1, 2022. Beginning January 1, 2023, the Department of Revenue must recalculate and adjust the fair market value of the cannabis flower and trim bi-annually on January 1 and July 1. A dispensary must collect and remit sales tax at a rate of 7% from each retail sale of medical cannabis. The excise tax applies regardless of the ownership of the medical cannabis establishment to which the cannabis cultivation facility sells or transfers the cannabis flower or cannabis trim. As such, related party transactions are still subject to excise tax.

Sales tax on dispensaries: A dispensary is required to collect and remit sales tax levied at the rate of 7% on the gross proceeds from the retail sale of medical cannabis.

Business Expenses and Deductions: The bill provides an income tax deduction for all ordinary and necessary business expenses paid or incurred during a taxable year in carrying on a trade or business as a medical cannabis establishment, including a reasonable allowance for salaries and employee/officer compensation.

December 31, 2021

Mississippi Extends Relief to File, Pay State Taxes for Hurricane Ida Victims

On December 28, 2021, the Mississippi Department of Revenue issued a notice extending the tax relief for victims of Hurricane Ida for individual, corporate, franchise, partnership, and S corporation income taxpayers. Prior to this notice, taxpayers who were eligible for this relief had until January 3, 2022 to file their 2020 income tax returns and quarterly estimated payments. Mississippi will follow the extended federal due date and eligible taxpayers will now have until February 15, 2022 to file returns and pay any taxes that were originally due between August 28, 2021 and February 15, 2022.

March 23, 2021

Mississippi Update on Extension of Filing Deadline

The Mississippi Department of Revenue has issued a notice explaining that Mississippi will follow the federal extension to file 2020 individual income tax returns. The due date is extended from April 15, 2021 to May 17, 2021. The extension applies only to the filing of individual income tax returns and the payment of taxes due. Penalties and interest will not accrue on returns filed and payments made on or before May 17, 2021. The Department also noted that the extension does not apply to quarterly estimated payments due on April 15, 2021. (Notice 80-21-002, Miss. Dept. Rev., 03/22/2021.)

March 3, 2021

Mississippi Moving Toward Ending Personal Income Tax, Increasing Sales Tax

Mississippi is trending towards ending personal income tax and increasing state sales tax. If the proposal is passed, the bill would immediately eliminate income tax for people making less than $50,000 a year (or $100,000 for married filers), and income tax would be completely phased out by 2030. Further, the general sales tax rate would jump to 9.5% from 7% effective July 1 of this year.

April 3, 2020

Individual and Corporate Deadline

Mississippi’s Department of Revenue has extended the deadline to file and pay the 2019 individual income tax and corporate income tax to May 15, 2020. Withholding tax payments for the month of April are extended until May 15, 2020. This extension does not apply to Sales Tax, Use Tax, or any other tax types – those returns should be filed and paid on the normal due date.

Source: https://www.dor.ms.gov/Documents/COVID Extension.pdf

Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.

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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.