The Mississippi Department of Revenue’s recent flurry of regulatory activity continues unabated with a number of proposals and developments, primarily in the sales and use tax arena. With its most recent filings, the Department appears to take aim at remote internet sellers who have not voluntarily registered with the Department under its widely publicized “economic nexus” use tax proposals. Commercial construction contractors also have numerous substantive changes to consider, including a new 10 percent penalty regime that could apply even if all taxes are timely paid and even in some tax overpayment situations.

Newly Proposed Amendments

  • Contractor’s Tax Rules and Penalties. On June 21, 2017, the Department issued a notice that it intended to amend Reg. 35.IV.10.01 concerning application of the contractor’s tax and penalties for failing to prequalify a taxable contract. A public hearing will be held on Wednesday, July 26, 2017, at 2:30 p.m. Continue reading >

Economic Impact Statements

The Department has come under sharp public criticism recently over the fact that it has never issued an economic impact statement for any of its proposed regulations or amendments, in spite of the fact that such statements are explicitly required under Mississippi’s Administrative Procedures Act. In response to this criticism, the Department has begun issuing those statements, but, as seen below, so far it has concluded none of its amendments and new regulations pose any additional economic burden on taxpayers.

  • Airbnb, VRBO, etc. – Economic Impact Statement. On March 24, 2017, the Department proposed to amend Reg. 35.IV.5.01 addressing the short-term rental of homes and other dwelling facilities for purposes of levying the state’s sales tax on “hotels.” A public hearing was held on that regulation on April 26, 2017. Under that proposed amendment, offering a room or home for rent on a short-term basis renders it taxable if the facility is “known to the trade” as a hotel or motel. The regulation now provides that advertising the room or home by the owner or through a third party would render it “known to the trade” for purposes of rendering that rental taxable. Continue reading >
  • Prepared foodsEconomic Impact Statement. On March 24, 2017, the Department proposed to amend Reg. 35.IV.9.02 attempting to define what constitutes “prepared foods” for purposes of local sales taxes on those items, as that term was not previously defined in the statutes or regulations. A public hearing was held on that regulation on April 26, 2017. Under that proposed amendment, prepared foods include (a) food made to order upon the customer’s request; (b) food sold in a heated state or heated by the seller; (c) two or more food ingredients mixed or combined by the seller for sale as a single item, but not including food that is only cut, repackaged, or pasteurized by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the Food and Drug Administration in Chapter 3, part 401.11, of its Food Code so as to prevent food-borne illnesses; or (d) food sold with eating utensils “provided by the seller,” including plates, knives, forks, spoons, glasses, cups, napkins, or straws. Continue reading >
  • Printing industryEconomic Impact Statement. On March 24, 2017, the Department proposed to amend Reg. 35.IV.4.05 addressing customer use of printing equipment and printed products delivered out of state. A public hearing was held on that regulation on April 26, 2017. Under that proposed amendment, the term “Printer” includes publishers and other producers or reproducers of lettering or images of any kind on paper, printing plates, or other material. Providing copiers, printers, or other machinery in the owner’s place of business for use by customers who make their own printed material for a fee does not fall under the term “Printer.” The regulation also clarified that printed products that are delivered outside of this state are exempt from sales tax; specified that computers, digital equipment, and software used in the printing process is subject to the reduced 1.5 percent tax rate; and that electric power and other fuels used in the process are fully exempt in accordance with recent statutory changes. New language in the regulation specified that other forms of printing equipment such as inserters or mail sorting equipment, as well as purchases of copiers and other equipment provided for use by customers who make their own printed material, are taxable at the regular retail rate of tax. Continue reading >

Other Pending Actions

Final action remains to be taken on numerous other previously issued regulatory amendments for which public hearings have already been held. Those proposals include the following… Continue reading >

Any taxpayer who has questions or concerns about these or any other regulatory actions is encouraged to attend the public hearings and/or submit written comments to the Department. Members of the Jones Walker Tax & Estates Practice Group are available to answer questions about that process or to assist any taxpayers in assessing the impact or likely application of these proposals to taxpayers’ particular circumstances.