Effective December 1, 2017, Mississippi will be implementing a Rule requiring sellers lacking a physical presence in the state to collect sales tax if the sales into the state exceed $250,000 for the prior twelve months.
By way of background, the United States Supreme Court has held a state can only force a seller to collect sales tax if the seller has a physical presence in the state. Here, the Mississippi Department of Revenue appears to be directly and purposefully contradicting this holding. In fact, the Commissioner of the Department of Revenue is apparently personally aware of the contradiction but since the United States Supreme Court might overturn its position, then the Commissioner believes the Department is on solid ground. The Department believes they have the authority to implement and immediately enforce this Rule based on the Department’s interpretation on existing statutes.
An interesting perspective comes in with regards to Mississippi House Bill 480. This bill would have changed Mississippi’s nexus statute and been similar to the Rule being implemented by the Department. However, the bill died in committee. It is curious why the legislature would kill a bill that could bring more revenues into the state, unless the legislature potentially thought the bill would have been unconstitutional. It is also perplexing why the legislature thought the bill was even necessary in the first place if the Department of Revenue already had the authority based on existing statutes.
In any respect, the Rule is being implemented and immediately enforced. It is almost certain that various challenges will come against the Department as a result of the Department’s enforcement of the Rule. Will the state courts uphold the United States Supreme Court precedent? Or will another state go rouge?
A copy of the Rule can be found here.
About the Author: Gerald “Jerry” Donnini II is a partner of the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Donnini concentrates in the area of Florida and Federal tax matters, with a heavy emphasis on the tobacco, convenience store and petroleum industries. He also handles a myriad of multi-state state and local tax issues. Mr. Donnini is a co-author for CCH’s Expert Treatise Library: State Sales and Use Tax and writes extensively on multi-state tax issues for SalesTaxSupport.com.
ADDITIONAL ARTICLES TO READ
ANOTHER TAX AMNESTY FOR AMAZON FBA SELLERS IN THE WORKS?, published November 26, 2017, by Jerry Donnini, Esq.
THE VOLUNTARY DISCLOSURE PROGRAM, published October 11, 2017, by Jerry Donnini, Esq.
STATES OFFER AMNESTY FOR FBA AMAZON PRORGAM, published August 13, 2017, by Jerry Donnini, Esq.
Tennessee Jumps on Economic Nexus Train, published March 13, 2017, by Jerry Donnini, Esq.