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A Mississippi sales tax regulation has been explained to indicate that a rebate given by a seller is considered to be a discount from the selling price when shown on the invoice and, therefore, exempt for sales tax purposes. Rebates made directly by a manufacturer, however, to the purchaser or to the seller are taxable as they are still considered part of the selling price. Buy-down payments are offered as either a sales-based or purchase-based programs. A sales-based buy down is received by a retailer from a manufacturer and is based on the number of sales of a particular product. These incentives are passed on to the consumer in the form of reduced sales prices and are a taxable component of the sale. On the other hand, a purchased-based buy-down is based on the particular product or the number of particular products the retailer holds in its inventory. These payments are considered a reduction in purchase price of the retailer and are not taxable (Mississippi Regulation, Rule 24, June 23, 2005).


The Mississippi sales tax rule on electric power, light, gas, and other fuel distributors has been updated to require that manufacturers holding a valid direct pay permit must provide the pay permit to its utility providers for all utility purchases. The manufacturer will not be charged any tax by the utility provider and will be responsible for remitting the correct tax directly to the Tax Commission. Any business not holding a direct pay permit, but eligible for the reduced 1.5% rate of tax, must contact the Tax Commission for a letter authorizing its eligibility to purchase its electricity and natural gas at the reduced rate. (Sales Tax Rule 1, effective June 23, 2005)


The State of Mississippi has passed H.B. 1668, which enacts a sales and use tax exemption for the sale and/or lease of materials, machinery, and equipment to an enterprise operating or owning listed projects under the Mississippi Major Economic Impact Act. The bill also allows for a use tax exemption in regards to the purchase of utilities by such an enterprise. The exemptions are effective retroactively to January 1, 2005. (Mississippi State Tax Commission, H.B. 1668, effective retroactively to January 1, 2005)


Direct pay permits may now be issued to public utilities by the chairman of the State Tax Commission. The permits will allow public utility companies to relieve their vendors from their obligation to collect and remit sales tax on the utility's taxable purchases. By issuing a direct pay permit, the public utility company will be responsible for use tax remittance. Currently, only taxpayers selling tangible personal property or performing certain construction activities are eligible for the permits. The law change will be effective July 1, 2005. (MS SB 2706 Laws 2005)


The Mississippi Governor has signed S.B. 2746, which, effective July 1, 2005, levies a contractor’s sales tax and provides for the issuance of a jeopardy assessment, lien, and warrant against unqualified contracts and contracts for which taxes have not been prepaid or bonded in a proper manner. The bill levies a tax equal to 3 ½% upon every person engaging or continuing in this state in the business of contracting or performing a contract or engaging in any of the activities, or similar activities, listed in the bill for a price, commission, fee or wage. The tax is levied on the total contract price or compensation received when the compensation exceeds $10,000.00. A tax rate of 1 ½% is imposed on amounts included in a contract price or compensation received in regards to the sale of manufacturing or processing machinery for a manufacturer or custom processor. Excluded from the tax is the contract price or compensation relating to contracts for personal residences; the portion of a contract exceeding $100,000,000.00 related to design or engineering services; and the contract price or compensation related to restoring, repairing, or replacing a utility distribution system that has been damaged by natural causes such as hurricanes or floods. Also included in the bill is a statement that the Mississippi State Tax Commissioner may seek a jeopardy assessment, lien, and warrant against contracts deemed unqualified or contracts in which proper taxes have not been paid before contract work begins. In this case, the term unqualified contract references a contract where a bond has not been executed. (S.B. 2746, Mississippi State Tax Commission, effective July 1, 2005)



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