Mississippi Enacts Marketplace Nexus Legislation

Effective July 1, 2020, Mississippi has enacted marketplace nexus provisions. Per the legislation, a “person doing business in this state” (and thus has nexus for sales tax purposes) includes any marketplace facilitator, marketplace seller, or remote seller with sales that exceed $250,000 in any consecutive twelve-month period. A sale made through a marketplace facilitator is a sale of the marketplace facilitator and not the sale of a marketplace seller for purposes of determining whether a person exceeds the $250,000 threshold.

Per the legislation, “marketplace facilitator” means any person who facilitates a retail sale by a seller by:

• Listing or advertising for sale by the retailer in any forum, tangible personal property, services or digital goods that are subject to tax under this chapter; and
• Either directly or indirectly through agreements or arrangements with third parties collecting payment from the customer and transmitting that payment to the retailer regardless of whether the marketplace provider receives compensation or other consideration in exchange for its service.

“Marketplace seller” means a seller that makes sales through any physical or electronic marketplace owned, operated, or controlled by a marketplace facilitator, even if such seller would not have been required to collect and remit sales tax had the sale not been made through such marketplace.

“Remote seller” means a person, other than a marketplace facilitator, that does not maintain a place of business in this state and that through a forum sells tangible personal property, taxable services or specified digital products, the sale or use of which is subject to the tax imposed by this chapter.

The Department of Revenue (DOR) will audit a marketplace facilitator solely for sales made by marketplace sellers and facilitated by the marketplace facilitator. The DOR shall not audit marketplace sellers for sales facilitated by a marketplace facilitator except to the extent the marketplace facilitator seeks relief from liability.

A marketplace facilitator is relieved of liability for failure to collect and remit tax to the extent that the failure was due to incorrect or insufficient information given to the marketplace facilitator by the marketplace seller, provided that the marketplace facilitator can demonstrate it made a reasonable effort to obtain correct and sufficient information from the marketplace seller. This does not apply if the marketplace facilitator and the marketplace seller are related.

Marketplace facilitators shall collect tax on sales through its marketplace based upon the address where the tangible personal property or specified digital products are shipped or delivered. However, taxes on services sold through its marketplace shall be collected as otherwise provided.

The legislation provides that a marketplace facilitator and a marketplace seller may contractually agree to have the marketplace seller collect and remit all applicable taxes and fees if the marketplace seller:

• Has annual U.S. gross sales over $1 billion, including the gross sales of any related entities, and in the case of franchised entities, including the combined sales of all franchisees of a single franchisor;
• Provides evidence to the marketplace facilitator that it is registered in Mississippi; and
• Notifies the DOR that the marketplace seller will collect and remit all applicable taxes on its sales through the marketplace and is liable for failure to collect or remit applicable taxes on its sales.

The legislation also specifies that “retail sale” includes a sale made or facilitated by a person regularly engaged in the sale or facilitation of sales of services or tangible personal property. “Retail sale” does not include a sale by a third-party food delivery service that delivers food from an unrelated restaurant to a customer, regardless of whether the customer orders and pays for the food through the delivery service or whether the delivery service adds fees or upcharges to the price of the food. (H.B. 379, Laws 2020, effective July 1, 2020)