Food Delivery Services Exempt in Mississippi

As a result of Mississippi’s marketplace nexus legislation which became effective on July 1, 2020, Mississippi sales tax no longer applies to sales of food through third-party delivery services that allow customers to order food to be delivered from a restaurant and pay for the food through the delivery service’s app or website. The marketplace nexus legislation removed the sale of food made through a third-party delivery service from the definition of a “retail sale.” Restaurants will charge the regular retail tax and any applicable local taxes on the selling price charged by the restaurant for the food to the third party delivery service. The sale of the food to the end customer will not be subject to tax.  Tips paid to the delivery driver of the third-party delivery services are exempt.

Note that food delivery service companies that maintain their own inventory of items for sale or perform a combination of third-party deliveries and direct sales of items to customers are required to register to collect and remit sales tax on sales from their own inventory. Any food delivery service making direct sales is required to register to collect and remit state and applicable local sales taxes on the entire charge for the food and delivery. Sales tax also applies to delivery charges and any other charges added by the delivery service related to sales of items from their own inventory. Tips that are not required but are at the discretion of the customer are exempt. Food delivery services that maintain their own inventory of items for sale and deliver to customers in more than one city are required to register as a “transient vendor” and will be required to file a distribution of sales by city report with the monthly sales tax return. (Notice 72-20-09, September 16, 2020, Mississippi Department of Revenue)

Posted on September 29, 2020