• Mississippi Files Final Remote Seller Use Tax Regulation
  • November 22, 2017 | Author: John F. Fletcher
  • Law Firm: Jones Walker LLP - Jackson Office
  • "Substantial economic presence" nexus standard formally embodied in regulation.

    As expected after recently having filed an economic impact statement, the Mississippi Department of Revenue on November 1 filed its final remote seller use tax regulation with the Secretary of State. The new regulation will be effective December 1, 2017, and contains numerous changes from the original proposal issued in January (see prior Jones Walker coverage here, here, here, and here). The notice contains no public hearing or comment period, so it is unlikely there will be any further revisions prior to the effective date.

    "Substantial economic presence" standard finalized.

    The final regulation retains the original $250,000 annual sales standard, providing that anyone having that level of sales into the state over the prior twelve months has "substantial economic presence" and has use tax nexus if those sales are coupled with purposeful and systematic exploitation of the market.

    The original proposal based the testing period on the previous calendar year’s sales, whereas the final version applies it on a rolling twelve-month basis. Under both versions, the collection requirement is triggered prospectively once that threshold is met, and does not apply retroactively to the sales occurring during that test period.

    As written, however, the new rolling standard could result in a seller temporarily having substantial economic presence based on a brief spike in sales, only to have them fall below that standard a few months later. It is unclear whether the Department will allow a seller in that circumstance to cancel its use tax registration until it again had a sales spike and exceeded the threshold over that rolling test period.