Understanding SaaS Taxability in Mississippi

Is SaaS Taxable in Mississippi?

As of July 1, 2023, Mississippi has explicitly exempted SaaS from sales and use tax, unless it is hosted on a server owned by the customer located in the state.

In Mississippi, guidance is also on a prospective basis, so there may be historical implications for a business.

Distinction for B2B vs. B2C

The exemption applies uniformly to both business-to-business (B2B) and business-to-consumer (B2C) transactions. There are no specific exemptions for business-related purchases; thus, all SaaS transactions are exempt from Mississippi sales tax.

Nexus Thresholds for Mississippi

Mississippi enforces economic nexus, requiring out-of-state sellers to collect sales tax if they meet specific thresholds, such as $250,000 in gross sales. There is no transaction threshold.

Sales Tax Compliance Checklist

To ensure compliance with Mississippi tax regulations:

• Register for a Sales Tax Permit: Businesses with nexus in Mississippi must register with the Mississippi Department of Revenue to obtain a sales tax permit.
• Collect and Remit Sales Tax: Once registered, collect the appropriate sales tax on taxable transactions and remit the collected taxes to the state.
• File Regular Tax Returns: Depending on your sales volume, you may be required to file monthly, quarterly, or annual sales tax returns. Timely filing is crucial to avoid penalties.

Examples of Taxable vs. Non-Taxable SaaS in Mississippi

• Non-Taxable:
  • Business Use: A company subscribes to a cloud-based accounting software for its operations. This transaction is exempt from Mississippi sales tax.
  • Personal Use: An individual subscribes to a cloud-based accounting software for personal budgeting. This transaction is exempt from Mississippi sales tax.

Additional Resources

For more information, refer to:

• Mississippi Department of Revenue: Provides comprehensive guidance on sales tax regulations and compliance.
• For insights into SaaS taxability in Mississippi, read this article we wrote.

The process can get confusing. Miles Consulting makes multi-state tax compliance simple.