Starting Feb. 1, online retail giant Amazon will begin collecting sales tax from Mississippi customers.
The Mississippi Department of Revenue quietly made the announcement on the agency’s Facebook page Tuesday evening: “Commissioner (Herb) Frierson stated ‘I appreciate Amazon for voluntarily stepping forward to collect the Mississippi sales tax. I hope that other e-retailers will follow the lead of Amazon. A special thanks to Department of Revenue Associate Commissioner Meg Bartlett for her work with Amazon to secure this agreement.’
Frierson confirmed the move to collect the 7 percent tax when contacted by Mississippi Today.
“Nah, it’s not fake news. That’s real,” Frierson said.
Blake Wilson, president of Mississippi Economic Council, the state’s chamber of commerce, called the policy “a landmark move” Tuesday evening and said the state would reap benefits of the added sales tax revenue “for years to come.”
“It does three things,” Wilson said. “It takes a step toward leveling the playing field, which is welcome to local and state retailers with brick and mortar businesses here. Two, it’s going to increase revenues for the state at a time that we really need it, particularly in a state that’s extremely sales tax dependent. And three, it’s going to set an example for other online retailers to do the same.”
Frierson could not say how much the tax is estimated to generate, just that it would be substantial.
Amazon engaged Mississippi, Frierson said, so the move did not require legislative approval because the company volunteered to charge the tax and remit the fees back to the state.
A group of lawmakers met regularly this summer discussing Mississippi’s tax policy and mulling potential reform options. Internet sales tax was a consistent topic of conversation. Tax Foundation economist Nicole Kaeding urged lawmakers several times in those meetings to hold off on adopting any sort of internet sales tax.
Congress is currently mulling a number of bills that would more uniformly regulate online transactions. Kaeding said the Tax Foundation’s stance on the issue is that Congress should regulate internet sales because they are considered “interstate sales,” and she cited potential legal problems if the state were to introduce its own legislation on the issue.
In one of the tax group meetings, Rep. Mark Baker, R-Brandon, suggested Mississippi follow Alabama’s lead and pass a law that would tax internet sales despite future Congressional decisions or potential litigation.
“I believe we should follow Alabama as closely as possible and get ourselves in line for litigation,” Baker said in October.
Alabama’s legislation, passed in 2015, requires Amazon to collect that state’s 8 percent sales tax on purchases made on the site. The legislation went into effect Nov. 1, 2016, and revenue officials there say it will generate $40-$50 million annually starting this fiscal year.
Lawmakers in Alabama earmark 75 percent of the revenue to the state’s general fund budget.
Mississippi Attorney General Jim Hood has also said he backs online sales tax collection.
“If local stores are unable to compete with out-of-state online retailers, we lose jobs, an important tax base and a critical investment in our communities. We’re asking the Supreme Court to even the playing field for merchants and to allow the states to gain the revenue that should be due to them,” Hood said in a November press release.
Amazon did not immediately respond to a request for comment.
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