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Tax Law

New Mississippi Marketplace Facilitator Law Leaves Food Delivery Services off the Menu

On June 30, Mississippi became the latest state to enact a marketplace facilitator law after Governor Tate Reeves signed House Bill 379, also known as the “Mississippi Marketplace Facilitator Act of 2020.” The law requires most marketplace facilitators to collect sales and use tax on behalf of marketplace sellers beginning on July 1, 2020. The collection requirement applies to marketplace facilitators and remote sellers that exceed $250,000 in direct or facilitated sales in a consecutive 12-month period.

Not all marketplace sales will be covered under the new law. Third-party food delivery marketplaces are explicitly excluded from the new sales tax collection requirements. In order to impose the new sales tax collection obligations, the new legislation updates Mississippi’s definition of a “retail sale” to include, in part, “a sale made or facilitated by a person regularly engaged in the sale or facilitation of sales of services or tangible personal property.” However, the law clarifies that the term “retail sale” does not include sales “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 services adds fees or upcharges for the price of the food.”

Additionally, although the new law shifts sales tax collection obligations to marketplace facilitators, it also allows marketplace sellers with over $1 billion in annual sales to retain sales tax collection and remittance obligations by agreement with the marketplace facilitator.