The Mississipi Department of Revenue issued a bulletin for retailers explaining the rules of the 2013 sales tax holiday, which takes place July 26 to 27. During the holiday, clothing and footwear items selling for less than $100 are exempt from the state sales tax.
Clothing refers to “. . . any article of apparel designed to be worn on the human body . . .,” including:
Footwear is “. . . any item of apparel for human feet except for skis, swim fins, roller blades, skates, and any similar items.”
Note: accessories are not exempt, including:
Consult the bulletin for a complete list of exempt items.
All clothing or footwear items selling for less than $100 are exempt from state sales tax, regardless of how many are sold at a time. Items costing $100 or more are subject to the state sales tax rate of 7%.
The bulletin gives specific guidance on the following types of sales:
- Rentals: rentals of clothing and footwear do not qualify for the exemption.
- Pairings of eligible and non-eligible items: if eligible and non-eligible items are normally sold as a set, the full price is subject to sales tax if the value of the non-eligible items is greater than the value of the eligible items.
- Mail, telephone and Internet sales: the same rules apply to items purchased via mail, telephone, and/or Internet as long as the purchases are made during the sales tax holiday.
For guidance on other kinds of sales, such as coupons and layaway, consult the bulletin.
Enterprise, Heidelberg, and Crenshaw have chosen not to participate in the sales tax holiday. Retailers in theses cities must charge sales tax on all purchases.
The Department of Revenue warns retailers:
Reporting and Record Keeping. Adequate records must be maintained to substantiate tax classifications of sales and purchases regarding the Sales Tax Holiday. When reporting the qualifying sales, retailers should use one of the open lines in the “Schedule of Itemized Deductions” to report the dollar amount of qualifying sales. “QSTHS” (Qualifying Sales Tax Holiday Sales) should be used to indicate the deduction.
Automatic tax rate updates and record keeping
Keeping track of changes to rates and rules can be time consuming. Getting sales tax wrong leaves a company exposed to state audit penalties. Learn more about software that automatically tracks changes to rules and rates, and gives you powerful reporting capabilities.