Sales tax; exclude processing or interchange fees charged for electronic payment transactions from "gross proceeds of sales."

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To: Finance
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Senator(s) Johnson

SENATE BILL NO. 3191

AN ACT TO AMEND SECTION 27-65-3, MISSISSIPPI CODE OF 1972, TO 1
EXCLUDE THE AMOUNT OF ANY DEBIT CARD, CREDIT CARD OR OTHER 2
PROCESSING OR INTERCHANGE FEE CHARGED FOR AN ELECTRONIC PAYMENT 3
TRANSACTION FROM THE DEFINITION OF "GROSS PROCEEDS OF SALES"; AND 4
FOR RELATED PURPOSES. 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 6
SECTION 1. Section 27-65-3, Mississippi Code of 1972, is 7
amended as follows: 8
27-65-3. The words, terms and phrases, when used in this 9
chapter, shall have the meanings ascribed to them herein. 10
(a) "Tax Commission" or "department" means the 11
Department of Revenue of the State of Mississippi. 12
(b) "Commissioner" means the Commissioner of Revenue of 13
the Department of Revenue. 14
(c) "Person" means and includes any individual, firm, 15
copartnership, joint venture, association, corporation, promoter 16
of a temporary event, estate, trust or other group or combination 17
acting as a unit, and includes the plural as well as the singular 18
in number. "Person" shall include husband or wife, or both, where 19
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joint benefits are derived from the operation of a business taxed 20
hereunder. "Person" shall also include any state, county, 21
municipal or other agency or association engaging in a business 22
taxable under this chapter. 23
(d) "Tax year" or "taxable year" means either the 24
calendar year or the taxpayer's fiscal year. 25
(e) "Taxpayer" means any person liable for or having 26
paid any tax to the State of Mississippi under the provisions of 27
this chapter. A taxpayer is required to obtain a sales tax permit 28
under Section 27-65-27 before engaging in business in this state. 29
If a taxpayer fails to obtain a sales tax permit before engaging 30
in business in this state, the taxpayer shall pay the retail rate 31
on all purchases of tangible personal property and/or services in 32
this state, even if purchased for resale. Upon obtaining a sales 33
tax permit, a previously unregistered taxpayer shall file sales 34
tax returns for all tax periods during which he engaged in 35
business in this state without a sales tax permit, and report and 36
pay the sales tax accruing from his operation during this period 37
and any applicable penalties and interest. On such return, the 38
taxpayer may take a credit for any sales taxes paid during the 39
period he operated without a sales tax permit on a purchase that 40
would have constituted a wholesale sale if the taxpayer had a 41
sales tax permit at the time of the purchase and if proper 42
documentation exists to substantiate a wholesale sale. This 43
credit may also be allowed in any audit of the taxpayer. Any 44
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penalties and interest owed by the taxpayer on the return or in an 45
audit for a period during which he operated without a sales tax 46
permit may be determined based on the sales tax accruing from the 47
taxpayer's operation for that period after the taking of this 48
credit. 49
(f) "Sale" or "sales" includes the barter or exchange 50
of property as well as the sale thereof for money or other 51
consideration, and every closed transaction by which the title to 52
taxable property passes shall constitute a taxable event. 53
"Sale" shall also include the passing of title to property 54
for a consideration of coupons, trading stamps or by any other 55
means when redemption is subsequent to the original sale by which 56
the coupon, stamp or other obligation was created. 57
The situs of a sale for the purpose of distributing taxes to 58
municipalities shall be the same as the location of the business 59
from which the sale is made except that: 60
(i) Retail sales along a route from a vehicle or 61
otherwise by a transient vendor shall take the situs of delivery 62
to the customer. 63
(ii) The situs of wholesale sales of tangible 64
personal property taxed at wholesale rates, the amount of which is 65
allowed as a credit against the sales tax liability of the 66
retailer, shall be the same as the location of the business of the 67
retailer receiving the credit. 68
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(iii) The situs of wholesale sales of tangible 69
personal property taxed at wholesale rates, the amount of which is 70
not allowed as a credit against the sales tax liability of the 71
retailer, shall have a rural situs. 72
(iv) Income received from the renting or leasing 73
of property used for transportation purposes between cities or 74
counties shall have a rural situs. 75
(g) "Delivery charges" shall mean and include any 76
expenses incurred by a seller in acquiring merchandise for sale in 77
the regular course of business commonly known as "freight-in" or 78
"transportation costs-in." "Delivery charges" also include any 79
charges made by the seller for delivery of property sold to the 80
purchaser. 81
(h) "Gross proceeds of sales" means the value 82
proceeding or accruing from the full sale price of tangible 83
personal property, including installation charges, without any 84
deduction for delivery charges, cost of property sold, other 85
expenses or losses, or taxes of any kind except those expressly 86
exempt by this chapter. 87
"Gross proceeds of sales" includes consideration received by 88
the seller from third parties if: 89
(i) The seller actually received consideration 90
from a party other than the purchaser and the consideration is 91
directly related to a price reduction or discount on the sale; 92
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(ii) The seller has an obligation to pass the 93
price reduction or discount through to the purchaser; 94
(iii) The amount of the consideration attributable 95
to the sale is fixed and determinable by the seller at the time of 96
the sale of the item to the purchaser; and 97
(iv) One (1) of the following criteria is met: 98
1. The purchaser presents a coupon, 99
certificate or other documentation to the seller to claim a price 100
reduction or discount where the coupon, certificate or 101
documentation is authorized, distributed or granted by a third 102
party with the understanding that the third party will reimburse 103
any seller to whom the coupon, certificate or documentation is 104
presented; 105
2. The purchaser identified himself or 106
herself to the seller as a member of a group or organization 107
entitled to a price reduction or discount (a "preferred customer" 108
card that is available to any patron does not constitute 109
membership in such a group); or 110
3. The price reduction or discount is 111
identified as a third-party price reduction or discount on the 112
invoice received by the purchaser or on a coupon, certificate or 113
other documentation presented by the purchaser. 114
Where a trade-in is taken as part payment on tangible 115
personal property sold, "gross proceeds of sales" shall include 116
only the difference received between the selling price of the 117
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tangible personal property and the amount allowed for a trade-in 118
of property of the same kind. When the trade-in is subsequently 119
sold, the selling price thereof shall be included in "gross 120
proceeds of sales." 121
"Gross proceeds of sales" shall include the value of any 122
goods, wares, merchandise or property purchased at wholesale or 123
manufactured, and any mineral or natural resources produced, which 124
are withdrawn or used from an established business or from the 125
stock in trade for consumption or any other use in the business or 126
by the owner. However, "gross proceeds of sales" * * * shall not 127
include meals prepared by a restaurant and provided at no charge 128
to employees of the restaurant or donated to a charitable 129
organization that regularly provides food to the needy and the 130
indigent and which has been granted exemption from the federal 131
income tax as an organization described in Section 501(c)(3) of 132
the Internal Revenue Code of 1986. 133
"Gross proceeds of sales" shall not include bad check or 134
draft service charges as provided for in Section 97-19-57. 135
"Gross proceeds of sales" * * * shall not include finance 136
charges, carrying charges or any other addition to the selling 137
price as a result of deferred payments by the purchaser. 138
"Gross proceeds of sales" shall not include the amount of any 139
debit card, credit card or other processing or interchange fee 140
charged for an electronic payment transaction. 141
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(i) "Gross income" means the total charges for service 142
or the total receipts (actual or accrued) derived from trades, 143
business or commerce by reason of the investment of capital in the 144
business engaged in, including the sale or rental of tangible 145
personal property, compensation for labor and services performed, 146
and including the receipts from the sales of property retained as 147
toll, without any deduction for rebates, cost of property sold, 148
cost of materials used, labor costs, interest paid, losses or any 149
expense whatever. 150
"Gross income" shall also include the cost of property given 151
as compensation when the property is consumed by a person 152
performing a taxable service for the donor. 153
However, "gross income" or "gross proceeds of sales" shall 154
not be construed to include the value of goods returned by 155
customers when the total sale price is refunded either in cash or 156
by credit, or cash discounts allowed and taken on sales. Cash 157
discounts shall not include the value of trading stamps given with 158
a sale of property. 159
(j) "Tangible personal property" means personal 160
property perceptible to the human senses or by chemical analysis 161
as opposed to real property or intangibles and shall include 162
property sold on an installed basis which may become a part of 163
real or personal property. "Tangible personal property" shall 164
also include computer software but shall not include 165
electronically stored or maintained data. 166
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(k) "Installation charges" shall mean and include the 167
charge for the application of tangible personal property to real 168
or personal property without regard to whether or not it becomes a 169
part of the real property or retains its personal property 170
classification. It shall include, but not be limited to, sales in 171
place of roofing, tile, glass, carpets, drapes, fences, awnings, 172
window air-conditioning units, gasoline pumps, window guards, 173
floor coverings, carports, store fixtures, aluminum and plastic 174
siding, tombstones and similar personal property. 175
(l) "Newspaper" means a periodical which: 176
(i) Is not published primarily for advertising 177
purposes and has not contained more than seventy-five percent 178
(75%) advertising in more than one-half (1/2) of its issues during 179
any consecutive twelve-month period excluding separate advertising 180
supplements inserted into but separately identifiable from any 181
regular issue or issues; 182
(ii) Has been established and published 183
continuously for at least twelve (12) months; 184
(iii) Is regularly issued at stated intervals no 185
less frequently than once a week, bears a date of issue, and is 186
numbered consecutively; provided, however, that publication on 187
legal holidays of this state or of the United States and on 188
Saturdays and Sundays shall not be required, and failure to 189
publish not more than two (2) regular issues in any calendar year 190
shall not exclude a periodical from this definition; 191
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(iv) Is issued from a known office of publication, 192
which shall be the principal public business office of the 193
newspaper and need not be the place at which the periodical is 194
printed and a newspaper shall be deemed to be "published" at the 195
place where its known office of publication is located; 196
(v) Is formed of printed sheets; provided, 197
however, that a periodical that is reproduced by the stencil, 198
mimeograph or hectograph process shall not be considered to be a 199
"newspaper"; and 200
(vi) Is originated and published for the 201
dissemination of current news and intelligence of varied, broad 202
and general public interest, announcements and notices, opinions 203
as editorials on a regular or irregular basis, and advertising and 204
miscellaneous reading matter. 205
The term "newspaper" shall include periodicals which are 206
designed primarily for free circulation or for circulation at 207
nominal rates as well as those which are designed for circulation 208
at more than a nominal rate. 209
The term "newspaper" shall not include a publication or 210
periodical which is published, sponsored by, is directly supported 211
financially by, or is published to further the interests of, or is 212
directed to, or has a circulation restricted, in whole or in part, 213
to any particular sect, denomination, labor or fraternal 214
organization or other special group or class or citizens. 215
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For purposes of this paragraph, a periodical designed 216
primarily for free circulation or circulation at nominal rates 217
shall not be considered to be a newspaper unless such periodical 218
has made an application for such status to the department in the 219
manner prescribed by the department and has provided to the 220
department documentation satisfactory to the department showing 221
that such periodical meets the requirements of the definition of 222
the term "newspaper." However, if such periodical has been 223
determined to be a newspaper under action taken by the department 224
on or before April 11, 1996, such periodical shall be considered 225
to be a newspaper without the necessity of applying for such 226
status. A determination by the Department of Revenue that a 227
publication is a newspaper shall be limited to the application of 228
this chapter and shall not establish that the publication is a 229
newspaper for any other purpose. 230
(m) "MPC" or "Material Purchase Certificate" means a 231
certificate for which a person that is liable for the tax levy 232
under Section 27-65-21 can apply and obtain from the commissioner, 233
and when issued, entitles the holder to purchase materials and 234
services that are to become a component part of a structure to be 235
erected or repaired with no tax due. Any person taxable under 236
Section 27-65-21 who obtains an MPC for a project and purchases 237
materials and services in this state that are to become a 238
component part of a structure being erected or repaired in the 239
project and at any time pays sales tax on these purchases may, 240
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ST: Sales tax; exclude processing or
interchange fees charged for electronic payment
transactions from "gross proceeds of sales."
after obtaining the MPC for the project, take a credit against his 241
sales taxes for the sales tax paid on these purchases if proper 242
documentation exists to substantiate the payment of the sales tax 243
on the purchase of component materials and services. This credit 244
may also be allowed in any audit of the taxpayer. Any penalties 245
and interest owed by the taxpayer on the return or in the audit 246
where this credit is taken may be determined based on the sales 247
tax due after the taking of this credit. 248
SECTION 2. This act shall take effect and be in force from 249
and after July 1, 2026. 250