Published: April 3, 2023

Mississippi to Tax Electronically Delivered Software and Digital Products Beginning July 1, 2023

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On March 28, 2023, Governor Reeves of Mississippi signed legislation extending the sales tax to sales of software and other digital products. Digital products include any digital audio-visual work, digital audio work, and digital book such as music, games, reading materials, and ring tones. The tax does not apply to software stored on a server located outside of Mississippi and only accessible for use over the internet.

The bill also clarifies that computer services are taxable when they are performed in the state. When the services are performed both inside and outside the state, the taxpayer may use any reasonable formula to apportion the services to the state. Computer software services include technical design and programming of software. It also includes installing, configuring, debugging, modifying, testing, or troubleshooting computer hardware, networks, programs, or computer software.

The tax commissioner is also required to adopt rules and regulations that allow purchasers to purchase computer software or computer software services exempt from tax. The purchaser will then be responsible for remitting tax to the state. This will allow taxpayers to remit tax directly to the Department of Revenue even if they don’t have a direct pay permit.

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