On November 3, 2021, the Mississippi Department of Revenue (“Department”) will hold a public hearing on its proposed amendment to the Department’s sales tax regulation on computer equipment, software, and services (Title 35.IV.5.06). The proposed rule amendment defines cloud computing, software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) and provides that taxable services include “certain services, delivered through SaaS, PaaS, IaaS and other cloud computing models” without identifying the taxable services. Further, the amendment deletes the exclusion from Mississippi’s use tax for software “maintained on a server located outside the state and accessible for use only via the Internet,” making all cloud-based software used in the state subject to tax.
The Department’s notice of the amendment describes the proposed changes as clarifications of “the tax treatment of computer software sales and services when delivered through cloud computing.” A “clarification” usually means that the Department plans to apply the changes retroactively. In addition, neither the notice of amendment nor the proposed language addresses the taxation of licenses used by customers in multiple states or how or when Mississippi will allow credits for taxes paid to another state.
The public hearing will be at 1:30 p.m. on November 3, 2021 at the Mississippi Department of Revenue, 500 Clinton Center Drive, Clinton, Mississippi 39056. Anyone wishing to speak at the hearing must send a written notification to the Office of Tax Policy (address below) at least 72 hours before the hearing. The notification should include a brief description of the speaker’s presentation and the speaker’s position on the amendment. In addition, interested parties may send written comments on the amendment to:
Mr. Sam Portera, CPA
Deputy Office Director, Tax Policy
Mississippi Department of Revenue
Post Office Box 1033
Jackson, Mississippi 39215
sam.portera@dor.ms.gov
TECHNICAL INFORMATION CONTACTS:
Brian Stromen
Principal
Ryan
763.445.4200
brian.stromen@ryan.com
Adina Christian
Director
Ryan
512.476.0022
adina.christian@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.