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The Mississippi Department of Revenue recently amended several sales and use tax regulations to remove longstanding provisions purporting to impose use tax on third party freight charges. These changes reflect the Mississippi Supreme Court’s 2025 ruling in Miss. Dept. of Revenue v. Tennessee Gas Pipeline Company, LLC that the Department’s position was contrary to the underlying statutes. As a result, the Department is prohibited from assessing use tax on shipping, delivery, or freight charges paid to third parties other than the seller of goods.
The updated regulations are as follows:
- Mileage, Delivery Charges, and Rebilled Expenses - Miss. Admin. Code 35.IV.2.03(101)
- Manufacturers and Custom Processors - Miss. Admin. Code 35.IV.7.03(506)
- Food and Beverage / Soft Drinks - Miss. Admin. Code 35.IV.9.01(110)
The effective date of these changes will be August 3, 2026, but judicial prohibition against taxing these charges predates that effective date.
These amendments are a good reminder that taxpayers should review their internal use tax accrual procedures to reflect the holding in the Tennessee Gas Pipeline case, as numerous companies have been self-accruing on these charges for many years in response to prior Department audits and guidance.
The effective date of these changes will be August 3, 2026, but judicial prohibition against taxing these charges predates that effective date.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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