35 Miss. Admin. Code Pt. IV, Subpt. 11, Ch. 02 — Automobile, Truck and Truck-Tractor Dealers

100 Terms and Definitions
101 Automobiles, trucks and truck -tractors shall include only vehicles which are commonly
known to the trade as such. The term includes motor homes (self -propelled) but does not
include mobile homes, campers, trailers, semi -trailers, motorcycles, warehouse trucks,
draglines, golf carts and similar vehicles.
102 Semi-trailer for tax purposes is one that is attached to and moved by a truck-tractor.
103 Sales price or purchase price for tax purposes means the full amount received from the
sale of property, including delivery charges, manufacturers excise tax and any other
additions to the selling price, unless specifically excluded by statute. The Federal
Retailers Excise Tax on truck chassis and bodies and on truck -trailer and semi -trailer
chassis and bodies is exempt from sales tax. No distinction is made between sales of new,
used or trade-in vehicles for sales and use tax purposes, all being taxed on the difference
in the sales price and the amount allowed for a trade -in. A trade-in is limited to property
of the same kind and character as that normally carried in inventory for sale.
104 (Reserved)
200 Rate and Application of Tax
201 The special rate of tax on sales and rentals of automobiles and trucks with a gross weight
of 10,000 lbs. or less is 5%. Motor homes are also taxed at the special rate of 5% as
private carriers of passengers under Miss. Code Ann. Section 27 -65-17. Motorcycles are
taxed at the regular retail rate of tax. Truck -tractors and semi -trailers are taxed at the
special rate of 3%. Effective July 1, 2014, Miss. Code Ann. Section 27 -65-101(1)(ss)
provides an exemption for truck -tractors and semi -trailers used in interstate commerce
and registered under the International Registration Plan (IRP) or any similar reciprocity
agreement or compact relating to the proportional registration of commercial vehicles as
provided for in Miss. Code Ann. Section 27 -19-143. Retail sales or rental of other
tangible personal property are taxable at the regular retail rate of tax.
202 Special equipment already mounted on a truck, the function of which is to transport
persons or property, is taxable at the applicable rate of tax as the truck when sold as a
complete unit. If sold separately, the regular retail rate of tax will be applicable.
(Example: bus bodies, concrete mixing equipment, tanks for transportation of liquids and
the like.)
203 Equipment mounted on a vehicle so that it can be transported from place to place for the
performance of a special function while stationary is taxable at the regular retail rate of
tax whether sold as a complete unit or separately. (Example: seismographic equipment,
oil well work-over rigs, cherry pickers and the like.)
204 Electric Power Associations (EPAs) purchasing automobiles or trucks with a gross
weight of 10,000 lbs. or less, are taxed at the reduced rate of 1% plus the additional 2%
tax levied by Miss. Code Ann. Section 27 -65-17. Direct pay permits may not be used to
self-accrue this tax.
205 Accessories permanently attached to a vehicle at the time of sale, such as overdrive,
heater and radio, are taxable at the same rate as that of the vehicle. Accessories that are
not permanently attached are taxable at the regular retail rate of tax.
206 Sales between licensed new or used car dealers of merchandise (parts & accessories) for
resale at retail are exempt from sales tax. Sales of new motor vehicles to used car dealers
are taxable. Sales of merchandise to licensed leasing and rental companies for subsequent
lease or rental are likewise exempt from sales tax.
207 The sales of accessories, equipment, labor, parts and services are taxable at the regular
retail rate of tax when sold to a consumer and exempt when sold to other licensed retail
dealers for resale. Income received from the repair (labor and parts) of vehicles for
another licensed dealer where the vehicle will be placed in stock for sale is exempt.
208 Internal sales of parts and labor that are necessary to repair a vehicle in inventory are
exempt because the tax will apply on the sale of the repaired vehicle. However,
merchandise such as tires for wreckers and similar withdrawals from stock for business
use are taxable at the regular retail rate.
209 Dealers titling a vehicle for wholesaler will be required to report 5% sales tax based on
the NADA value of the vehicle, absent any valid sales invoice from the wholesaler.
210 (Reserved)
300 Service Contracts
301 The sale of a contract to provide for maintenance and/or repairs of a motor vehicle is
exempt from sales tax when sold either with the vehicle or separate from the sale of the
vehicle. These contracts are known in the industry as either a service contract, extended
warranty or other similar names and are separate from the original new car warranty as
provided by the manufacturer. Income received from the subsequent repair work
performed by the dealer under the provisions of these contracts is taxed at the regular
retail rate of tax.
302 The income received and retained by an automobile dealer derived from the sale of
maintenance and/or repair agreements to cover work performed at a specific
dealership(s), is treated as the prepayment of maintenance and repairs. The income
received from such sale is taxed at the regular retail rate of tax as any other automobile
repairs.
303 (Reserved)
400 Wrecker and Towing Service
401 Charges for wrecker or towing services where no other taxable services (repairs, storage
or other similar service) are provided are exempt from sales tax. When wrecker or towing
services are provided in connection with other services that are taxable, the total amount
is subject to the regular retail rate of tax. The separate invoicing of the wrecker or towing
services would not affect the taxability of the charges. The taxability of wrecker and
towing services is determined for each instance that includes this service and not for the
business as a whole.
402 (Reserved)
500 Warranty Repairs
501 Repairs to a vehicle under the original new vehicle manufacturers' warranty where
payment or credit is directly from the manufacturer are exempt. Rental cars provided
under the new car warranty, either from the dealer's own fleet or through a car rental
agency, are considered part of the warranty repair and not subject to sales tax or the
motor vehicle rental tax. Any part of the charge for repairs or service billed to or paid by
the customer is taxable at the regular retail rate of tax.
502 (Reserved)
600 Rebates
601 A rebate given by the dealer is considered to be a discount deductible from the sales price
when shown on the sales invoice and is exempt.
602 Rebates made directly by the manufacturer that are assigned to the dealer are taxable
under Miss. Code Ann. Section 27-65-3.
603 Incentive awards paid to the dealer by the manufacturer which do not affect the selling
price to the customer are considered to be a reduction in cost to the dealer and are not
taxable.
604 (Reserved)
700 Cars furnished by Dealers
701 A vehicle furnished free of charge or at less than an arms -length charge is taxable to the
dealer on the value of the vehicle when withdrawn from stock. This includes cars used by
owners, salesmen, dealership employees, or any other individual whom the dealership has
given a car for use. The value of the vehicle shall be determined by computing the annual
lease value of the vehicle based on its fair market value (FMV) as of the first date the
auto is made available for personal use. The FMV is determined to be the manufacturers
invoice price. This figure should then be used to determine the annual lease value
assigned by the Internal Revenue Service in absence of any other method of
determination provided by the Department. Tax at the rate of 5% should be paid on the
total lease value of all vehicles provided to individuals for personal use. No credit for tax
paid on the use of the vehicle will be allowed against the tax due once the vehicle is sold.
The total tax due should be computed on December 31st of each year and reported on the
December sales tax return due by January 20th.
702 (Reserved)
800 Rentals
801 Income from renting or leasing tangible personal property is taxed at the same rates as
sales of the same property.
802 Dealers owe no tax on the cost of property when withdrawn from inventory for lease or
rental. Sales of property that has been rented or leased are taxable on the full sales price
with no deduction allowed as a result of tax paid on rental or lease income.
803 (Reserved)
900 Repossessions
901 Repossessions shall be treated as returned merchandise and credit will be allowed only
for the uncollected part of the selling price previously reported and taxed. The subsequent
sale of the repossessed car will be taxable on the same basis as the sale of any other car.
902 Repossessions by out -of-state dealers do not cancel or void use tax liabilities which
accrue to the purchaser simultaneously with the first use or registration of the vehicle in
Mississippi.
903 (Reserved)
1000 Out-of-State Sales
1001 Sales of automobiles, trucks, truck -tractors, semi -trailers, trailers, boats, travel trailers,
motorcycles and all -terrain cycles which are exported from this state within forty -eight
(48) hours and registered and first used in another state are exempt from sales tax. A
properly executed Certificate of Interstate Sale must be maintained to substantiate sales
of boats, all -terrain cycles or other equipment not required to be registered for highway
use. A golf cart is not an all -terrain cycle and would be taxable at the seven percent (7%)
regular rate of tax at the time of purchase regardless of its intended use or modifications
made for multi-purpose use.
1002 (Reserved)
1100 Isolated, Casual or Occasional Sales
1101 The 5% rate of sales or use tax is due on motor vehicles purchased by any person, firm or
corporation from another person, firm or corporation which is not a licensed dealer.
"Motor vehicle" includes private carriers of passengers, school buses, church buses,
taxicabs, ambulances, hearses, motorcycles, private carriers of property, and private
commercial carriers of property and drays of a gross weight of ten thousand (10,000)
pounds or less. Sales or use taxes on such purchases are to be paid to the County Tax
Collector at the time the motor vehicle is registered or licensed. The 5% sales or use tax
is based on the true value of the vehicle using the most current official motor vehicle
assessment schedule as supplied by the Department as provided by Miss. Code Ann.
Section 27-65-201. Purchases of other non -business motor vehicles or property are not
taxable when purchased as isolated, casual or occasional sales.
1102 (Reserved)
1200 Purchases
1201 All purchases of tools, supplies, machinery and equipment which are bought for use in
operating the business and not for resale, or which do not become an integral part of
vehicles being repaired are taxable at the regular retail rate of sales or use tax.
1202 Purchases of vehicles, parts and other merchandise for resale are exempt from sales or
use tax.
1203 (Reserved)
1300 Records
1301 Adequate records must be maintained to substantiate tax classifications on sales and
purchases.
1302 (Reserved)
1400 Use Tax
1401 Persons who purchase vehicles, which will be registered and used in this state, from
dealers located in other states are liable for the payment of use tax at the same rate and on
the same basis as sales tax. The Mississippi use tax is payable to the County Tax
Collector if not previously paid to an authorized out -of-state dealer, registered with the
Mississippi Department of Revenue, at the time of purchase. Credit for the amount of
sales tax paid to the dealer in the other state, that retains the tax collected on the sale, is
not allowed against the Mississippi use tax due on automobiles, motor homes, trucks,
truck-tractors and semi -trailers, trailers, boats, travel trailers, motorcycles and all -terrain
cycles. Any tax credit allowed must be evidenced by proof of payment.
1402 Persons who purchase motor vehicles, which are classified as isolated, casual or
occasional sales, are liable for the payment of use tax at the same rate and on the same
basis as sales tax (see Isolated, Casual or Occasional Sales in this Rule).
1403 (Reserved)
35.IV.11.02 revised effective December 1, 2018