35 Miss. Admin. Code Pt. IV, Subpt. 6, Ch. 04 — Water

100 Levy
101 Pursuant to Miss. Code Ann. Section 27 -65-19(1)(a) sales to consumers of potable water
and services related thereto by rural water associations, municipalities, privately owned
businesses, stock companies or any other persons are taxable at the regular retail rate of
sales tax, except as otherwise provided. These sales are exempt when sold for residential,
noncommercial, nonagricultural use.
102 (Reserved)
200 Residential Usage
201 In order to qualify for the residential exemption, the water must be sold to, billed to, and
paid for by the homeowner or resident of the facility. Residential customers may include,
but are not limited to, privately owned hunting and fishing camps, summer homes,
cabins, or apartments.
202 Hunting or fishing camps that provide hunts and/or accommodations for a fee are not
allowed the residential exemption and are subject to the regular retail rate of tax. Vacant
apartments with water being billed to the apartment complex or manager are not eligible
for the residential exemption. Private homes or residences owned by a business or
corporation that are used for commercial purposes and that may be used to provide
overnight stay on a temporary or transient basis are subject to the regular retail rate of
tax. Such common establishments include bed & breakfast facilities.
203 Apartments rented to non -transient customers where water is sold to, billed to and paid
for by the apartment owner are eligible for the residential exemption as long as the water
is separately metered between residential and commercial use.
204 Any apartment or home that has mixed usage (residential/commercial) must be taxed at
the regular retail rate unless there is a separate meter for the business (ex. business shop,
poultry farm, commercial barn, repair garage, etc.). This provision does not include
homes that also contain a home office.
205 Charges billed to an apartment owner or homeowner's association for commercial use in
common areas such as swimming pools, recreational facilities, leasing offices,
clubhouses and irrigation sprinkler systems are not residential usage and are taxable at
the regular retail rate of tax.
206 (Reserved)
300 Exemptions
301 Sales of water are not subject to sales tax when sold to a qualified exempt organization
described in Mississippi statute.
302 Pursuant to Miss. Code Ann. Section 27-65-19(1)(a)(ii) sales of water to a church exempt
from federal income taxation under 26 USCS Section 501(C)(3) shall be excluded from
taxable gross income of the business if the exempt sales are utilized on property that is
primarily used for religious or educational purposes. Any church purchasing water may
sign an affidavit attesting to the fact that they are exempt from federal taxation and that
they qualify to be exempt from sales tax. Utility providers can accept this affidavit or the
501(c)(3) certificate from the Internal Revenue Service as evidence that the church
qualifies for the exemption.
303 Manufacturers holding a valid direct pay permit must provide their direct pay permit to
its utility providers. The manufacturer will not be charged any tax by the utility provider
but will be responsible for remitting the correct tax directly to the Department of
Revenue. Utility companies must keep their customers direct pay permit or affidavit as
documentation in order to sell water for non-residential purposes exempt.
304 (Reserved)
400 Taxability of Other Income
401 All receipts from customers, which are not refundable or which are not investments in
marketable equities are considered to be gross income, taxable at the appropriate rate
applicable to the customer. Examples are:

# 1.

Charges for line extension

# 2.

Charges for setting or installing meter

# 3.

Connection or reconnection charges, including sterilization, inspection fees, tap on
fees, etc.

# 4.

Non-refundable membership fees

# 5.

Plumbing services on customer's property

# 6.

Water sales, including fire protection sprinkler charges
402 Any of the above charges made to a residential customer are exempt when billed by the
utility company. Any charges for the above listed services performed by a plumber are
taxable pursuant to Miss. Code Ann. Section 27 -65-23. Any charges for line extensions
or relocations made during construction of a residence are taxable at the regular retail rate
of tax when billed to the contractor. Charges for water billed to the contractor for
temporary use during construction is also taxable at the regular retail rate of tax.
403 Sales of appliances and the installation or servicing thereof, as well as sales of any other
merchandise to residential consumers are taxable at the regular retail rate of tax. This
includes accommodation sales and sales to employees.
404 Nontaxable Income:
1. Grants in Aid of Construction (Government, private foundations, or disinterested
parties)
2. Investment income
3. Meter deposits (refundable)
4. Permit charges on plumbing installations
5. Real estate rentals
6. Refundable membership fees

# 7.

Reimbursement for line relocation

# 8.

Sales or exchanges of water between public utilities

# 9.

Scrap sales

# 10.

Sewage charges if separately itemized
405 (Reserved)
500 Purchases
501 Purchases of equipment, chemicals and other supplies by privately owned water systems
are taxed at the regular retail rate of sales or use tax except that purchases of chlorine,
sodium fluoride or other chemicals which, after being added, will remain in the water to
the point of the sale for ultimate use are exempt from sales tax. Purchases of tangible
personal property and services which are used in the or dinary and necessary operation of
nonprofit water associations or cor porations and municipally owned and operated
systems are exempt from tax.
502 All other sales and purchases claimed as exempt must be substan tiated by sales invoices
or other records approved by the Commissioner.
503 (Reserved)
600 Filing Requirements
601 Any person making taxable sales of potable water must complete the Distribution of
Sales Tax by Cities Schedule, part of the sales tax return filing. The 2% tax discount
does not apply to sales of potable water. Adequate records must be maintained to
substantiate tax classifications.
602 (Reserved)