Mississippi Sales Tax Penalties & Interest Checklist
Understanding Sales Tax Penalties and Interest
Sales tax penalties and interest are charged by the Mississippi Department of Revenue, adding to unpaid sales tax obligations. The state applies a penalty when you fail to file a return on time, fail to pay taxes on time, or underpay the amount owed, while interest accrues monthly on the unpaid tax amount and continues to grow until you pay the debt in full.
Together, penalties and interest can increase your total tax debt significantly. A $1,000 unpaid sales tax liability can grow to $1,200 or more, depending on how long it remains unpaid and which penalties apply.
Why Mississippi Imposes These Charges
Mississippi applies penalties and interest according to state tax law to encourage the timely filing and payment of sales taxes. When you miss a deadline or underpay, the state applies penalties as a consequence of non-compliance, and interest accrues automatically to compensate the state for the delayed use of tax revenue.
Common triggers for penalties include late filing, late payment, underpayment of tax, or filing an incorrect return. The Department of Revenue calculates and applies the Mississippi sales tax penalty and interest based on the specific violation and the number of days the obligation remains unpaid.
Current Penalty and Interest Rates
The penalty for late filing or late payment is $50 or 10% of the tax due, whichever is greater.
Mississippi charges a 10 percent sales tax penalty after you receive a 60-day delinquent notice or when you make a payment after the due date.
Interest accrues at 0.5% per month on the unpaid balance for taxes assessed after January 1,
2019. Your unpaid balance will continue to accumulate the Mississippi sales tax at 0.5 percent monthly interest until you pay the full amount owed, and the penalty applies when the failure to pay is due to negligence and determined by tax regulations to be without intent to defraud.
Enforcement Actions for Unpaid Debt
If you do not address penalties and interest notices, the Department of Revenue sends follow-up notices requesting payment. Mississippi statutes specify that you receive written notice and a demand for payment within 60 days from when the state mails or hand delivers the notice.
After the 60-day period expires and you have not filed a timely appeal, the Commissioner may file a notice of tax lien with the circuit clerk of the county where you reside or own property.
Possible actions include filing a tax lien against your property, initiating wage garnishment, suspending your business license, or referring the case for court action, all of which reflect escalating tax compliance measures.
What a Notice Does Not Mean
Receiving a penalty and interest notice does not mean the state has filed a lien or taken court action yet. The notice does not automatically mean your business license will be suspended or your wages will be garnished, and tax penalties do not indicate criminal prosecution.
Steps to Take After Receiving a Notice
You must take immediate action when you receive a penalty and interest notice from the
Mississippi Department of Revenue. Follow these steps to address the situation properly and
maintain tax compliance
- Locate the official notice from the Mississippi Department of Revenue and confirm it is
addressed to the correct business or individual.
- Note the date the notice was issued, the tax period, and the original sales tax amount
owed.
- Read the notice completely to understand which penalties apply and identify the total
balance owed.
- Review your own sales tax records for the period in question and verify whether you filed
a return for that period.
- Confirm whether the sales tax return was filed on time and verify the sales tax amount
reported on your return.
- Compare your records to the amount shown on the state notice and assess any tax
liabilities.
- Assess whether the penalty is for late filing, late payment, underpayment, or a filing
error.
- Contact the Sales Tax Division at the phone number on your notice to ask about the
specific penalties applied and how they were calculated under current tax regulations.
Gathering Documentation and Requesting Information
Request an updated account statement showing the current total balance owed, including all interest and penalty charges accrued to date, and the current rate of interest. Gather all sales tax returns you filed for the relevant period, proof of payment, records showing when you filed the return, and any correspondence with the state to demonstrate tax compliance efforts.
Response and Resolution Options
Prepare a written response explaining your situation and your position regarding any penalties assessed. If you dispute the tax penalties, prepare a written explanation of why and include documentation supporting your claim that addresses the specific tax liabilities in question.
Mississippi offers installment agreements for taxpayers who owe at least $75 and cannot pay immediately. Taxpayers owing between $75 and $3,000 can spread payments over 12 months through payment plans, while those owing more than $3,000 who have an installment agreement with the IRS can spread payments over up to 60 months.
Submitting Your Response
Mail your response to the address shown on the notice and include your business name, sales tax account number, and a copy of the notice you received. Keep a copy of everything you send and consider sending by certified mail to confirm delivery and establish tax compliance records.
Document the date and name of any state employee you spoke with, and keep notes of phone call discussions regarding interest and penalty calculations. Save all written responses the state sends to you about your sales tax return.
Tax Lien Procedures
A notice of tax lien becomes a judgment on the judgment roll when filed with the circuit clerk.
This judgment serves as authority for the issuance of writs of execution, writs of attachment, writs of garnishment, or other remedial writs for collecting outstanding tax liabilities, and a tax lien remains valid for seven years from the date of filing.
Notices of tax liens may be refiled indefinitely by the Commissioner in seven-year increments.
Tax liens continue to accrue interest during the enforcement period based on the applicable rate of interest.
Common Mistakes to Avoid
Do not ignore the notice or delay addressing it, as this often results in escalated enforcement action. Mark any deadlines mentioned in the notice on a calendar to avoid missing response dates.
Include your complete account number and tax period when requesting information from the state or submitting documents to ensure proper application to your tax liabilities. Save copies of all correspondence and documents, as failing to keep records makes it difficult to prove tax compliance efforts.
Address past penalty and interest balances separately from current sales tax return filings to maintain clear tax compliance records. Filing your current sales tax return does not resolve a past penalty and interest balance.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
We help with
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
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