Bill seeks to end accelerated sales tax system
Published: January 25,2013
Currently, taxpayers who collect sales and use taxes — which encompasses almost all of the state’s small businesses — are allowed to remit them to the state no later than the 25th of the next month. For example, May’s sales taxes have to be paid no later than June 25.
That deadline shifts in June, which is the last month of the state’s fiscal year. At least 75 percent of June taxes, for those with a monthly average of at least $20,000 in liability, have to be paid no later than June 25. That can force a small business to pay two months’ worth of sales and use taxes on the same day.
Ron Aldridge, executive director of the Mississippi chapter of small business advocacy group National Federation of Independent Businesses, is supporting the legislation.
Aldridge said the accelerated deadline for June makes it financially uncomfortable for a lot of small businesses.
“You’re losing a week there at the end of the month,” he said. “It pulls you out of your normal cash flow pattern. Anybody who’s ever owned a small business knows that any kind of disruption in your cash flow can be difficult to handle because the margins are just so thin. It can present a tremendous problem.”
That problem is exacerbated when sales taxes aren’t collected at the point of sale, such as credit card sales, Aldridge said.
Because the fiscal year ends in June, the accelerated deadline contributes revenue to the closing fiscal year by taking it from the next fiscal year, which starts July 1. It’s designed so the state can close the books at the actual end of the fiscal year, instead of waiting until the next month.
But, Aldridge said, the early deadline does not actually solve anything for the state.
“The state still gets the money, it’s just technically paid after the fiscal year is over. Really, all you’re doing is just solving a budget problem on paper.”
Gov. Phil Bryant, in his executive budget recommendation he issued in November, recommended that small businesses with less than $50,000 in average monthly tax liability be exempt from the accelerated sales tax system. Bryant reiterated that stance in Tuesday night’s State of the State.
Though both personal income and sales and use taxes are due on June 25, Bryant’s budget recommendation only specified sales and use taxes. Any reductions to the budget, under Bryant’s budget plan, would be offset by surplus funds.
In 2007, the Legislature passed and former Gov. Haley Barbour signed a law that would have raised the accelerated sales tax threshold from $20,000 to $50,000. The implementation of that law has been delayed, though, which creates the scenario in which most small businesses pay two months of taxes on one day.
To sign up for Mississippi Business Daily Updates, click here.
Top Posts & Pages
- Analyst: KiOR Columbus plant may end up sold as scrap
- College Board gives Keenum contract extension, raise
- (UPDATE) Gov. Bryant: $1.2 billion aluminum plant is a very exciting proposition for the state of Mississippi
- Hunting deer? There's an app for that
- Apple ordered to pay $23.6M for using SkyTel technology
- Humana and Bill, Hillary and Chelsea Clinton Foundation partnering
- Can Metrocenter rise from the ashes? Again
- Six out of eight universities could have higher tuitions in 2015
- Rep. Howell decides not to seek re-election to House
- LTE: With tax cuts, Gov. Bryant dismissive of least of us