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Why are there multiple Mississippi State tax rates on my transaction?

Overview

When reviewing a transaction, you noticed the tax rate used was higher than the normal State rate of 7%. Expanding the line details shows two MS State Tax jurisdictions, one of 7% and one of 3.5%.

Environment

Avalara AvaTax

Resolution

  • Mississippi has special tax rules for Construction equipment and services
    • Certain tax codes, such as PM020400 for Mach & Equip (Commercial Use) - Farming Industry, will apply a second tax rate of 3.5%
  • Tax Codes for Machinery, construction equipment and services will be taxed with multiple rates in Mississippi (as of March 2015):
    • A special state rate applies to the entire vale of the item taxed with that tax code
    • A second special state rate applies to the value over $10,000
  • You see two state rates applied to the sale because there are multiple state rates being applied to a portion of the item value