If you live in Mississippi or run a business in this state, you need to file tax returns with the Mississippi Department of Revenue. The DOR administers and collects individual income tax as well as business taxes such as withholding, sales and use, corporate tax, and franchise tax. It also handles a variety of special taxes for beer, tobacco, gaming, and more.
The DOR can assess penalties and take collection actions against you if you don’t pay. If you get behind on business taxes, the state may even suspend your operations. Dealing with state tax issues can sometimes be even worse than dealing with the IRS. To ensure you get the best help possible, you should hire someone with experience working with your state’s DOR.
At Damien’s Law, we’re based in Mississippi, and we have extensive experience helping individual and business taxpayers deal with the IRS and the MS DOR. We also work extensively in Tennessee, with offices in Memphis. To get help, contact us today. In the meantime, here’s a guide to tax essentials in Mississippi.
How to Pay MS Income Taxes
You can send in payments when you file your state tax returns through the mail or you can request to have payments directly debited from your checking account when you e-file or mail paper returns. You can also make payments online for the following:
- Tax returns
- Estimated tax payments
What If You Can’t Pay in Full?
If you cannot pay your MS individual income tax in full, you should explore payments or settlement options. Businesses need to contact the DOR directly or work with a tax professional if they can’t afford to pay — the rules vary for individuals and businesses.
Payment Plan on MS Income Taxes
The DOR may be willing to give you a monthly payment plan on your individual income taxes. However, you must owe less than $3,000, and you must be able to pay off the bill within 12 months. Additionally, you can only qualify if you’ve been compliant with the state’s tax rules for the last five years and you haven’t been in an installment agreement for at least five years.
MS Offer in Compromise — Tax Settlement
The MS DOR is willing to settle state income tax debts for certain taxpayers who cannot afford to pay in full. This is called an offer in compromise, and when you apply, you need to provide details about your financial situation so that the state can decide whether or not to waive a portion of your bill.
For the MS DOR to approve your offer, your offer generally must include the equity in all of your assets, but you don’t have to include the following:
- Up to $75,000 in homestead equity.
- Up to $10,000 in vehicle equity per taxpayer.
- Up to $10,000 in personal property, such as clothing, furniture, etc.
In Mississippi, only individuals can apply for an offer in compromise, and you can’t be self-employed. If you need help settling business taxes, you should reach out to a tax attorney. When you apply, you should include the greater of $100 or a 20% downpayment. If the DOR denies your request, it will apply this amount to your bill.
Voluntary Disclosure for Unfiled MS Tax Returns
Have you forgotten to file MS returns? Think you should have filed returns but didn’t? Then, you may want to look into the state’s Voluntary Disclosure Program (VPD). The VPD gives taxpayers the chance to come forward on their own, and in exchange, the department waives penalties on their account.
When you hire a tax attorney to help you, you can start the process anonymously. Then, when you know that you qualify, you can share your name with the department and pay any tax liability associated with the tax returns. This program applies to income tax, corporate and franchise tax, sales and use tax, and withholding tax. You can only qualify if the DOR hasn’t contacted you about the unfiled returns.
Mississippi Tax Audits
Generally, you don’t have to worry about a state tax audit on your individual income tax return. However, if the IRS makes changes to your return, you are supposed to update your state return. In most cases, the DOR will just automatically adjust your personal income tax return and send you a notice if you owe money.
The DOR commonly audits business tax returns. Your business may be randomly selected for an audit, or the DOR may select you based on potential risks spotted on your tax return. If you’re selected for an audit, you will need to provide the auditor with a variety of financial documents to back up the information on your income tax return.
Payment Plans on Audit Assessments
If the DOR assesses a tax against your business during an audit, you should try to pay it in full. Alternatively, you can request a payment plan, but usually, the DOR requires you to pay one-third down and then pay off the balance within six months.
What If You Don’t Pay Taxes in MS?
If you don’t pay your MS personal or business taxes, the DOR can attempt to collect the money without your cooperation. When this happens, the DOR will also add collection costs to your bill. Here are the state’s main involuntary collection methods.
Penalties for Late Tax Payments
If you don’t pay your taxes on time, the MS DOR will assess a late payment penalty of 0.5% of the unpaid taxes for every month you are late. This can get up to 25% of your balance. Additionally, you will incur interest at a rate of 0.5% per month. There is no cap on the interest. It will continue to accrue until you pay.
MS State Tax Lien
A lien is a legal claim against your assets for the amount of your tax debt plus interest and penalties. It is a public record, and it attaches to all of your current and future assets. If you give away an asset, the lien will still be attached to it. Similarly, if you inherit or receive an asset, the lien will automatically attach to that.
Lenders/creditors and other interested parties can easily see if someone has a tax lien. MS state tax liens are recorded in the county register’s office. There is also a public database on the DOR’s website.
The state also has the right to garnish your wages if you don’t pay your taxes. If this happens, the DOR will send a letter to your employer, telling them to garnish your wages until the tax debt is paid in full.
The MS DOR can seize your assets or bank accounts for unpaid taxes. Before implementing a levy, the DOR must send a notice to your last known address.
FAQs About MS Taxes
The MS tax code is very broad, and people can face a variety of problems and complications. Here are some additional questions that aren’t covered above. If you have a question that isn’t answered here, please contact us directly.
Does MS have an estate tax?
Mississippi has not had an estate tax since January 1, 2005. Prior to that, the state levied an estate tax on estates with value over a certain threshold based on the IRS’s estate tax exemption. However, if you live in Mississippi and have an estate worth over a certain threshold, you may face the federal estate tax.
Where’s my Mississippi income tax refund?
You can check the status of your MS tax refund on the DOR’s website. You need your Social Security Number and the amount of your refund.
Can I be held personally liable for corporate tax debts?
In Mississippi, the DOR can help corporate officers, shareholders, and employees with fiscal responsibilities liable for corporate tax debts. Even if the corporation is dissolved, terminated, or bankrupt, the DOR can still hold individuals responsible for its debts. The corporate veil does not necessarily protect you from these debts, and if you’re dealing with business tax debts, you should consult with a specialist.
How do you file back taxes in MS?
Start by gathering financial details related to your return. Then, go to the MS DOR website and download the tax forms for the years that you need to file. Consider hiring a tax attorney who has experience with the MS DOR or who offers historical bookkeeping to help you reconstruct financial details.
Get Help From a Mississippi Tax Attorney
At Damien’s Law, we have offices in Mississippi and Tennessee, and we can help you navigate state tax issues as well as federal tax concerns. To get help, contact us today. We’ll start with a free consultation and help you decide the best way forward for you