The following is intended to provide general information concerning a frequently asked question about taxes administered by the Mississippi Department of Revenue (DOR.) It is an informal interpretation of the tax law and is not intended to serve as a rule, regulation, declaratory opinion, or letter ruling. Legislation, regulations, court decisions, notices and announcements could affect the accuracy of this information. Please refer to the Mississippi Code Annotated and the Mississippi Administrative Code for the most current version of the law and administrative procedures.
- How are businesses selected for audit?
The Department of Revenue uses systematic methods and electronic data to evaluate and determine those taxpayers who are at potential risk for underreporting and/or underpaying sales, use, corporate, withholding taxes and all other taxes collected by the Mississippi Department of Revenue.
- How will I be notified that my business has been selected for audit?
A Department of Revenue auditor contacts businesses/persons either by phone and/or by letter. Once initial contact has been established, discussions will follow regarding audit periods, accounting records, sampling the accounting records, and where the audit will be conducted. These discussions may be by phone or during a face-to-face meeting.
The Office of Audit and Compliance recognizes that many companies maintain their accounting records in electronic format. If any of the records can be provided electronically, the audit time at your business location may be substantially reduced. Furthermore, providing records in electronic format also reduces the risks associated with sampling and increases the accuracy of the audit.
- Should I have my accountant or attorney at the audit?
It is not necessary for your accountant or attorney to be present during an audit. In order for the auditor to discuss the audit with a third party, the Department of Revenue requires you to authorize your representative by signing a power of attorney form. The form may be found on the Department of Revenue website or just click the link.
- How long will the auditor be at my business? Does the auditor need to come to my business to conduct the audit?
The length of time an auditor will be at your business depends on several factors, such as the complexity of the records. Department of Revenue audits are normally conducted at your business site, although other options are available. An audit can be conducted at the Department of Revenue office using electronic data provided by you or at your accountant’s office.
- How long should I keep my records for audit purposes?
The Department of Revenue recommends that records be retained for a minimum of 4 years or as long as necessary to prove that a liability does not exist for periods under audit.
- Do the auditors use sampling methods?
Yes, in some cases. Audit sampling generally benefits both the taxpayer and the Department of Revenue by reducing the time necessary to complete the audit and reducing your time and effort in retrieving documents for the audit.
Some factors that will affect the Department of Revenue’s ability to perform a sample of your records include the number of invoices and access to records.
- Why do auditors ask to review my federal income tax returns?
An auditor will examine your federal income tax return to compare the information on the federal return with the state’s income and sales tax returns, and the sales recorded in your records. The depreciation schedule is also examined to determine if there were sales and purchases of fixed assets during the audit period.
- Who do I call if I have questions or concerns regarding the audit?
The first step is to thoroughly discuss the audit findings with the auditor. We encourage you to ask the auditor questions concerning anything that is not clear to you. If you cannot come to an agreement, request a meeting with the auditor’s supervisor where you will be given the opportunity to explain your position, ask questions, and provide any additional documentation to support your position. If you still cannot agree with the audit results, you may appeal by requesting a hearing before the Review Board. You can find more information on this subject by reviewing the "Information Concerning Audit Procedures and Appeal Process" found on the Department of Revenue website.
- What are my payment options for sales, use, or corporate tax audit liabilities?
If you are in agreement with the determined tax liability and desire to pay the agreed-upon amount, make a check payable to the Mississippi Department of Revenue and mail the check to the address indicated on your audit related correspondence.
If you agree with the determined tax liability, but are unable to pay, you may request an installment agreement. Our standard agreement for audit payment plans is one third down, and the remaining amount due in equal installments for a six month period.
If you do not agree with the determined tax liability, you may choose to not pay the audit or pay the audit under protest. If you choose not to pay, assessment notices will be mailed to your business address. You will be provided 30 days to pay or appeal the assessment. The 30-day time frame is initiated with the date of the assessment notice.
If you choose to pay the audit under protest, the interest will stop accruing on the date of your payment. If the Review Board, Commission, or a court of law rules in your favor, you will receive a refund of the amount paid. Paying the liability under protest has the advantage of stopping the accrual of interest if a decision favorable to the state is determined.
- Does Mississippi have a Voluntary Disclosure program?
Yes, Mississippi has a voluntary disclosure program. You or your representative may contact the Office of Tax Administration for additional information.
- Who can benefit from Voluntary Disclosure?
Voluntary disclosure may help individuals, partnerships, and corporations that have not filed their required tax returns.
- How does a taxpayer apply for Voluntary Disclosure?
A taxpayer may request voluntary disclosure treatment by submitting a written request to:
The Office of Tax Administration
P.O. Box 1033
Jackson, MS 39215
Attn: Voluntary Disclosure
The request must include the following:
- the name, address and FEIN of the taxpayer;
- the types of tax involved and the date the taxpayer began business; a detailed description of the taxpayer’s activities in MS and the description of the product or service provided by the taxpayer;
- a detailed description of the taxpayer’s activities in MS and the description of the product or service provided by the taxpayer;
- an explanation of the taxpayer’s failure to file and pay taxes due; and
- a statement from the taxpayer that they have not been contacted by nor under investigation by the Department of Revenue concerning the tax liability.
- Why should a taxpayer come forward?
The Department of Revenue may enter into an agreement with the taxpayer to limit the statute of limitations, waive penalties, and possibly reduce the number of returns that must be filed.
- How many years will the Department of Revenue go back if the taxpayer has not filed the required tax returns?
The Department of Revenue can go back as many years as the taxpayer had taxable business transactions or income. A number of factors are used to determine how many years to include in the Voluntary Disclosure. Such as what type of tax it is, has the taxpayer been collecting and not remitting, how long has the taxpayer been in MS, what type of activity has the taxpayer had in MS, etc. In the case of collecting and not remitting Sales Tax or Withholding Tax (Trust Fund taxes), the Department of Revenue will go back as far as when the taxpayer began collecting the tax.
- What are the responsibilities of a taxpayer who requests voluntary disclosure treatment?
A taxpayer must file all returns agreed upon within ninety days, pay all tax, late filing fees, and interest according to the agreement, file the current and any subsequent returns in a timely manner according to the agreement, and make books and records available to the Department of Revenue, upon request.
- What are the Department of Revenue's rights in voluntary disclosure agreements?
The Department of Revenue reserves the right to audit the facts given as part of the agreement, audit any returns filed, void the agreement if factual misrepresentations have been made by or on behalf of the taxpayer, and/or if the taxpayer fails to comply with any term(s) of the agreement.
- How do I report someone I suspect is not filing returns or paying taxes?
If you believe someone is violating Mississippi tax laws, you may contact the Office of Audit and Compliance at 601-923-7301, or P. O. Box 1033, Jackson MS 39211. You may also send information from contact page on the Department of Revenue website.
Please provide as much detailed information as is possible. You must provide the name of the person or business you are reporting. You may include your name or you may remain anonymous. Following is a list of the types of information to provide us if you know it:
Current address of the person or business.
A detailed description of what you suspect (for example, not filing returns, receiving cash payments).
How you became aware of this problem.
Social security number of the person.
Type of tax not being paid (such as sales tax, income tax, withholding tax).
Name of the person's employer.
- How will I know if my complaint was investigated?
Because of the provisions contained in our disclosure laws, we are not allowed to divulge any information regarding our investigations to informants or anyone else not authorized to receive the information. We can assure you that we will review the information you provide and proceed with whatever action is warranted, either by pursuing a criminal investigation into the matter or by referring it for possible audit.
- Will my records be kept confidential?
Mississippi law requires that all tax, financial and application information received by the Department of Revenue remain confidential and only used for official purposes. Any current or former Commission employee who makes or participates in an unauthorized disclosure of confidential tax information is subject to criminal penalties.
- What is a tax lien?
A tax lien is a legal claim the Department of Revenue records against your property to secure the payment of taxes that you owe. A lien is filed only after the liability has become finally determined. The lien is filed in the circuit clerk’s office of the county or counties where you have property. Once the lien is recorded, the Department of Revenue may issue a warrant to seize your wages, bank accounts and other assets.
- Will I be notified before a lien is recorded and my property is seized?
Before a tax debt becomes finally determined, you are notified of the assessment and given an opportunity to appeal the assessment. Law requires that the Department of Revenue send notification of the assessment to the last known address of the person or business.
- Can my paycheck be garnished to pay my back taxes?
Yes if the liability has been finally determined and a tax lien has been recorded, the Department of Revenue can require your employer to garnish your salary until the liability is paid in full.
- Can I be held responsible for the debts of a corporation?
Yes. Individuals can be held personally liable for the tax debts of a corporation. Those individuals, corporate officers and/or shareholders, having control or supervision of, or charged with the responsibility of filing returns, making payments, or executing the corporation's fiscal responsibilities can be personally assessed for the outstanding tax debts of the corporation. The dissolution, termination or bankruptcy of a corporation or business will not discharge a responsible officer, employee's or trustee's liability.