Study committee created to ensure Mississippi municipalities are receiving accurate sales tax diversions

• The push to create the study committee originated in DeSoto County when the city of Southaven identified that certain businesses were incorrectly coded in the Mississippi Department of Revenue system.

The governor has approved legislation that creates a Sales Tax Diversion Study Committee with the purpose of examining, evaluating, and developing recommendations regarding the proper allocation of sales tax revenue between the Mississippi Department of Revenue and the state’s municipalities.

HB 898, authored by State Rep. Rodney Hall (R), sets up a study committee to conduct a comprehensive review of current sales tax diversion practices and identify any discrepancies. The group is to assess the financial impact of misallocated sales tax revenue on municipalities, analyze and evaluate software and other mechanisms to ensure accurate sales tax distribution, and ultimately recommend reforms to the Legislature before the 2027 session.

The push to create the study committee originated in DeSoto County when the city of Southaven identified that certain businesses were incorrectly coded in the Mississippi Department of Revenue system. Those errors resulted in local-option sales tax that should have been distributed back to the city remaining at the state level.

There is a concern that this may not be an isolated occurrence as multiple municipalities across Mississippi could be adversely affected by similar coding errors.

Rep. Hall told Magnolia Tribune Friday that House Bill 898 ensures that when businesses generate revenue in certain communities, those dollars are properly returned to support local growth and infrastructure.

“What we uncovered suggests the system isn’t always working as intended, and it’s likely that cities across Mississippi have funds that should be back home still sitting in Jackson,” Hall said. “In a time when every dollar matters, this bill delivers accountability and modern solutions to strengthen our communities and creates a more reliable environment for businesses to grow.”

Members of the study committee, as outlined in the bill, include:

• Chairman of the House Ways and Means Committee
• Chairman of the Senate Finance Committee
• Three members of the Senate appointed by the Lt. Governor
• Three members of the House appointed by the Speaker
• Commissioner of the Department of Revenue
• State Auditor
• Executive Director of the Mississippi Municipal League
• A representative from a municipality with over 50,000 residents and one from a municipality with less than 50,000 residents, both appointed by the Governor
• Executive Director of the Mississippi Economic Council
• A representative from a “destination marketing organization” appointed by the Lt. Governor

The study committee, which gets to work after July 1, is authorized to request any data, analysis and assistance from any state agency, division or political subdivision while conducting its research.