Mississippi – Reduced Rate for Sales of Fuel to Oil and Gas Producers

SALT Report 2618 – The Mississippi Department of Revenue issued guidance regarding the reduced sales tax rate of 1.5% for sales of electricity, current, power, steam, coal, natural gas, liquefied petroleum gas, and other fuels that takes effect July 1, 2013. Qualified “fuel” sales must be made to producers of oil and gas and used directly in enhanced oil recovery using carbon dioxide and/or the permanent sequestration of carbon dioxide in a geological formation.

In order to be eligible for the reduced rate, the exemption requires that the oil and gas producer issue a direct pay permit to the utility provider. The direct pay permit holder will be responsible for self-accruing the tax once the permit is provided to the utility provider.

The reduced rate only applies to the fuels listed and used in the manner described above. Any fuels used for office space or used in a way that does not adhere to the exemption requirements will be taxable at the regular rate of 7%.

For Further Information

Mississippi Department of Revenue – Notice 72-13-005