News & Insights

Mississippi Supreme Court Upholds Taxpayers Alternative Apportionment Method

Tax Development Aug 24, 2020

The Mississippi Supreme Court affirmed the Chancery Court’s entry of summary judgment on the Mississippi Board of Tax Appeals ruling in favor of Comcast of Georgia/Virginia, Inc. (“Comcast”) and its use of an alternate apportionment method to calculate Mississippi Corporate Franchise Tax.The Mississippi Supreme Court affirmed the Chancery Court’s entry of summary judgment on the Mississippi Board of Tax Appeals ruling in favor of Comcast of Georgia/Virginia, Inc. (“Comcast”) and its use of an alternate apportionment method to calculate Mississippi Corporate Franchise Tax.1 The Mississippi Department of Revenue (“Department”) assessed Comcast almost $3.9 million in franchise tax for the periods 2008–2010. However, Comcast argued that the amount of tax did not accurately reflect the amount of business being conducted in Mississippi. The Department sought to include both the value of Comcast’s unitary and nonunitary subsidiaries as part of the capital tax base under Mississippi Code Section 27-13-9(1) and (2). However, Comcast argued that capital related to investments in nonunitary subsidiaries (passive investments with no connection to business in Mississippi) did not accurately reflect the value of its capital used in the state.

Under Mississippi Code Section 27-13-11, Comcast argued that it was entitled to present information showing the true value of its capital in the state when the calculation of franchise tax (by the Department) does not result in an accurate measure of the amount of tax actually due. Comcast was able to demonstrate that by including the value of Comcast’s nonunitary subsidiaries in its capital, the Department included billions of dollars in nonunitary assets in Comcast’s tax base. Comcast also showed that the Department’s assessment disregarded receipts and property of Comcast subsidiaries in the statutory apportionment formula, which resulted in an overattribution of income to Mississippi. Under Comcast’s alternate apportionment method, its calculated franchise tax was approximately $525,000 for periods 2008–2010 compared to the Department’s assessment of almost $3.9 million.

For up-to-date information on all things sales tax in Mississippi, as well as other states, please refer to Ryan News & Insights.

1 Mississippi Dept. of Revenue v. Comcast Cable Communications, LLC, Mississippi Supreme Court NO. 2019-CA-01134-SCT.

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