Emerson Electric v. So. Car. Dept. of Revenue

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Emerson Electric Company and its subsidiaries timely filed consolidated tax returns for South Carolina in fiscal years 1999 through 2002. The periods at issue in this appeal were tax years 1999, 2000, and 2001 (license tax years 2000, 2001, and 2002). In its initial returns, Emerson did not claim deductions for expenses related to its receipt of dividends from subsidiary corporations. Emerson later filed amended returns, claiming the deductions and seeking a refund. Emerson's claimed entitlement to the deductions on its South Carolina returns was the question before the Supreme Court. Emerson argued in the that section 12-6-2220(2), as applied, discriminated against non-resident taxpayers in violation of the Commerce Clause of the United States Constitution. Upon review, the Supreme Court found that the record revealed Emerson availed itself of these same deductions numerous times against its taxable income in various other taxing jurisdictions. The Administrative Law Court properly found Emerson failed to carry its burden of proving that the application of section 12-6-2220 violated the Commerce Clause. The Department of Revenue properly disallowed Emerson's related expense deductions. Emerson's related expense deductions were properly allocated to the state of its principal place of business, Missouri.