Mississippi Department of Revenue v. AT&T Corporation

n 1993, AT&T Corporation and affiliate corporations (collectively, AT&T) filed an affiliated group, Mississippi income tax return with the Mississippi Department of Revenue f/k/a Mississippi State Tax Commission, using the statutorily-permissible "combined method" of reporting. But from 1994 to 1996, AT&T filed its returns under the "consolidated method" of reporting, which was then statutorily available only to affiliated groups with members doing business and taxable solely in Mississippi, ostensibly to challenge the constitutionality of this distinction. Following an audit in 1997, the Commission issued an Assessment of Income Taxes of more than $5 million against AT&T. After unsuccessful administrative appeals before the Commission, AT&T filed a "Petition for Appeal of Additional Income Tax Assessment Ordered by State Tax Commission, For Declaratory and Injunctive Relief, and For Refund of Overpayment of Tax" in the Chancery Court of Hinds County. The Petition challenged the constitutionality of several tax statutes under the Commerce Clause of the United States Constitution and sought associated relief. But AT&T's Petition was not 'accompanied with a bond, to be approved by the clerk . . . , in a sum double the amount in controversy[,]" as then required by Mississippi Code Section 27-7-73. Rather, AT&T paid the Assessment, then filed the Petition. Preliminarily, the chancery court found that AT&T had "properly appealed" the full Commission's Order. The chancery court then held that the subject tax statutes violated the Commerce Clause; that the"offensive limitations" were to be struck so that AT&T was granted the "tax benefits" enjoyed by other taxpayers; and, based thereon, that AT&T was entitled to an award of $12,727,174. Thereafter, the Commission appealed those rulings, while AT&T appealed only the chancery court's interest calculations. Because AT&T did not follow the then-applicable procedure for appeal, the chancery court lacked jurisdiction to hear its appeal. The Supreme Court reversed the chancery court and reinstated the Commission's order. View "Mississippi Department of Revenue v. AT&T Corporation" on Justia Law