Miss. Dept. of Revenue v. AT&T Corporation

In 2003, the Mississippi State Tax Commission (now the Department of Revenue) assessed additional income tax, penalties, and interest in an amount greater than $11.75 million against AT&T based on its income from dividends from non-Mississippi subsidiaries. After exhausting its administrative remedies, AT&T appealed to the Chancery Court of the First Judicial District of Hinds County, arguing that a portion of Section 27-7-15(4)(i) discriminated against interstate commerce in violation of the negative, or dormant, aspect of the Commerce Clause of the United States Constitution. AT&T argued that the scheme allowed an income tax exemption for dividends received from AT&T’s Mississippi subsidiaries while denying an exemption to similarly situated non-Mississippi subsidiaries. Ultimately, the chancellor agreed and declared a portion of Section 27-7-15(4)(i) as unconstitutional. Having determined that the geographical limitation in Section 27-7-15(4)(i) offended the negative aspect of the Commerce Clause of the United States Constitution, the Mississippi Supreme Court held that portion of it to be unconstitutional and invalid. The phrase “under the provisions of this article” was struck from Section 27-7-15(4)(i) and the severance was be applied to AT&T for the tax years at issue in this case. The judgment of the Chancery Court was affirmed. View "Miss. Dept. of Revenue v. AT&T Corporation" on Justia Law