Calling the Mississippi appeals process a virtual local lock for the state’s Department of Revenue, Equifax Credit Information Services has asked the U.S. Supreme Court to review last summer’s Mississippi Supreme Court decision upholding the method DOR used in taxing Equifax.
In a Feb. 19 petition for certiorari, Equifax argues that the Mississippi tax appeals process all but ensures that assessments and penalties imposed by the Department of Revenue will be upheld.
Trials promised to out-of-state taxpayers are “a charade en route to an affirmation of the [DOR's] actions,” Equifax claimed in a filing by the Atlanta law firm of Alston & Bird.
Equifax, an Atlanta-based company7that provides consumer credit reporting services to Mississippi business, challenged its 2012 tax income tax bill after the DOR applied a market-based standard by which taxes would be assessed on revenue generated in the state. Using that standard, the DOR increased Equifax’s tax bill from zero to more than $700,000.
Equifax appealed to Chancery Court, arguing the DOR had not met state requirements for using a taxing standard other than the statutorily authorized cost-performance approach, the Uniform Division of Income for Tax Purposes Act’s method for sourcing the sales of a service business. The DOR countered that the statutory formula failed to fairly reflect the extent of Equifax’s business activity in Mississippi and, under section 18 of UDITPA, required market-based sourcing instead. The DOR also imposed penalties against Equifax when its use of market-based sourcing created a greater liability on audit.
The Chancery Court upheld the DOR’s standard but the Appeals Court ruled in favor of Equifax. The state Supreme Court followed with a July ruling that the DOR had met the test for applying an alternative standard.
In its filing with the U.S. Supreme Court, Equifax claimed the Chancery Court applied a highly deferential standard that the state Supreme Court required it to use. The result: Equifax never received its day on court, the petition states.
Meanwhile, both houses of the Mississippi Legislature have passed bills that require the DOR to present “clear and convincing evidence” in order to apply a tax apportionment standard pother than the cost-performance method authorized by state law.