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Miss. Dep't of Revenue v. Isle of Capri Casinos, Inc.

Supreme Court of Mississippi

February 13, 2014, Decided

NO. 2012-CA-01419-SCT

Opinion

 [*1193]  NATURE OF THE CASE: CIVIL - STATE BOARDS AND AGENCIES

COLEMAN, JUSTICE, FOR THE COURT:

P1. The Mississippi Department of Revenue ("the Department") assessed $4,181,706 in taxes, penalties, and interest against Isle of Capri Casino, Inc. and its affiliated entities ("Isle of Capri") for tax years 2004, 2005, 2006, and 2007. Isle of Capri appealed, and the chancery court granted summary judgment in its favor. The Department now appeals. Finding no error on the part of the chancery court, we affirm.

Facts and Procedural History

P2. Isle of Capri computes its Mississippi corporate income and franchise tax on a combined basis along with its affiliated entities pursuant to Mississippi Code Section 27-7-37, which permits the affiliated group to file a combined return but leaves each entity  [**2] jointly and severally liable for the total amount of tax liability for the affiliated group.1 See Miss. Code Ann. § 27-7-37 (Rev. 2013); Miss. Admin. Code § 35-III-8.07 at 102(5) (repealed Nov. 17, 2011). Four entities in the affiliated group held Mississippi gaming licenses for the taxable years at issue. The four paid license fees based on their monthly gross revenues from gaming operations as required by statute. See Miss. Code Ann. § 75-76-177 (Rev. 2009). Isle of Capri then used the license fees as a credit to offset its combined income tax liability in 2007 pursuant to Mississippi Code Section 75-76-179. See Miss. Code Ann. § 75-76-179 (Rev. 2009). Applying the credits in the same manner, Isle of Capri filed amended tax returns for 2004, 2005, and 2006.

P3. The Department then audited Isle of Capri's returns from 2004 through 2007 and assessed $4,181,706 in taxes, penalties, and interest. The Department based the assessment on the application of the license fees as a credit, claiming that only the tax liability of the four entities that actually held the licenses was eligible for offset. In other words, the credit belonged  [*1194]  exclusively to the entity that paid the license fee and could not be used to benefit the affiliated group as a whole. Isle of Capri appealed the Department's assessment first to the Board of Review and then to the Board of Tax Appeals; both affirmed the assessment with minor changes.

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131 So. 3d 1192 *; 2014 Miss. LEXIS 104 **; 2014 WL 562025

MISSISSIPPI DEPARTMENT OF REVENUE v. ISLE OF CAPRI CASINOS, INC.; IOC-LULA, INC.; IOC-NATCHEZ, INC.; RIVERBOAT CORPORATION OF MISSISSIPPI; RIVERBOAT CORPORATION OF MISSISSIPPI-VICKSBURG; CAPRI AIR, INC.; IOC COAHOMA, INC.; LADY LUCK GAMING CORPORATION; LADY LUCK VICKSBURG, INC.; CASINO AMERICA, INC.; IOC SERVICES, LLC; IOC MISSISSIPPI, INC.; RIVERBOAT SERVICES, INC.; ICC CORP.; LADY LUCK GULFPORT, INC.; LADY LUCK BILOXI, INC.; IMPS A.K.A. INTERNATIONAL MARCO POLO SERVICES, INC.; IOC MANUFACTURING, INC.; AND IOC DEVELOPMENT COMPANY, LLC

Prior History:  [**1] COURT FROM WHICH APPEALED: HARRISON COUNTY CHANCERY COURT SECOND JUDICIAL DISTRICT. DATE OF JUDGMENT: 07/26/2012. TRIAL JUDGE: HON. JAMES B. PERSONS.

Disposition: AFFIRMED.

CORE TERMS

affiliated group, tax liability, combined, entities, Appeals, offset, court of chancery, license, income tax liability, computed, licensee, gaming, present case, conditioned, taxpayer, statutory requirements, judgment of the court, affiliated, deference, credits, argues, surety, agency's interpretation, license fee, surety bond, income tax, consolidated, satisfies

Administrative Law, Judicial Review, Standards of Review, Arbitrary & Capricious Standard of Review, Constitutional Right, Exceeding Statutory Authority, Substantial Evidence, De Novo Standard of Review, Rule Interpretation, Deference to Agency Statutory Interpretation, Civil Procedure, Appeals, Summary Judgment Review, Standards of Review, Remedies, Bonds, General Overview, Judgments, Summary Judgment, Appellate Jurisdiction, Tax Law, Income Taxes, Corporations & Unincorporated Associations, Imposition of Tax, Governments, State & Territorial Governments, Licenses, State & Local Taxes, Administration & Procedure, Credits, Overassessments & Refunds, Individuals, Estates & Trusts, Deductions