Miss. Dep't of Revenue v. Pikco Fin., Inc.
| Docket Number: | 2011-CA-00842-SCT Linked Case(s): 2011-CA-00842-SCT |
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| Oral Argument: | 07-26-2012 | |
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| Supreme Court: | Opinion Link Opinion Date: 07-26-2012 Opinion Author: Carlson, P.J. Holding: Reversed and Remanded |
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| Additional Case Information: |
Topic: Taxation - Federal preemption - 12 U.S.C. Section 548 - 12 C.F.R. Section 7.4009(c)(2) - Visitorial power - Finance Company Privilege Tax - Section 27-21-3 - Parent national bank Judge(s) Concurring: Waller, C.J., Dickinson, P.J., Randolph, Lamar, Chandler, Pierce and King, JJ. Non Participating Judge(s): Kitchens, J. Procedural History: Admin or Agency Judgment Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES |
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| Trial Court: |
Date of Trial Judgment: 05-09-2011 Appealed from: Hinds County Circuit Court Judge: William Gowan, Jr. Disposition: Granted Appellee's motion to quash. Case Number: 251-11-75 CIV |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Mississippi Department of Revenue |
BRIDGETTE TRENETTE THOMAS
GARY W. STRINGER |
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| Appellee: | Pikco Finance, Inc. | CHRISTOPHER ROYCE SHAW | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Taxation - Federal preemption - 12 U.S.C. Section 548 - 12 C.F.R. Section 7.4009(c)(2) - Visitorial power - Finance Company Privilege Tax - Section 27-21-3 - Parent national bank |
| Summary of the Facts: | The Mississippi Department of Revenue issued a subpoena to Pikco Finance, Inc., requesting documentation pertaining to Pikco’s nonpayment of finance company privilege taxes. Pikco filed a petition to quash the subpoena on the basis that MDOR’s ability to audit and tax under Mississippi’s Finance Company Privilege Tax law was preempted by the National Bank Act. The circuit court granted Pikco’s petition to quash, and MDOR appeals. |
| Summary of Opinion Analysis: | Pikco argues that it is not required to comply with MDOR’s subpoena because Mississippi’s Finance Company Privilege Tax is preempted by the National Bank Act. The burden of demonstrating that federal law preempts state law is on the party claiming preemption, in this case, Pikco. Federal law preempts state law in three situations: where Congress has explicitly preempted state law; where Congress has occupied the entire field; or where there is an actual conflict between federal and state law. Congress has not explicitly preempted state law as to taxation. Congress has not occupied the entire field as to national banks. There is no duplicative federal law pertaining to collection of Mississippi state finance taxes. Thus, the National Bank Act does not preempt state taxation; in fact, it explicitly exempts it, leaving taxation to the states under 12 U.S.C. Section 548 and 12 C.F.R. Section 7.4009(c)(2). Pikco also argues that it is not required to comply with MDOR’s subpoena because the issuance of the subpoena is an exercise of a visitorial power. Pikco’s argument is based on 12 U.S.C. Section 484. Pikco’s rationale – that even though it is not a national bank, the protections of Section 484 apply to it under 12 C.F.R. Section 7.4006 – is flawed because taxation is a matter of state law, not federal law. State law governs taxation, and under state law Pikco is not treated the same as its parent national bank, and the visitorial limitation of Section 484 is not applicable. Further, examination of tax records by state officials is not an exercise of a visitorial power prohibited under Section 484. Visitorial power under the National Bank Act refers to a sovereign’s supervisory powers over corporations. MDOR’s issuance of a subpoena as a means of enforcing an allowable state tax is not an exercise of a “supervisory power” over Pikco. Pikco argues that it is exempt from the Finance Company Privilege Tax under section 27-21-3, which provides exemption to state and national banks. It is undisputed that Pikco is not a state or national bank. However, Pikco claims that it is to be treated the same as its parent national bank according to 12 C.F.R. Section 7.4006, and because its parent national bank would be exempt under section 27-21-3, Pikco also should be exempt. Pikco is correct that, as a licensed operating subsidiary of Pike National Bank, under 12 C.F.R. Section 7.4006, it would be treated the same as its parent national bank with regard to federal law. However, Pikco erroneously attempts to apply 12 C.F.R. Section 7.4006 to the assessment of taxes under Mississippi’s Finance Company Privilege Tax, which is a matter of state law. Pikco’s claim of exemption from the Finance Company Privilege Tax fails as a matter of law, because Pikco is not a state or national bank. |
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