Equifax, Inc., et al. v. Miss. Dep't of Revenue
| Docket Number: | 2010-CT-01857-SCT Linked Case(s): 2010-CA-01857-COA ; 2010-CA-01857-COA ; 2010-CT-01857-SCT ; 2010-CT-01857-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 06-20-2013 Opinion Author: Randolph, P.J. Holding: Court of Appeals reversed; Chancery court reinstated and affirmed. |
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| Court of Appeals: |
Opinion Link Opinion Date: 05-01-2012 Opinion Author: Griffis, P.J. Holding: REVERSED AND REMANDED |
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| Additional Case Information: |
Topic: Taxation - Standard of review - Burden of proof - Standard allocation of income - Section 27-77-7(4) - Alternative apportionment method - Penalties - Section 27-13-25(3) Judge(s) Concurring: Waller, C.J., Dickinson, P.J., Kitchens, Pierce, King and Coleman, JJ. Non Participating Judge(s): Chandler, J. Concur in Part, Concur in Result 1: Lamar, J., Concurs in Part and in Result Without Separate Written Opinion Procedural History: Admin or Agency Judgment Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES Writ of Certiorari: yes Appealed from Court of Appeals |
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| Trial Court: |
Date of Trial Judgment: 11-04-2010 Appealed from: Hinds County Chancery Court Judge: J. Dewayne Thomas Disposition: CHANCERY COURT AFFIRMS DECISION OF MISSISSIPPI STATE TAX COMMISSION Case Number: G-2009-884-T/1 |
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| Note: | The Supreme Court found that the chancellor did not commit manifest error by concluding that Equifax failed to prove that it was entitled to reversal of the Commission’s imposition of penalties and it reversed the Court of Appeals. The original Court of Appeals opinion can be found at http://courts.ms.gov/Images/Opinions/CO76842.pdf . | |
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Equifax, Inc. and Equifax Credit Information Services, Inc. |
LOUIS G. FULLER
KATIE LOFTON WALLACE
TIMOTHY J. PEADEN
MARY T. BENTON |
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| Appellee: | Mississippi Department of Revenue f/k/a Mississippi State Tax Commission | GARY WOOD STRINGER JAMES L. POWELL |
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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 - Standard of review - Burden of proof - Standard allocation of income - Section 27-77-7(4) - Alternative apportionment method - Penalties - Section 27-13-25(3) |
| Summary of the Facts: | Equifax, Inc., and Equifax Credit Information Services, Inc. computed its Mississippi taxable income as zero. The Mississippi State Tax Commission audited Equifax and determined that the standard apportionment method did not fairly reflect Equifax’s business in Mississippi. The Commission employed an alternative apportionment method, under which Equifax’s income from services provided to customers located in Mississippi was apportioned to Mississippi, and it issued assessments against Equifax. Equifax appealed to chancery court which affirmed the Commission’s decision. The Court of Appeals reversed the judgment of the chancery court on standard-of-review and burden-of-proof grounds and found all remaining issues moot. The Supreme Court granted certiorari. |
| Summary of Opinion Analysis: | Issue 1: Standard of review All agree that the applicable standard of review and burden of proof in chancery court for judicial review of a Commission decision are found in section 27-77-7(4). Under the language of that statute, the chancery court must hold a judicial hearing to determine whether the taxpayer challenging the Commission decision can prove entitlement to any or all of the relief requested by a preponderance of the evidence. In this case, the evidence to be considered by the chancellor was the record from the Commission, including the agreed-upon facts. The court does not adjudicate the merits (or lack thereof) of the agency’s decision, but rather is limited to examining the legality of the decision. The statute clearly mandates deference for Commission decisions, as for decisions of any administrative agency. Equifax’s complaint in chancery court sought judicial review of the merits of the Commission’s decision, a determination which clearly was outside of the chancery court’s authority. The chancellor properly limited his analysis to determining whether Equifax had proven that it was entitled to reversal of the Commission’s decision for any of the prescribed legal bases for reversing an agency decision. Under section 27-77-7(4), Equifax had the opportunity to present evidence contesting the legality of the Commission’s and the Board of Review’s decisions. Section 27-77-7(4) provides a judicial forum to try anew (or for the first time) the legal issues raised by the taxpayer in chancery court. Its limited purpose is only to examine whether the Commission’s decision was supported by substantial evidence, was not arbitrary and capricious, was within the Commission’s power to make, and did not violate the taxpayer’s statutory or constitutional rights. Section 27-77-7(4) also establishes the burden of proof and upon whom the burden rests. In a taxpayer’s action in chancery court appealing a final judgment of the Commission, as in all other judicial proceedings, the party petitioning the court for relief bears the burden of proving its claims by a preponderance of the evidence or a higher standard, if required by the issues raised. At the hearing in chancery court, the parties were given the opportunity to present such evidence and legal authority as they deemed appropriate to the limited issues being tried, i.e., the legality of the decision. And, the chancery court applied the proper standard of review and burden of proof. The Court of Appeals erroneously construed section 27-77-7(4) as imposing a de-novo standard of review. The Court of Appeals further erred by holding that the Commission – rather than the taxpayer-petitioner, Equifax – had the burden of proof. Issue 2: Alternative apportionment method Equifax argues that the chancellor erred by finding that the use of an alternative apportionment method was not a promulgation of a new rule in violation of the Mississippi Administrative Procedures Act and that the imposition of penalties under section 27-13-25(3) was not arbitrary and capricious. The chancellor did not manifestly err by finding that the Commission’s requirement of an alternative apportionment method for Equifax’s income did not amount to a rule, unduly promulgated in violation of the Mississippi Administrative Procedures Act. Equifax presented no evidence that the Commission promulgated a new standard apportionment method for all service companies. Rather, the Commission required Equifax to use an alternative apportionment method under an existing rule. The existing rule clearly provides for the Commission to require alternative apportionment where the standard allocation of income does not fairly represent a taxpayer’s activity in the state – such as Equifax’s allocation of zero income to Mississippi, despite having employees in the state and receiving $22,679,340 for services provided to customers in Mississippi during the audit period. Also, the chancellor did not commit manifest error by concluding that Equifax had failed to prove that the Commission’s imposition of penalties pursuant to section 27-13-25(3) warranted reversal. As the chancellor pointed out in his order, it was clear that “the lack of any taxable income attributable to the State of Mississippi is not a fair assessment of Equifax’s income earned within the state.” |
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