Mississippi Dept. of Revenue v. SBC Telecom, Inc. et al.Annotate this Case
At issue in this appeal was the computation of the broadband credit limits that a taxpayer may use against its franchise-tax and income-tax liabilities. During the tax periods at issue, AT&T Mobility II, LLC, and BellSouth Telecommunications operated telecommunications enterprises and made significant investments in broadband technology developments throughout Mississippi, generating Broadband Investment Credits (Broadband Credits) under Mississippi Code Section 57-87-5. BellSouth Mobile Data, SBC Alloy Holdings, New BellSouth Cannular Holdings, New Cingular Wireless Services, SBC Telecom, and Centennial were all direct or indirect corporate owners of AT&T Mobility II. The taxpayers here each filed a separate franchise-tax return and were included as affiliated group members in the combined corporate income-tax return filed on behalf of the affiliated group. The Mississippi Department of Revenue (MDOR) determined that the broadband credits the taxpayers had claimed had been improperly applied to an amount greater than the credit cap of 50 percent of the taxpayers’ tax liabilities according to Mississippi Code Section 57-87- 5(3) (Rev. 2014). The MDR disallowed portions of the broadband credits claimed by the taxpayers and assessed additional franchise taxes, interest and penalties to the taxpayers separately on several dates between December 22, 2014, and May 20, 2015. The taxpayers argue that each taxpayer is jointly and severally liable for the total combined income-tax liability of the affiliated group, therefore making the income-tax liability of each taxpayer the same as the total combined income-tax liability of the affiliated group. The chancellor granted summary judgment in favor of the taxpayers and ruled that the taxpayer’s tax liabilities under Chapters 7 and 13 of Title 271 of the Mississippi Code was the aggregate of the taxpayer’s separate franchise-tax liability and the total combined income-tax liability of the affiliated group. The Mississippi Supreme Court affirmed the chancellor's ruling on the credit-computation issue. "The plain and unambiguous language of Section 57-87-5 clearly limits broadband credits that a taxpayer may take in any given year to 50 percent of the aggregate of the taxpayers’ franchise-tax liability and the total combined income-tax liability of the affiliated group."