Some members of the Mississippi Legislature fear last summer’s state Supreme Court ruling that bumped the one-year Mississippi tax bill of Atlanta’s Equifax Credit Information Services from zero to over $700,000 will tarnish the state’s “business friendly reputation.”
To undo the perceived damage, two Republican-sponsored bills designed to make it harder for the state to assess taxes on multistate businesses based on revenue earned, a standard called the “market-approach,” are moving ahead in both the House and Senate.
Part of the push is coming from the Council on State Taxation, a nonprofit trade association of more than 600 multistate corporations, that late last year downgraded the state’s grade among “The Best and Worst of State Tax Administration” from a B-plus to a C-plus. COST cited the Equifax case and indicated a grade reassessment would come with adoption of legislation to diminish the effects of the Equifax ruling.
Until the ruling in the Equifax case, Mississippi had followed the Uniform Division of Income for Tax Purposes Act, or UDITPA, established in 1957 by the National Conference of Commissioners on Uniform State Laws to remedy apportionment issues associated with taxpayers’ operating in multiple states. The UDITPA method applies a weighted performance-based standard in assessing taxes on the sales of services.
The Mississippi ruling — which has caught the attention of state taxing authorities around the country — upheld the state tax commissioner’s use of market-based standards in assessing tax liabilities for multistate companies such as credit reporting service Equifax. Using the standard UDITPA cost-of-performance method, Equifax computed its tax liability as zero. The state Department of Revenue later declared the standard method did not properly reflect the company’s business activities in the state.