Mississippi Supreme Court - DRD that excludes dividends received from out-of-state affiliates is unconstitutional

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November 2016

Overview

​On October 27, 2016, the Mississippi Supreme Court ruled that the state’s dividends received deduction, which applies only to dividends received from affiliates doing business and filing state income tax returns in Mississippi, unconstitutionally discriminates against interstate commerce. By striking the offensive limitation, the taxpayer could exempt from taxation income from dividends that have already been taxed in Mississippi or in any other state.

Taxpayers that have been denied dividends received deductions, or failed to report such deductions, from affiliates not doing business in Mississippi should consider whether to file refund claims consistent with the guidance in this decision.

 

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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