Gary W. Stringer, Jackson, Bridgette T. Thomas, attorneys for appellant.
Robert F. Walker, Everett White, Jackson, attorneys for appellees.
Before WALLER, C.J., KITCHENS and COLEMAN, JJ.
¶ 1. The Mississippi Department of Revenue (" the Department" ) assessed $4,181,706 in taxes, penalties, and interest against Isle of Capri Casino, Inc. and its affiliated entities (" Isle of Capri" ) for tax years 2004, 2005, 2006, and 2007. Isle of Capri appealed, and the chancery court granted summary judgment in its favor. The Department now appeals. Finding no error on the part of the chancery court, we affirm.
Facts and Procedural History
¶ 2. Isle of Capri computes its Mississippi corporate income and franchise tax on a combined basis along with its affiliated entities pursuant to Mississippi Code Section 27-7-37, which permits the affiliated group to file a combined return but leaves each entity jointly and severally liable for the total amount of tax liability for the affiliated group. See Miss.Code Ann. § 27-7-37 (Rev.2013); Miss. Admin. Code § 35-III-8.07 at 102(5) (repealed Nov. 17, 2011). Four entities in the affiliated group held Mississippi gaming licenses for the taxable years at issue. The four paid license fees based on their monthly gross revenues from gaming operations as required by statute. See Miss.Code Ann. § 75-76-177 (Rev.2009). Isle of Capri then used the license fees as a credit to offset its combined income tax liability in 2007 pursuant to Mississippi Code Section 75-76-179. See Miss.Code Ann. § 75-76-179 (Rev.2009). Applying the credits in the same manner, Isle of Capri filed amended tax returns for 2004, 2005, and 2006.
¶ 3. The Department then audited Isle of Capri's returns from 2004 through 2007 and assessed $4,181,706 in taxes, penalties, and interest. The Department based the assessment on the application of the license fees as a credit, claiming that only the tax liability of the four entities that actually held the licenses was eligible for offset. In other words, the credit belonged
exclusively to the entity that paid the license fee and could not be used to benefit the affiliated group as a whole. Isle of Capri appealed the Department's assessment first to the Board of Review and then to the Board of Tax Appeals; both affirmed the assessment with minor changes.
¶ 4. Isle of Capri then appealed to the Harrison County Chancery Court, Second Judicial District, and filed a surety bond for half of the assessment as required by statute. See Miss.Code Ann. § 27-77-7 (Rev.2010). Both parties moved for summary judgment. The chancery court granted summary judgment for Isle of Capri and overturned the Department's assessment. The Department timely appealed. The issues to be determined are: (1) whether Isle of Capri properly filed its statutorily required appeal bond with the chancery court; and (2) whether Isle of Capri properly applied certain gaming license credits to offset its Mississippi income tax liability.
Standard of Review
¶ 5. Generally, we limit our review of an administrative agency's decision and will reverse only if the agency's decision: " (1) was unsupported by substantial evidence; (2) was arbitrary and capricious; (3) was beyond the power of the administrative agency to make; or (4) violated the complaining party's statutory or constitutional right." Jones County Sch. Dist. v. Miss. Dep't of Revenue, 111 So.3d 588, 597 (¶ 32) (Miss.2013) (quoting Buffington v. Miss. State Tax Comm'n, 43 So.3d 450, 453-54 (¶ 12) (Miss.2010)). Regarding review of an agency's decision on questions of law, the Court has explained:
" An agency's interpretation of a rule or statute governing the agency's operation is a matter of law that is reviewed de novo, but with great deference to the agency's interpretation." Buffington, 43 So.3d at 454.... Recently, this Court clarified what " deference" means in this context. Queen City Nursing Ctr., Inc. v. Miss. State Dep't of Health, 80 So.3d 73, 84 (Miss.2011). The Court emphasized that it has the ultimate authority and responsibility for interpreting laws. Id. So, even though an " agency's interpretation is an important factor that usually warrants strong consideration," the Court does not defer to an agency's interpretation in the sense that it yields judgment or ...