Opportunity for an Amended Return

Recently, the Mississippi Supreme Court ruled against the Mississippi Department of Revenue (MDOR) in its attempts to collect over $4 million from Isle of Capri Casinos, Inc.

Isle of Capri computes its Mississippi corporate income and franchise tax on a combined basis with all its affiliated entities; however, when the entities file a combined return, each entity is jointly and severally liable for the entire amount of tax due.

For tax years 2004-2007, four of the Isle of Capri Casinos held Mississippi gaming licenses, and they paid licensing fees based on monthly gross revenue. Isle of Capri used the amounts paid for Mississippi licenses as a tax credit to offset the entire income tax liability of all the affiliated entities. After MDOR audited the Isle of Capri, it assessed over $4 million in taxes, penalties, and interest, claiming that only the four entities who held the Mississippi licenses could offset their tax liability with the credit.

The Mississippi Supreme Court found for the Isle of Capri Casinos and held that once the combined income tax liability is calculated for all the affiliated entities, tax credits can be applied to offset any tax owed by the entire affiliated group. If your company has filed Corporate Income and Franchise Tax Returns without applying certain tax credits to the entire group, you may have an opportunity to file an amended return and seek a refund.