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Mississippi Supreme Court holds dividends received exclusion statute violates dormant Commerce Clause

On Oct. 27, 2016, the Mississippi Supreme Court held that the portion of the state’s corporate income tax dividends received exclusion statute that imposes a geographical limitation on the ability to qualify for the exclusion violates the dormant Commerce Clause of the U.S. Constitution. Under the geographical limitation, the Court held that the exclusion is impermissibly limited to dividends received from affiliates that do business in Mississippi and file income tax returns in the state. The Court remedied the defect in the statute by severing the unconstitutional portion of the statute, thereby allowing the exemption to taxpayers who already have borne a tax in Mississippi or another state.