Mississippi State Tax Commission v. Murphy Oil USA, Inc.

Summary

The Mississippi Supreme Court, on rehearing, considered whether petroleum-product sales transferred to purchasers in Mississippi should be treated as Mississippi sales for franchise-tax apportionment purposes. The court rejected the destination-sales theory, held that the sales reflected business conducted in Mississippi, and concluded that the franchise tax satisfied the Commerce and Due Process Clauses. The court reversed the chancery court and rendered judgment reinstating the Mississippi State Tax Commission’s assessment.

Holdings

1. The Destination Sales Theory does not determine Mississippi receipts for franchise-tax purposes; the relevant inquiry is the volume of business actually conducted in Mississippi rather than the ultimate destination of the product.
2. The franchise tax had a substantial nexus with Mississippi because Murphy availed itself of the privilege of conducting substantial business activities in the state.
3. The franchise tax was fairly apportioned, did not discriminate against interstate commerce, and was fairly related to services provided by Mississippi; therefore, it did not violate the Commerce Clause or Due Process Clause.

Questions Presented

1. Whether the Destination Sales Theory should be used to determine sales assignable to Mississippi for franchise-tax purposes.
2. Whether Mississippi's inclusion of the sales in the franchise-tax apportionment formula violated the Commerce Clause or Due Process Clause of the United States Constitution under the four-part Complete Auto test.

Disposition

reversed_and_remanded