Caesars Entm't, Inc. v. Miss. Dep't of Revenue

Citation295 So.3d 466
Decision Date07 May 2020
Docket NumberNO. 2019-CA-00155-SCT,2019-CA-00155-SCT
Parties CAESARS ENTERTAINMENT, INC. v. MISSISSIPPI DEPARTMENT OF REVENUE
CourtUnited States State Supreme Court of Mississippi

ATTORNEYS FOR APPELLANT: SHELDON G. ALSTON, LOUIS G. FULLER, Jackson

ATTORNEYS FOR APPELLEE: BRIDGETTE T. THOMAS, JOHN S. STRINGER

BEFORE KITCHENS, P.J., COLEMAN AND GRIFFIS, JJ.

KITCHENS, PRESIDING JUSTICE, FOR THE COURT:

¶1. On October 10, 2007, the Mississippi Department of Revenue (the Department) notified Caesars Entertainment, Inc. (Caesars), that an examination concerning its past tax returns, including its 2005 tax return, had been initiated and that the statutes of limitation in Mississippi Code Sections 27-7-49 and 27-13-491 were arrested. The Department concluded its examination on January 10, 2013, finding that there was no overpayment or underpayment by Caesars.

¶2. In February 2014, this Court issued a decision that concerned a casino's ability to use gaming license credits to offset its income tax liability. See Miss. Dep't of Revenue v. Isle of Capri Casinos, Inc. , 131 So. 3d 1192 (Miss. 2014). On June 13, 2014, in response to this Court's holding in Isle of Capri , Caesars filed an amended tax return seeking a refund for the tax period beginning January 1, 2005, and ending June 13, 2005. The Department denied Caesars’ refund claim on the basis that the time to ask for a refund had expired. Both the Board of Review and Board of Tax Appeals affirmed the Department's denial. Under Mississippi Code Section 27-77-7 (Rev. 2017), Caesars appealed the Department's denial to the Chancery Court of the First Judicial District of Hinds County. Both parties moved for summary judgment. The chancellor granted the Department's motion for summary judgment, finding that Caesars’ refund claim was untimely. Caesars timely filed its notice of appeal.

¶3. On appeal, Caesars argues that Mississippi Code Section 27-7-49(2) (Rev. 2017) extends the statute of limitations found in Mississippi Code Section 27-7-313 (Rev. 2017), which gives a taxpayer additional time to file a refund claim after an audit and gives the Department additional time to determine a taxpayer's correct tax liability and to issue a refund regardless of when a refund claim was submitted. The Department argues that Section 27-7-49(2) applies only to the Department and its time frame to examine and issue an assessment.

¶4. This Court finds that Caesars’ time to file an amended tax refund claim was not tolled or extended and that the Department has three years to examine a taxpayer's tax liability, absent exceptions under Mississippi Code Section 27-7-49. See Miss. Code Ann. § 27-7-49(2) - (4) (Rev. 2010). The Court affirms the chancellor's grant of the Department's motion for summary judgment.

STATEMENT OF THE FACTS

¶5. On June 13, 2005, Caesars merged into a wholly owned corporate subsidiary of Harrah's Entertainment. Due to the mid-year merger, Caesars was required to file a tax return for the period beginning on January 1, 2005, and ending on June 13, 2005. The tax return originally was due on September 15, 2005, but Caesars was granted a filing extension under Mississippi Code Section 27-7-50 (Rev. 2017). The final day of the extension was March 15, 2006. Caesars timely filed its 2005 tax return on or about March 6, 2006.

¶6. On October 10, 2007, the Department sent a letter notifying Caesars that an examination of its past tax returns had been initiated and that the letter served "to arrest the [s]tatute of [l]imitations on the tax returns under review." The statutes of limitation to which the letter referred were the time limits prescribed in Mississippi Code Sections 27-7-49 and 27-13-49. Five years and three months later, on January 10, 2013, the Department concluded its examination. Following the conclusion of the Department's examination, Caesars received the Department's audit assessment, which stated that "[n]o additional tax is due; [Caesars’] tax liability was not overpaid." Caesars had sixty days from the date of the audit assessment in which to file an appeal with the Review Board. Caesars did not take an appeal from the audit assessment.

¶7. In February 2014, this Court handed down its decision in Mississippi Department of Revenue v. Isle of Capri Casinos, Inc. , in which we held that when a casino and its affiliates file a combined return, the gaming license tax credits can be used to offset the income tax liability of the entire affiliated group. Isle of Capri , 131 So. 3d at 1196-98. Caesars had not prepared its 2005 tax return in accordance with the holding in Isle of Capri . On June 13, 2014, Caesars filed an amended corporate-income and franchise tax return in a manner consistent with the holding in Isle of Capri , claiming a refund in the amount of $2,831,884 for the January 1, 2005, to June 13, 2005, tax period. The Department denied Caesars’ refund claim on January 5, 2016, finding,

The time allowed to request a refund has expired. The law requires that you file claim for a refund within three years of the original due date, or by the final day of an approved extension period.

¶8. Caesars first appealed the Department's denial to the Board of Review and then to the Board of Tax Appeals, both of which upheld the Department's denial of the refund. On September 14, 2017, Caesars, under Mississippi Code Section 27-77-7, timely appealed to the Chancery Court of the First Judicial District of Hinds County. Both parties filed motions for summary judgment.

¶9. In its motion for summary judgment, Caesars argued that the Department's notice of examination tolled the statute of limitations on the assessment of taxes under Section 27-7-49(2) and on refund claims under Section 27-7-313, which allowed Caesars additional time to file a refund claim after the Department's audit. Conversely, the Department argued in its motion for summary judgment that the plain language of Section 27-7-49 and Section 27-7-313 fail to provide an extension or tolling mechanism that would allow a taxpayer to file a refund claim outside the three years prescribed by Section 27-7-313. In Caesars’ response to the Department's motion for summary judgment, Caesars argued that "[t]he Department has an obligation to determine its correct tax liability." The chancellor granted the Department's motion for summary judgment on the basis that Section 27-7-49(2) applies to the Department, not taxpayers, and the subsection does not grant taxpayers additional time to file for a refund. The chancellor determined also that the three-year time frame is repeated throughout Mississippi's tax statutes, demonstrating the legislature's intent that a taxpayer have only three years to file a refund claim. Caesars timely filed its notice of appeal in this Court on January 16, 2019.

¶10. Caesars raises two issues on appeal. First, whether the chancellor erred by finding that Mississippi Code Section 27-7-49(2) does not extend the statute of limitations provided in Mississippi Code Section 27-7-313, allowing a taxpayer to file a refund claim for overpaid income taxes while the Mississippi Department of Revenue conducts an audit of the taxpayer. Second, whether the chancellor erred by failing to find that Mississippi Code Section 27-7-49(2) extends the statute of limitations provided in Mississippi Code Section 27-7-313 for the Department to determine Caesars’ correct tax liability and to refund the amount of any overpayment, even if Caesars submitted its refund claim outside the statute of limitations provided in Mississippi Code Section 27-7-313.

¶11. The Department argues that the chancellor did not err by finding that Caesars’ refund request was untimely because Section 27-7-49(2) relates solely to the statute of limitations established in Mississippi Code Section 27-7-49(1) (Rev. 2017), and the Department does not have an unlimited time to review a taxpayer's return.

STANDARD OF REVIEW

¶12. "This Court reviews a chancery court's grant or denial of summary judgment de novo ." Miss. Dep't of Revenue v. AT & T Corp. , 202 So. 3d 1207, 1213 (Miss. 2016) (citing Miss. Dep't of Revenue v. Hotel and Rest. Supply , 192 So. 3d 942, 945 (Miss. 2016) ). This Court announced in King v. Mississippi Military Department that it "abandon[ed] the old standard of review giving deference to agency interpretations of statutes." King v. Miss. Military Dep't , 245 So. 3d 404, 408 (Miss. 2018). "Summary judgment is proper ‘if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ " Castigliola v. Miss. Dep't of Revenue , 162 So. 3d 795, 801 (Miss. 2015) (quoting Miss. R. Civ. P. 56(c) ).

DISCUSSION
I. Whether the chancellor erred by finding that the application of Mississippi Code Section 27-7-49(2) does not extend the statute of limitations provided in Mississippi Code Section 27-7-313, allowing a taxpayer to file a refund claim for overpaid income taxes while the Mississippi Department of Revenue conducts an audit of the taxpayer.

¶13. Because this dispute arises from a refund claim for Caesars’ 2005 tax period, the applicable version of Mississippi Code Section 27-7-49 and Section 27-7-313 are the pre-2013 amended versions of the statutes. See H.B. 892, Reg. Sess., 2013 Miss. Laws ch. 470. Mississippi Code Section 27-7-313 refers to a taxpayer's refund for income tax and states, in pertinent part,

No refund shall be granted under this article or under the provisions of Article 1 of this chapter unless a claim for same is made within three (3) years from the date the return is due, or within three (3) years from the final day of an extension period previously granted by the commissioner pursuant to the provisions of Section 27-7-50 ; however, the restrictions imposed by this section do not apply to those refund requests or claims made in compliance with subsections (2) and (3) of
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