Oral arg. – Miss. S. Ct. – Jan. 26, 2016

At 10:00 the Court will hear the Miss. Dept. of Revenue v. Hotel & Restaurant Supply. 

The Department of Revenue performed an audit of Hotel Restaurant and Supply for sales between  August 1, 2006 through August 31, 2009 and determined that certain items sold by Hotel & Restaurant on which tax had not been collected, under the exemption of Miss. Code Ann. § 27-65-21, did not meet the qualifications of having become a component part of the structure.  Under Mississippi law,  supplies sold to contractors are  taxed at 3½% – instead of 7% – if (1) a material purchase certificate is presented to the supplier and (2) the supplies ultimately become a component part of the structure.  The Department assessed an additional tax of $408,740 which Hotel & Restaurant appealed arguing that  the Department should have sought to collect any taxes from contractors – and not the supplier – since (1) it was a contractors’ tax, (2) the contractors were in the best position to determine whether property ultimately became a component part as it was the contractors who built the structures and made that determination, (3) the applicable statute placed duties upon the contractors and not the suppliers, and (4) the standard practice was for contractors to itemize to the Department the property that was not a component part. The Board of Tax Appeals agreed with Hotel & Restaurant Supply and found in its favor. The Chancery Court of Hinds County affirmed.  The Department appeals arguing that the court applied the wrong  standard of review.

Department of Revenue’s brief

Hotel & Restaurant’s brief

The Department’s reply brief

Watch the argument here.

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