In a case that is interesting both substantively and procedurally, the Mississippi Supreme Court held that a consumer lending subsidiary of a national bank was subject to the Mississippi Finance Company Privilege Tax. Miss. Dep’t of Revenue v. Pikco Finance, Inc., 2012 WL 3031281 (Miss. July 26, 2012). In ruling for the state, the court held that:

  1. The National Bank Act does not preempt the imposition of state taxes on national banks, such as the Mississippi tax at issue;
  2. The Mississippi Department of Revenue’s use of a subpoena for the taxpayer’s records was not an exercise of “visitorial” power preempted by the National Bank Act because it related to the state’s taxing authority rather than the state’s regulatory authority; and
  3. The subsidiary at issue was not exempt from tax under a state law exemption for national banks because while it was a subsidiary of a national bank, it was not a national bank itself.

Procedurally, the case is interesting because the Department of Revenue, after discovering that the taxpayer was not filing Mississippi returns, sent the taxpayer a subpoena for records. Rather than providing the records, the taxpayer filed a petition to quash the subpoena in the Hinds County Circuit Court, and the court granted the taxpayer’s petition to quash. The Mississippi Supreme Court reversed on appeal after deciding the merits of the case, as described above. While the taxpayer’s effort to challenge the subpoena was not successful, it did provide an expedited path to get the taxpayer’s substantive position before a court for a decision on the merits (at least in this case).