The Mississippi Chancery Court held that the state’s dividend exclusion statute is unconstitutional because it violates the Commerce Clause of the U.S. Constitution. The statute excludes from a taxpayer’s gross income intercompany dividends received from domestic affiliates doing business and filing income tax returns in Mississippi. In so doing, the court found the statute denies taxpayers a tax benefit “based solely upon the choice of the taxpayer and its subsidiaries not to locate any operations in Mississippi or to file a Mississippi income tax return.” The court concluded that the statute facially discriminates against interstate commerce because it favors “domestic corporations over foreign competitors” and discourages “corporations from choosing to locate their operations outside Mississippi.” The Department of Revenue could not save the statute by establishing that it imposes only a compensatory tax designed to “make interstate commerce bear a burden already borne by intrastate commerce;” to the contrary, the court noted the statute results in double taxation to certain companies. Rejecting the Department’s suggested remedy of rescinding the statute and disallowing the tax benefit for all taxpayers on a retroactive basis, to include years for which the statute of limitations for assessment had expired, the court struck the discriminatory limitation and granted the tax benefit to the taxpayer for the years at issue. AT&T Corp. v. Miss. Dep’t of Revenue, No. G-2004-1393 (Miss. Ch. Mar. 20, 2015).