In direct response to the Mississippi Supreme Court’s decision in Equifax, Inc. v. Miss. Dep’t of Revenue, wherein the court upheld the Department of Revenue’s use of market-based sourcing despite the taxpayer’s use of cost-of-performance sourcing in compliance with the governing statute, Mississippi’s Governor signed House Bill (HB) 799 into law. The most notable provisions of the bill set new conditions for the Department of Revenue to follow in applying alternative methods of apportionment and limit the Department’s authority to require taxpayers to file combined returns. HB 799 goes beyond the issues in Equifax to remedy a wide range of inequitable procedural provisions during the audit and appeals process. Specifically, the legislation codifies the ability of the Department or a taxpayer to use an alternative apportionment method but explicitly places the burden of proof on the party invoking the alternative method to prove by a “preponderance of the evidence” that 1) the statutory or regulatory methods do not fairly represent the extent of the taxpayer’s business activity in the state and 2) the method selected more fairly represents that activity than any other reasonable method available. The legislation also requires that alternative apportionment be invoked only in “limited and unique, nonrecurring circumstances” when the standard apportionment provisions “produce unanticipated results that do not fairly represent the extent of the taxpayer’s business activity” in Mississippi. Moreover, the bill prohibits the Department from invoking its forced combination authority until the Department adopts regulations which specify the “criteria and circumstances” it must use to meet the “preponderance of the evidence” standard necessary to support an assumption that intercompany transactions resulted in the improper shifting of taxable income. The bill’s effective date is January 1, 2015. HB 799, 2014 Leg., Reg. Sess. (Miss. 2014).