The Mississippi Court of Appeals reversed a summary judgment ruling in favor of the Mississippi Department of Revenue (DOR) in a case challenging a sales tax audit assessment. The Court of Appeals held that the taxpayer had presented sufficient evidence to create a genuine issue of material fact on the issues raised such that summary judgment was inappropriate and a trial on the merits should have taken place, remanding the case to chancery court.
The taxpayer, a construction company located in Mississippi, underwent a sales tax audit conducted by the DOR. The auditor applied a cash-flow analysis of the taxpayer’s bank records to assess additional sales tax, asserting the taxpayer had failed to maintain adequate records. The taxpayer challenged the assessment, arguing that the DOR improperly included income from other businesses owned by the same individual shareholder, treated shareholder contributions as taxable income, and arbitrarily applied Jackson’s 1% special city tax. The chancery court granted summary judgment to the DOR, finding that the assessment was entitled to a statutory presumption of correctness based on the failure of the taxpayer to keep adequate records.
In its opinion reversing the judgment, the Court of Appeals found that the taxpayer’s presentation of evidence including separate bank accounts, IRS tax ID records, corporate filings, general ledger entries identifying shareholder contributions, and documentation showing projects outside the City of Jackson were sufficient to allow a factfinder to conclude that the DOR had overstated the taxpayer’s liability. As a result, the Court of Appeals held that the taxpayer was entitled to a trial on the merits and remanded the case for further proceedings. Although the decision does not resolve the underlying issues in the taxpayer’s favor, it is a significant procedural victory for the court to hold that the taxpayer produced sufficient evidence to rebut the presumed correctness of the assessment.
ABG Contractors, Inc. v. Graham, No. 2025-CA-00329-COA (Miss. Ct. App. Aug. 18, 2026).