Mississippi Supreme Court Rules That Pollution Control Equipment Regulation is Invalid

Monday, August 11th, 2014


The Mississippi Supreme Court ("Court") recently held that a regulation on pollution control equipment was invalid.

The taxpayer had purchased low-NOx (nitrogen oxide) burners for use in its production process. The taxpayer bought the burners to reduce its NOx emissions to comply with federal regulations. The Department assessed tax on these purchases. The taxpayer argued that the burners were exempt pollution control equipment.

Mississippi exempts sales of pollution control equipment. The law states that pollution control equipment is equipment "used or acquired" to prevent, control, monitor, or reduce pollution. The Mississippi Department of Revenue's ("Department") regulation stated that pollution control equipment is equipment "used exclusively and directly" to prevent, control, monitor, or reduce pollution.

The Court held that the low-NOx burners were pollution control equipment. The law stated that the equipment had to be "used or acquired" for pollution control. The Department did not have the authority to restrict the exemption to equipment used "exclusively and directly" in pollution control. The regulation was therefore invalid. Because the NOx burners were used for pollution control, they were pollution control equipment. It did not matter that they were not used exclusively for pollution control.


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