Press "Enter" to skip to content

South Dakota Resists Refunding Citibank’s Old $30M Tax Overpayment

On the bright side, the State of South Dakota is willing to fight big money... when it means keeping money in state coffers.

Bob Mercer noted Tuesday (and Governor Daugaard in his budget address did not) that the state could face up to $30 million in liability in a pending court case. (Our governors do like sweeping such potential legal liabilities under the rug.) According to Mercer, Citibank is taking South Dakota to court to get a refund on as much as $30 million that it may have overpaid in bank franchise tax from 1999 to 2002. A federal audit in 2012 found that Citibank overpaid federal income tax during that period, which means we calculated their bank franchise tax too high as well.

But the Department of Revenue won't pay, claiming a three-year statute of limitations. The South Dakota Supreme Court will hear arguments on the validity of that position on January 14.

Mercer points out that the state's sticklerism on the statute of limitations seems to arise only when dollars are flowing out of state coffers, not in:

In 2007, Citibank paid the state treasury an additional $4 million in state taxes after an IRS audit found Citibank didn’t report its income fully for the period of 1993-1998. The state Department of Revenue accepted the $4 million long after the three-year limitation in state law.

In September 2009, Citibank filed its state tax return for 2008. In September 2012, Citibank requested a $900,000 refund. The state Department of Revenue hasn’t acted yet on that refund request because the IRS hasn’t completed an audit for that period. We are now in 2014 and outside the three-year limitation [Bob Mercer, "Is Citibank Owed $30 Million, $4 Million or $0?" Pure Pierre Politics, 2014.12.02].

I'm perfectly fine with taxing Citibank far more than our current state laws do. But even the Citibank plutocrats deserve consistently applied tax rules. If taxpayers pay too much, they should cough it up. If the state taxes too much, the state should cough it back. If we're going to set a deadline for the coughing, that deadline should apply no matter which way the money is flowing.


  1. Bill Fleming 2014.12.05

    Is it common for a bank to be that far behind on its bookkeeping?

  2. leslie 2014.12.05

    I'd like to see that audit. tell us why citi made such a big bunch of mistakes? CPA liability? can't we blame this on big government? (pls don't respond u know who)

  3. Mike B 2014.12.05

    How much of this tax refund will come from education?

  4. Disgusted Dakotan 2014.12.05

    Hmmmmm! So, giving Bell Brands millions that guarantee political kickback$$ is good economic development? But, refunding an overtaxed company it's own $$ is not?

    This is where Democrats should be highlighting the hypocrisy of these crony capitalists masquerading as Republicans.

    Good work reporting this out CAH.

  5. bearcreekbat 2014.12.05

    A statute of limitations is a funny law. It is not self-executing and it can be waived by the party that would otherwise be protected by it.

    Perhaps Citibank executives and/or their lawyers decided that it was in their best interests to waive the SL defense to the tax underpayment?

Comments are closed.