Justia Minnesota Supreme Court Opinion Summaries

After the Commissioner denied Kimberly-Clark's corresponding refund claims that accompanied amended corporate franchise tax returns, Kimberly-Clark appealed to the tax court. Kimberly-Clark argued that its refund claims were allowable because the Legislature’s enactment of the Multistate Tax Commission’s apportionment formula was a contractual obligation that was unconstitutionally impaired when the 1987 Legislature repealed the provisions that authorized the use of that formula. The Minnesota Tax Court concluded that the Legislature’s 1987 repeal of the apportionment formula was constitutional and therefore the Commissioner properly denied Kimberly Clark’s refund claims. Kimberly-Clark petitioned for review. The court concluded that the Legislature made no unmistakable commitment in 1983 when it enacted Multistate Tax Compact, Minn. Stat. 290.171 that was impaired when the Legislature later repealed portions of that statute. Accordingly, the court affirmed the judgment. View "Kimberly-Clark Corp. Commissioner" on Justia Law

When Daniel Berglund refused to file Minnesota income tax returns for tax years 2008, 2009, and 2010, the Minnesota Department of Revenue prepared and filed returns for Berglund and mailed him Notices of Commissioner Filed Returns for the relevant tax years. In total, the Commissioner of Revenue assessed $668,840 in unpaid taxes, penalties, and interest for the three-year period. Berglund appealed, arguing that because the returns did not contain the Commissioner’s signature they were invalid and unenforceable. The tax court granted the Commissioner’s motion for judgment on the pleadings, finding that the lack of a “manual signature” was of no consequence. The Supreme Court affirmed, holding that the relevant statutes do not require that the Commissioner sign commissioner-filed returns in order for those returns to be valid. View "Berglund v. Comm’r of Revenue" on Justia Law

When Respondents filed their Minnesota tax return for tax year 2007, they claimed they were part-year residents of the state. After an audit, the Commissioner of Revenue determined that Respondents were full-year residents of Minnesota for that year and assessed additional income tax, penalties, and interest. On appeal, the tax court granted summary judgment in favor of Respondents, concluding that Respondents were not “residents” under Minn. Stat. 290.01. The Supreme Court reversed, holding (1) the statute is ambiguous; and (2) the tax court’s interpretation of the statute was erroneous. Remanded to the tax court for a recalculation of Respondents’ tax debt in accordance with this opinion. View "Curtis G. v. Comm’r of Revenue" on Justia Law

After the Dakota County Assessor estimated the market value of Westview Mall, owned by KCP Hastings, LLC, KCP challenged the estimated assessments. After a trial, the tax court adopted market valuations of the property that exceeded the County’s estimated assessments. The Supreme Court affirmed in part, vacated in part, and remanded, holding that the tax court (1) did not clearly err by using the mall’s gross building area rather than its gross leasable area in its calculations of market value; (2) clearly erred when it rejected KCP’s discounted-cash-flow analysis, which KCP’s appraiser used to arrive at his income-approach valuation; and (3) abused its discretion by determining the value of the subject property relying solely on the sales-comparison approach. View "KCP Hastings, LLC v. County of Dakota" on Justia Law

The property at issue in this appeal was the ethanol-production facility owned by Guardian Energy, LLC. After the county assessor estimated the market value of the property, Guardian Energy challenged the assessments by filing petitions with the tax court. The tax court determined that the assessed value of the property was significantly higher than the values proposed by either party. Guardian Energy sought review. The Supreme Court (1) affirmed the tax court’s determination that twenty-seven tanks used in the ethanol-production process were taxable real property; but (2) vacated the tax court’s valuation of the ethanol plant, holding that the tax court failed adequately to explain its calculation of external obsolescence, and therefore, the court’s valuation of the facility was not reasonably supported by the record as a whole. View "Guardian Energy, LLC v. County of Waseca" on Justia Law

Relators were sixteen electric cooperatives located in Minnesota. The cooperatives filed amended sales-tax returns for tax periods spanning the years 2004-06 to recover sales taxes they had paid for the portion of the revenues that they later converted into equity. The Commissioner of Revenue initially granted the refunds claimed on the cooperatives’ amended returns. However, the Commissioner later determined that the refund was made in error and assessed the cooperatives to recover the amounts refunded to them. The cooperatives appealed. The tax court concluded that the cooperatives were not legally entitled to sales-tax refunds for any earnings that they later converted into equity and that the challenged assessments were timely. The Supreme Court affirmed in part, reversed in part, and remanded, holding (1) electric cooperatives may not reclassify portions of monthly payments by their customers as equity contributions and receive sales-tax refunds based on the reclassification; and (2) when the Commissioner assesses a taxpayer based on a deficiency created by an erroneous refund, the two-year statute of limitations for erroneous refunds generally applies. View "Connexus Energy v. Comm’r of Revenue" on Justia Law

Based on an indirect audit that the Commissioner of the Minnesota Department of Revenue conducted of the sales and use tax returns for Conga Corporation for the tax periods from January 1, 2007 through March 31, 2010, the Commissioner determined that Conga had unreported revenues for the relevant tax periods and issued an order assessing additional sales, use, and entertainment taxes, plus penalties and interest. The tax court affirmed the Commissioner’s order with respect to the assessment of 2007 taxes but reversed with the penalty assessment for tax years 2008-2010, concluding that the Commissioner’s decision to use an indirect audit was not supported by the record. The Supreme Court reversed, holding that the Commissioner’s decision to use an indirect audit to assess taxes was supported by the record. Remanded. View "Conga Corp. v. Comm’r of Revenue" on Justia Law

LumiData, Inc. is a software company that sells a software program called SOLYS to retail suppliers. Between 2005 and 2008, LumiData did not file Minnesota sales tax returns or pay sales tax on its SOLYS sales. The Commissioner of Revenue assessed sales tax on LumiData’s SOLYS sales for the period at issue, concluding the software sales were subject to sales tax. LumiData appealed the Commissioner’s order to the tax court, arguing that its software sales were nontaxable because modifications it made to its software removed it from the definition of “prewritten computer software” within the meaning of Minn. Stat. 297A.61(17). The tax court upheld the assessment, concluding that SOLYS was taxable, prewritten computer software. The Supreme Court affirmed, holding (1) because LumiData did not separately state its customization charges in its invoices, the tax court correctly concluded that the sales price for SOLYS was taxable as a sale of prewritten computer software; and (2) because the record did not establish that LumiData had reasonable cause to believe that its sales of SOLYS were not taxable, the tax court did not err in upholding the Commissioner’s penalty assessments. View "LumiData, Inc. v. Comm’r of Revenue" on Justia Law

The Commissioner of Revenue notified JME of Monticello (JME), a waste management service provider, that it intended to audit JME’s waste management returns for a certain period. After the audit, JME was assessed approximately $87,000 in additional solid waste management taxes and interest. The Commissioner reached this determination after concluding that JME improperly calculated its waste management tax based on JME’s incorrect interpretation of Minn. Stat. 297H.04. JME appealed and brought a motion for summary judgment. The tax court upheld the Commissioner’s tax order. The Supreme Court affirmed, holding that the Commissioner correctly interpreted section 297H.04 and had correctly calculated the tax. View "JME of Monticello, Inc. v. Comm’r of Revenue" on Justia Law

Interstate Traffic Signs, Inc. (“Interstate”) rented traffic control equipment to contractors working on road construction projects. Prior to April 2010, Interstate charged sales tax on the equipment rental charge but did not charge tax on its delivery and “pick-up” charges, which included costs associated with retrieving and returning the rental equipment to Interstate. Beginning in April 2010, Interstate charged sales tax on the delivery charges but did not charge tax on pick-up charges. After an audit, the Commissioner of Revenue assessed an additional $37,838 in sales and use tax, determining that Interstate should have been charging sales tax on its pick-up charges. The tax court upheld the Commissioner’s assessment, concluding that the pick-up charge was subject to sales tax pursuant to Minn. Stat. 297A.62(1). The Supreme Court affirmed, holding that pick-up charges fall within the definition of “sales price” under section Minn. Stat. 297A.61(7), making those charges subject to sales tax under section 297A.62(1). View "Interstate Traffic Signs, Inc. v. Comm’r of Revenue" on Justia Law