Justia Tax Law Opinion Summaries

This case involves Alliance Housing Incorporated and North Penn Supportive Housing LLC, collectively known as Alliance, Minnesota nonprofits operating to create, own, and operate affordable housing for low and very low-income people. Alliance owns several properties in Minneapolis, which are used exclusively as private residences for tenants whose incomes are 30–50 percent of the area median income. Alliance provides some supplies and cleaning services to various units but does not occupy the properties. In late 2018, Alliance applied for tax exemption for all its properties in assessment year 2020. The Minneapolis City Assessor denied the applications. Alliance then filed a property tax petition for the assessment year 2020, payable in 2021, claiming that its properties were tax-exempt. The tax court concluded that the properties owned by Alliance were exempt from property taxes.The State of Minnesota in Supreme Court held that for purposes of qualifying for tax exemption under Article X, Section 1, of the Minnesota Constitution, an institution of purely public charity with a purpose of providing housing for low-income individuals uses its real property in furtherance of its charitable purpose when it leases its property to its intended beneficiaries for personal residence. The court found that when the very purpose of an Institution of Purely Public Charity (IPPC) is to own and operate real property in a charitable manner for private residence, the exclusive residential occupancy of the property by the clients of the IPPC does not defeat the constitutional requirement that property be used to further a charitable purpose. Therefore, the tax court did not err in finding that Alliance’s properties are used for the tax-exempt purpose of providing affordable housing to low-income tenants. The decision of the tax court granting property tax exemptions to Alliance’s properties was affirmed. View "Alliance Housing Incorporated vs. County of Hennepin" on Justia Law

The Supreme Court affirmed the decision of the Minnesota Tax Court affirming the assessment of the Commissioner of Revenue assessing tax on an apportioned share of Cities Management, Inc.'s (CMI) income from the sale of the S corporation, holding that the income from the corporation's sale was apportionable business income.CMI, which did business in Minnesota and Wisconsin, and its nonresidential partial owner filed Minnesota tax returns characterizing the sale of CMI's goodwill as income that was not subject to apportionment by the State under Minn. Stat. Ann. 290.17. The Commissioner disagreed and assessed tax on an apportioned share of the corporation's income from the sale. The tax court affirmed. The Supreme Court affirmed, holding that CMI's income did not constitute "nonbusiness" income under section 290.17, subd. 6 and may be constitutionally apportioned as business income. View "Cities Management, Inc. v. Commissioner of Revenue" on Justia Law

The Supreme Court affirmed in part and vacated in part the decision of the tax court that the taxable 2018 market value of a DoubleTree in Bloomington was $25,500,000, an amount that exceeded the valuations offered by the DoubleTree's owner and the County of Hennepin, holding that remand was required on a single issue.The County initially assessed the value of the DoubleTree property at $31,586,400, but Relator, the DoubleTree's owner, appealed the valuation to the tax court. After a trial, the tax court determined that the taxable 2018 market value of the DoubleTree was $25,500,000. The Supreme Court vacated the judgment in part and otherwise affirmed, holding that remand was required for the tax court to revisit and explain its adoption of the percentage reduction to the sales price of one of the hotels it used in its sales comparison analysis to account for non-taxable assets included in the sales price of comparator hotels. View "Bloomington Hotel Investors, LLC v. County of Hennepin" on Justia Law

The Supreme Court affirmed the judgment of the Minnesota Tax Court reducing the Commissioner of Revenue's valuations of CenterPoint Energy Minnegasco's natural gas distribution pipeline system for January 2, 2018 through January 2, 2019, holding that the Commissioner was not entitled to relief.The tax court reduced the Commissioner's valuations and ordered the Commissioner to recalculate Minnegasco's tax liability. The Commissioner appealed, challenging the tax court's income-equalization and cost approaches. The Supreme Court affirmed, holding that the tax court (1) did not err in the way that it used the Commissioner's initial assessments when evaluating the totality of the evidence and making its independent evaluations; (2) did not abuse its discretion in considering the conflicting expert opinions; and (3) did not clearly err in finding external obsolescence. View "Commissioner of Revenue v. CenterPoint Energy Resources Corp." on Justia Law

The Supreme Court affirmed the judgment of the Minnesota Tax Court, though its adjustments, increasing the market value of the real estate of the Minneapolis Hyatt Regency Hotel for the tax years 2016 through 2018, holding that when a county opposes discovery and the taxpayer moves to compel discovery, the balancing test found in Minn. Stat. 13.03, subdivision 6 is applicable.Relator, which owned the Hotel, challenged the market values assessed by the County of Hennepin for the tax years at issue, arguing that the tax court clearly erred when it accepted the appraisal report of Relator's expert but then made unsupported and unexplained adjustments to the expert's valuations. The Supreme Court affirmed, holding that the tax court (1) did not err or abuse its discretion in its discovery and evidentiary rulings; and (2) did not clearly err in adjusting Relator's valuation of the hotel real estate. View "1300 Nicollet, LLC v. County of Hennepin" on Justia Law

The Supreme Court affirmed the judgments of the tax court declining to include a "concession fee" as rental income attributable to the properties in this case under the income-capitalization approach to property valuation, holding that the tax court did not err.At issue was Hennepin County's valuation of the respective properties owned by Enterprise Leasing Company of Minnesota and Avis Budget Car Rental, LLC at the Minneapolis-St. Paul International Airport. The tax court disagreed with Hennepin County's approach, decided not to include the concession fee as rental income, and estimated a market value in each case that was lower than the value that the County sought at trial. The Supreme Court affirmed in both cases, holding that the tax court did not clearly err in excluding the concession fee from rental income. View "Enterprise Leasing Co. of Minn. v. County of Hennepin" on Justia Law

The Supreme Court reversed the judgment of the tax court denying summary judgment to Rainbow Early Education Center, an early childhood center, on its claim for a tax exclusion as a seminary of learning under Minn. Const. art. X, 1 and Minn. Stat. 272.02, subd. 5, holding that the tax court did not correctly apply the standard set forth in State v. Northwestern Preparatory School, 83 N.W.2d 242 (Minn. 1957).Rainbow petitioned for a property tax exemption, claiming status as a seminary of learning. Because prior decisions concerning the meaning of the phrase "seminaries of learning" centered on secondary or postsecondary institutions Rainbow cited licensure, facilities, programming, and rating by a government-administered best practices program in support of its claim that it was entitled to a property tax exemption . The tax court granted summary judgment to the County. The Supreme Court reversed, holding (1) an institution is an exempt seminary of learning when it has an educational purpose, provides a broad general education, and does so in a thorough and comprehensive manner; and (2) Rainbow presented uncontroverted evidence of each element. View "Under the Rainbow Early Education Center v. County of Goodhue" on Justia Law

The Supreme Court affirmed the judgment of the tax court ruling on certain motions filed by Taxpayer and rejecting Taxpayer's statutory claim that its property was unequally assessed, holding that the tax court did not abuse its discretion in ruling on the motions, and Taxpayer failed to present evidence to support the unequal assessment claim.On appeal, Taxpayer challenged the tax court's denial of its motion to compel Washington County to produce information about other similar properties, its motion to amend the pleadings to add unequal assessment and disparate treatment claims, and its motion to compel the county assessor to testify. Taxpayer further appealed the tax court's rejection of Taxpayer's unequal assessment claim. The Supreme Court affirmed, holding (1) the tax court's denial of Taxpayer's motions was not an abuse of discretion; and (2) the tax court did not err in rejecting the unequal assessment claim. View "Chambers Self-Storage Oakdale, LLC v. County of Washington" on Justia Law

The Supreme Court affirmed the decision of the tax court concluding that three clinics - Perham Clinic, Ottertail Clinic, and New York Mills Clinic - were not subject to property tax because they clinics were exempt under Minn. Stat. 447.31, subd. 6, holding that there was no error.The exemption at issue is provided for hospital districts. At issue on appeal was whether to classify the three medical clinics that were owned and operated by Perham Hospital District as taxable or exempt. Otter Tail County classified the clinics as commercial and thus subject to property tax, concluding that the tax exemption at issue was available to hospitals and not to clinics. After a trial, the tax court concluded that the clinics were exempt from tax under Minn. Stat. 447.31, subd. 6. The Supreme Court affirmed, holding that the tax court did not clearly err in finding that the District used the clinics to improve and run Perham Hospital during the tax years at issue. View "Perham Hospital District v. County of Otter Tail" on Justia Law

The Supreme Court affirmed the judgment of the Tax Court upholding that constitutionality of the Minnesota sales or use tax for aircraft purchases, holding that Minn. Const. art. X, 5 bars only the application of duplicative personal property taxes to aircraft.Article X, section 5 allows the Legislature to tax aircraft using the airspace over Minnesota "in lieu of all other taxes." Relators purchased aircraft outside of the state, paid the use tax, paid a separate annual tax imposed on aircraft, and then requested a refund of the use tax. When the refunds were denied, Relators sued the Department of Revenue, arguing that the use tax is unconstitutional under Minn. Const. art. X, 5. The Tax Court granted summary judgment for the Commissioner of Revenue. The Supreme Court affirmed, holding (1) the phrase "[a]ny such tax on aircraft shall be in lieu of all other taxes," as used in article X, section 5, prohibits only the application of duplicative personal property taxes on aircraft; and (2) the tax imposed on aircraft by Minn. Stat. 297A.82 does not violate article X, section 5. View "Sheridan v. Commissioner of Revenue" on Justia Law