Justia Tax Law Opinion Summaries

Articles Posted in Minnesota Supreme Court
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The Supreme Court affirmed the decision of the Minnesota Tax Court holding that the Minnesota Legislature incorporated the federal "minimum base amount" limitation into Minnesota's research and development (R&D) tax credit statute, Minn. Stat. 290.068, and that for the 2011 tax year, the term "aggregate gross recipes" referred to federal aggregate gross receipts, not Minnesota aggregate gross receipts, holding that the tax court's conclusions were without error. Specifically, the Court held (1) to calculate Minnesota's R&D tax credit, Minnesota incorporates the "minimum base amount" limitation set forth in I.R.C. 41(c)(2); and (2) the plain language of Minn. Stat. 290.068, subd. 2(c) and its incorporation of the term "aggregate gross receipts" through the term "base amount" referred to federal aggregate gross receipts for the 2011 tax year, and therefore, the tax court did not err in concluding that federal aggregate gross receipts must be used in the fixed-base-percentage formula contained with the base amount calculation for General Mills, Inc.'s 2011 Minnesota R&D tax credit. View "General Mills, Inc. v. Commissioner of Revenue" on Justia Law

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The Supreme Court affirmed the decision of the tax court holding that the Minnesota Legislature incorporated the federal "minimum base amount" limitation into Minnesota's research and development (R&D) tax credit statute, Minn. Stat. 290.068, and that for the 2011 tax year the term "aggregate gross receipts" referred to federal aggregate gross receipts, not Minnesota aggregate gross receipts, holding that the reasoning from the Court's opinion in General Mills v. Commissioner of Revenue, __ N.W.2d __, filed today, governed this case as well. At issue was whether the Legislature's incorporation of the federal tax code's definition of the term "base amount" in the tax credit statute includes the federal "minimum base amount" limitation and whether the term "aggregate gross receipts" as used in the Internal Revenue Code formula for calculating the R&D credit refers to Minnesota or federal aggregate gross receipts. The Supreme Court affirmed the tax court's decision, holding (1) to calculate the Minnesota R&D tax credit, section 290.068, subd. 2(c) incorporates the "minimum base amount" limitation contained within I.R.C. 41(c)(2); and (2) the plain language of section 290.068, subd. 2(c) and its incorporation of the term "aggregate gross recipes" through the term "base amount" referred to federal aggregate gross receipts for the 2011 tax year. View "International Business Machines Corp. v. Commissioner of Revenue" on Justia Law

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The Supreme Court affirmed the decision of the tax court dismissing petitions filed by Wal-Mart Real Estate Business Trust (the Trust) challenging Anoka County's assessment of the Trust's three parcels of land in the county, holding that the tax court properly found that the properties were "income-producing" and that the Trust's disclosures were inadequate. Each parcel at issue in this case had a Walmart retail store, operated by Walmart, Inc. The Trust was a wholly-owned subsidiary of Walmart. The tax court dismissed the Trust's petitions challenging the Trust's assessment of the parcels because the Trust failed to disclose certain information before the deadline set forth in Minn. Stat. 278.05, subd. 6(a). The Trust appealed, arguing that it was not subject to the mandatory disclosure rule because Walmart stores are not "income-producing" within the meaning of the tax statute's mandatory-disclosure provision. The Supreme Court affirmed, holding that the properties were income-producing and that the Trust's disclosures were inadequate. View "Wal-Mart Real Estate Business Trust v. County of Anoka" on Justia Law

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The Supreme Court affirmed the decision of the tax court affirming the conclusion of the Commissioner of Revenue that the sales tax exemption in Minn. Stat. 297A.68, subd. 5 for the purchase of capital equipment did not apply to items that Kroll Ontrack, LLC purchased. Kroll - a Minnesota LLC that sold technology-driven services to government entities, law firms, and corporate law departments - provided two internet-based programs that allowed its customers to maintain private databases of litigation documents and to sort, search, and produce relevant documents from those databases. From March 1, 2011 to November 30, 2012 Kroll purchased machinery and equipment needed to run its computer system and paid Minnesota sales tax on its purchases. In 2014, Kroll filed two requests for a refund of the sales tax it paid on the machinery and equipment, asserting that these items qualified as exempt capital equipment. The Commissioner of Revenue denied the refund claim. The tax court affirmed. The Supreme Court affirmed, holding that Kroll's system did not qualify for the capital equipment exemption in Minn. Stat. 297A.68, subd. 5. View "Kroll Ontrack, LLC v. Commissioner of Revenue" on Justia Law

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The Supreme Court affirmed the decision of the court of appeals affirming the decision of an unemployment law judge upholding the determination of the Minnesota Department of Employment and Economic Development that the wages Appellant paid to workers who hold H-2A and J-1 visas are subject to unemployment insurance taxation, holding that the court of appeals did not err in concluding that Appellant owed the taxes. Appellant, a corporation that grows and sells fruits and vegetables, began hiring H-2A and J-1 nonimmigrant visa holders in 2010. In 2016, the Department of Employment and Economic Development determined that Appellant owed $154,726 in unpaid unemployment insurance taxes, mostly on the wages of the H-2A and J-1 visa workers. An unemployment judge upheld the determination, concluding that the visa workers' wages were subject to unemployment insurance taxation under Minnesota law. The court of appeals affirmed. The Supreme Court affirmed, holding that Appellant must pay unemployment insurance taxes on these workers' wages. View "Svihel Vegetable Farm, Inc. v. Department of Employment & Economic Development" on Justia Law

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The Supreme Court discharged the writ of certiorari sought by Guardian Energy and dismissed the appeal in this case, holding that the order appealed from was not a final order at the time Guardian petitioned for a writ of certiorari, and therefore, this Court lacked jurisdiction. In 2015, the Supreme Court remanded this case to the tax court, concluding that the tax court's external-obsolescence calculations in valuating Guardian's property were not reasonably supported by the records. Before judgment was entered on the tax court's new order entered in 2016, Waseca County filed a motion requesting correction of computational errors made by the tax court through amended findings. Thereafter, the tax court stayed entry of judgment. Before the tax court ruled on the County's motion, Guardian sought review of the tax court's order. The Supreme Court dismissed the appeal for lack of jurisdiction, holding that the County's unresolved motion and the tax court's stay of entry of judgment rendered the 2016 order not final. Therefore, this Court lacked jurisdiction over Guardian's appeal. View "Guardian Energy, LLC, Relator v. County of Waseca" on Justia Law

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The Supreme Court affirmed the decision of the tax court upholding the decision of the Commissioner of Revenue to include Pell grants in its calculation of Relators’ household income, holding that “nontaxable scholarship or fellowship grants” as used in Minn. Stat. 290A.03(3)(a)(2)(xiii) is plain and unambiguous and includes Pell grants. Household income is used to determine eligible for, and the amount of, a property tax income and includes “nontaxable scholarship or fellowship grants.” Relators argued that Pell grants are not scholarships or fellowships and therefore cannot be included in the income calculation made to determine the amount of the property tax refund. The Supreme Court disagreed, holding that Pell grants are nontaxable and therefore includable in calculating household income. View "Waters v. Commissioner of Revenue" on Justia Law

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At issue was whether a notice to remove an assigned tax court judge was timely and, if so, whether the assigned judge erred in finding that it was impracticable to honor the notice. OCC, LLC, a property owner in Hennepin County, petitioned for a writ of mandamus that directed the tax court to vacate an order that quashed OCC’s notice to remove the assigned tax court judge and to honor the notice. The tax court declined specifically to decide whether the notice was timely and, instead, concluded that it was not “practicable” to honor the removal notice. The Supreme Court granted OCC’s petition for mandamus, directed the tax court to vacate its order quashing the notice to remove, and directed the tax court to honor that notice by assigning OCC’s consolidated tax proceedings to a different judge, holding (1) OCC’s notice to remove was timely under Minn. R. Civ. P. 63.03; and (2) the record did not establish that honoring the timely notice to remove was impracticable in this case. View "OCC, LLC v. County of Hennepin" on Justia Law

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The Supreme Court held that Minnesota’s Legend Drug Tax, Minn. Stat. 295.52(4), applies to a non-resident pharmacy’s delivery of prescription drugs to Minnesota-based patients and doctors and that such application does not violate the Due Process Clause or Commerce Clause of the United States Constitution. Respondent-pharmacy requested funds from the Department of Revenue for taxes paid under the Legend Drug Tax on transactions between Respondent’s non-resident pharmacies and Minnesota-based patients and doctors. The Commissioner of Revenue denied the refunds. The Tax Court granted summary judgment for Respondent, concluding that the Legend Drug Tax did not apply to the transactions at issue. The Supreme Court reversed, holding that the tax did apply to the transactions and that application of the tax comported with the Due Process and Commerce Clauses of the United States Constitution. View "Walgreens Specialty Pharmacy, LLC v. Commissioner of Revenue" on Justia Law

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The Supreme Court held that the tax court lacked jurisdiction to consider a motion filed in a case arising from a tax petition that was automatically dismissed by operation of law. Ronald and Dee Johnson challenged the County’s assessment of their property taxes. The County automatically dismissed the petition by operation of law because the Johnsons had not paid a portion of their property taxes by the date required by law. The tax court declined to consider the Johnsons’ motion regarding their petition because the petition had been automatically dismissed by statute and had not been reinstated. The Supreme Court affirmed, holding that the tax court correctly concluded that it no longer had jurisdiction over the dismissed petition. Specifically, the Court held (1) the requirements of Minn. Stat. 783.03(1) were met; and (2) the Johnsons’ arguments challenging the constitutionality of section 278.03(1) were without merit. View "Johnson v. County of Hennepin" on Justia Law