Articles Posted in Minnesota Supreme Court

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This tax dispute arose out of a failed real estate investment that resulted in significant tax consequences for Germaine Harmon, the widow of one of the original investors. Harmon challenged the Commissioner of Revenue’s assessment of her 2010 Minnesota income-tax liability, which the Commissioner based on a Schedule K-1 filed by the partnership in charge of the foreclosed real estate investment. The Supreme Court affirmed the tax court’s grant of summary judgment in favor of the Commissioner, holding that the tax court did not err by determining that Harmon failed to overcome the presumption of validity of the Commissioner’s assessment of taxes. View "Harmon v. Commissioner of Revenue" on Justia Law

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In 1999, Yik Lo created H.K.D. Lo, Inc. Yik and his wife, Yau Lo, operated several restaurants through H.K.D., the last of which they sold in 2005. In approximately 2004, Yik and Yau’s son, Kee Lo, opened a restaurant called Jun Bo that Kee operated through H.K.D. In 2011, Yik and Yau formally dissolved H.K.D. In 2012, the Commissioner of Revenue assessed Yik personally liable for sales taxes owed by H.K.D. in the amount of $91,019. Yik appealed. The tax court concluded that Yik was not personally liable for H.K.D.’s unpaid tax debt because Yik was not a person who had “control of, supervision of, or responsibility for” filing H.K.D.’s tax returns or paying H.K.D.’s taxes. The Supreme Court reversed, holding that because Yik funded H.K.D., signed checks on its behalf, had a fifty percent stake in the company, and delegated day-to-day control of the business to someone else, Yik had control over H.K.D.’s tax obligations, despite the fact that Kee demanded and exercised authority over Jun Bo’s daily operations. View "Lo v. Commissioner of Revenue" on Justia Law

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At dispute in this case was the taxable value of Macy’s Retail Holdings, Inc.’s downtown Minneapolis property. Macy’s challenged the Minneapolis Assessor’s valuation of the property for the 2008, 2009, and 2010 tax years. After a trial, the tax court valued the property at figures lower than the assessor’s original valuation of the property for each of the years in question but not to the extent urged by the testimony and appraisal report of Macy’s expert witness. The Supreme Judicial Court affirmed, holding that the tax court (1) did not clearly err in its determination of the property’s highest and best use and in its consideration of comparable-sales data; (2) did not abuse its discretion when it declined to strike portions of the appraisal report and testimony of the County’s expert witness as a sanction for a discovery violation; and (3) did not clearly err in disregarding the sale of a nearby commercial property when it evaluated the comparable-sales data provided by the parties. View "Macy’s Retail Holdings, Inc. v. County of Hennepin" on Justia Law

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The Mandels owned a home that, in 2011, was damaged by rainwater. Based on an post-casualty appraisal, the Mandels deducted $82,247 from their income reflected on their 2011 federal tax return. This deduction also affected the Mandels’ Minnesota taxable income. Following an audit, the Commissioner of Revenue disallowed much of the Mandels’ casualty-loss deduction by reducing the allowable tax deduction to the amount of the cost of the repairs the Mandels actually made to their home. The Mandels appealed. The tax court granted summary judgment in favor of the Commissioner. The Supreme Court affirmed, holding that the tax court did not err in determining that the Mandels’ post-casualty appraisal was not “competent” and did not err in granting the Commissioner’s motion for summary judgment. View "Mandel v. Commissioner of Revenue" on Justia Law

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Menard, Inc. challenged Clay County’s assessment of the market value of Menard’s home improvement retail store as of January 2, 2011 through January 2, 2014. A trial ensued before the tax court, after which the court adopted market valuations below the County’s assessment values but above Menard’s expert appraiser’s valuation. Both Menard and the County appealed. The Supreme Court affirmed the tax court’s value determinations, holding that the tax court did not err in weighting the sales comparison approach and the cost approach for the valuation years at issue and did not fail adequately to explain its reasoning for that decision. View "Menard, Inc. v. County of Clay" on Justia Law

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Hennepin County assessed real estate taxes on two properties owned by STRIB IV, LLC. STRIB IV applied to the County to classify the properties under Minnesota’s Green Acres statute, but the County denied the application. The tax court affirmed. The Supreme Court affirmed the tax court’s order, holding that STRIB IV’s subject properties did not qualify for Green Acres classification, as the Green Acres statute does not include properties owned by single-member LLCs such as STRIB IV, and the result required by the Green Acres statute’s plain language is not absurd. View "STRIB IV, LLC v. County of Hennepin" on Justia Law

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Dahmes Stainless, Inc. challenged the additional use taxes and interest assessed by the Commissioner of Revenue on components that Dahmes purchased to manufacture its products. In making the assessment, the Commissioner determined that Dahmes’s products constituted improvements to real property because they were common law fixtures. The tax court disagreed, concluding that Dahmes’s products were tangible personal property rather than improvements to real property, and therefore, the Commissioner erred by assessing use taxes. Dahmes subsequently filed a Minnesota Equal Access to Justice Act (MEAJA) application for attorney fees. The tax court awarded fees, concluding that the Commissioner’s position was not “substantially justified” by a “reasonable basis in law and fact” under Minn. Stat. 15.472(a). The Supreme Court affirmed, holding (1) Dahmes’s MEAJA application for attorney fees was timely filed; and (2) the tax court did not abuse its discretion by awarding attorney fees. View "Comm’r of Revenue v. Dahmes Stainless, Inc." on Justia Law

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The Commissioner of Revenue disallowed certain charitable-contribution deductions claimed on an income tax return filed by Respondents. The tax court reversed and granted summary judgment in favor of Respondents. In doing so, the court excluded evidence offered by the Commissioner of Revenue regarding a computational error made in calculating Respondents’ tax liability and thus failed to correct Respondents’ tax liability to account for the Commissioner’s computational error. The Supreme Court affirmed, holding that (1) the tax court did not abuse its discretion in excluding the Commissioner’s evidence of a computational error; and (2) the tax court’s finding regarding Respondents’ tax liability was supported by the record. View "Antonello v. Comm’r of Revenue" on Justia Law

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Two churches (the Churches) located in the City of Saint Paul were subject to a right-of-way assessment (ROW assessment) that the City assessed to nearly every owner of real property within the city limits to pay for public right-of-way maintenance services. The Churches appealed their 2011 ROW assessment, arguing that the charge was a tax and was not imposed uniformly upon the same class of property and that the assessed amount improperly exceeded the special benefit to the Churches’ properties. The district court upheld the assessments after applying a reasonableness test, concluding that the ROW was not a tax imposed under the City’s taxing power but was a fee imposed under the City’s police power and, therefore, was not subject to constitutional restrictions on taxation. The court of appeals affirmed. The Supreme Court reversed, holding (1) the ROW assessment was imposed as an exercise of the City’s taxing power rather than its police power; and (2) summary judgment was inappropriate because a genuine issue of material fact existed regarding the extent of special benefits to the Churches’ properties attributable to the right-of-way services. View "First Baptist Church of St. Paul v. City of St. Paul" on Justia Law

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Blandin Paper Company (Blandin) owned 4,680 parcels of timberland located in Aitkin, Itasca, St. Louis, and Koochiching Counties (the Counties). Blandin challenged tax assessments of market value for the timberland properties. Before trial, the Counties filed a motion to exclude evidence Blandin offered regarding the unit-rule method for determining the market value of the property at issue. The tax court denied the motion, determining that the unit-rule method is admissible in property tax proceedings. At trial, the court adopted Blandin’s appraisal values based on the unit-rule method and reduced the assessor's aggregate market value of the properties. The Supreme Court reversed, holding (1) the unit-rule method to determine the fair market value of real property may be admissible in a property tax proceeding; (2) the record in this case does not establish that the appraisal evidence offered by Blandin satisfied the requirements set forth in this opinion for admitting such evidence; and (3) the case must be remanded for both parties to have the opportunity to present evidence in favor of their respective positions. View "County of Aitkin v. Blandin Paper Co." on Justia Law