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Lake Country Power Cooperative v. Commissioner of Revenue

Supreme Court of Minnesota

July 18, 2018

Lake Country Power Cooperative, Mille Lacs Energy Cooperative, Peoples Energy Cooperative, Relators,
v.
Commissioner of Revenue, Respondent.

         Tax Court Office of Appellate Courts

          Jeffery J. McNaught, The Law Offices of Jeffery J. McNaught, LLC, Minneapolis, Minnesota; and Ann E. Kennedy, Ann E. Kennedy Law PLLC, Saint Paul, Minnesota, for relators.

          Lori Swanson, Attorney General, Kristine K. Nogosek, Assistant Attorney General, Saint Paul, Minnesota, for respondent.

         SYLLABUS

         Appeals taken by electricity distribution cooperatives from notices of value issued by the Commissioner of Revenue were governed by the 60-day deadline established by Minn. Stat. § 271.06, subd. 2 (2016). Because those appeals were filed more than 60 days after the date of the Commissioner's notices, the appeals were untimely.

          OPINION

          McKEIG, JUSTICE.

         Relators Lake Country Power Cooperative, Mille Lacs Energy Cooperative, and Peoples Energy Cooperative (collectively, "the Cooperatives") each separately appealed the valuation orders of the Commissioner of Revenue ("the Commissioner") for the 2014, 2015, and 2016 tax years. The tax court dismissed the appeals as untimely because they were not filed within the 60-day deadline for appeals from orders of the Commissioner, see Minn. Stat. §§ 271.06, subd. 2; 273.372, subd. 2(b) (2016). The Cooperatives appealed, arguing that the tax court failed to recognize that the two appeal paths provided by subdivision 2 of Minnesota Statutes § 273.372 effectively establish a single deadline, namely, April 30 of the year in which the tax becomes payable. Because the two appeal paths provided by section 273.372 apply to distinct steps in the property tax assessment process and therefore have separate deadlines, and because the Cooperatives' notices of appeal were governed only by a 60-day deadline, and were therefore untimely, we affirm the decision of the tax court.

         FACTS

         The Cooperatives are electricity distribution cooperatives that operate electric power companies. Their property-transmission lines and certain equipment- is assessed by the Commissioner at estimated market value. Minn. Stat. § 273.37, subd. 2 (2016). On or before August 1 each year, the Commissioner certifies the assessed values to the city or county assessor in which the property is located. Id.; see also Minn. R. 8100.0200 (2015) (stating that after the Commissioner establishes the estimated value, "the portion" of the utility's taxable system allocated to Minnesota "is distributed to the various taxing districts within the state"). The local assessor then uses that value to calculate the tax for the property located within the taxing district. See Minn. Stat. § 273.37, subd. 2 (explaining that the property is assessed "where situated").

         Utilities with property subject to assessment by the Commissioner can appeal the assessment, valuation, or classification of their property under section 273.372. See Minn. Stat. § 273.372, subd. 1(b) (2016) (explaining that the statute governs "appeals to court of a claim that utility . . . property has been partially, unfairly, or unequally assessed, or assessed at a valuation greater than its real or actual value, [or] misclassified"). The statute provides two possibilities for an appeal. First, the utility can appeal "from an order of the commissioner," which includes "a certification or notice of value by the commissioner." Id., subd. 2(b). These appeals are governed by chapter 271 of the Minnesota Statutes. Id. Alternatively, the utility may appeal "from the tax that results from implementation of the commissioner's order," in which case the appeal is governed by chapter 278 of the Minnesota Statutes. Id., subd. 2(c).

         For each of the tax years at issue here-2013, 2014, and 2015-the Commissioner sent each Cooperative a notice of assessed value of its property, which would be used to calculate the Cooperatives' property taxes for the taxes due in the following year.[1]

         In April of the year after the Commissioner's valuation orders were issued-that is, April of 2014, 2015, and 2016-the Cooperatives filed notices of appeal with the tax court. The notices of appeal stated that the Cooperatives appealed from "Orders of the Commissioner," specifically, the Commissioner's "valuation" of each Cooperative's property. The Cooperatives attached a copy of the Commissioner's valuation notice from the preceding year to each notice of appeal. The Cooperatives also asserted that the tax court had jurisdiction over their appeals under Minn. Stat. §§ 271.01, 271.06, and 273.372 (2016). In answer to each notice of appeal, the Commissioner asserted that the appeals were untimely, the tax court lacked subject matter jurisdiction over the appeals filed in 2015 and 2016, and the Cooperatives had not met the statutory requirements for their 2016 appeals.

         All nine appeals were stayed by joint agreement of the parties, pending our decision in Minnesota Energy Resources Corp. v. Commissioner of Revenue (MERC I), 886 N.W.2d 786 (Minn. 2016). After we issued our decision in MERC I, the tax court ordered a limited consolidation of the Cooperatives' appeals for the sole purpose of allowing the Commissioner to file a motion to dismiss the appeals for lack of subject matter jurisdiction. The Commissioner moved for dismissal on March 29, 2017, asserting that all nine appeals were subject to the 60-day time limit in Minn. Stat. § 271.06, subd. 2. Further, because the Cooperatives filed their appeals after expiration of that deadline, the Commissioner contended that the tax court lacked jurisdiction over the appeals, which required dismissal. The Cooperatives jointly opposed this motion, arguing that their appeals were timely under Minn. Stat. § 278.01, subd. 1(c) (2016), which allows taxpayers to file an appeal as late as April 30 of the year in which the tax is due. The Cooperatives asserted that Minn. Stat. § 273.372 created two overlapping appeal paths, they were free to pursue either path in their appeals, and their appeals were therefore timely under the path created by subdivision 2(c) of section 273.372.

         Finding "no doubt" that the Cooperatives had appealed orders of the Commissioner, the tax court concluded that the appeals were governed by Minn. Stat. § 273.372, subd. 2(b), and, by extension, chapter 271 of the Minnesota Statutes. The tax court therefore concluded that the Cooperatives' appeals were subject to the 60-day deadline in Minn. Stat. § 271.06, subd. 2. Finally, because the Cooperatives' appeals were all filed more than 60 days after the date ...


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