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STATE OF MINNESOTA

IN SUPREME COURT

A20-0977

Tax Court Anderson, J.

Hibbing Taconite Company, J.V., et al.,

Respondents,

vs.
Filed: April 21, 2021
Office of Appellate Courts
Commissioner of Revenue,

Relator.

________________________

Charles F. Webber, Michael J. Kaupa, Faegre Drinker Biddle & Reath, LLP, Minneapolis,
Minnesota, for respondents.

Keith Ellison , Attorney General , Jennifer Kitchak, Kristine K. Nogosek, John M.
O’Mahoney, Assistant Attorneys General, Saint Paul, Minnesota, for relator.

________________________
S Y L L A B U S
The statutory directive of Minn. Stat. § 298.01, subd. 4 (2012), requiring that a
taxpayer’s occupation tax liability be determined “in the same manner” as the franchise tax
imposed on corporations, does not require respondents to reduce a deduction allowed under
federal law by the percentage that must be taken by corporations.
Affirmed.

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O P I N I O N
ANDERSON, Justice.
In this appeal, we must determine the proper computation of the Minnesota
occupation tax, specifically as that tax relates to a deduction provided under federal law .
At issue is the meaning of the statutory phrase “determined in the same manner ” as the
franchise tax that Minnesota imposes on corporations, see Minn. Stat. § 298.01, subd. 4
(2012), and whether this phrase requires respondents Hibbing Taconite Company, J.V. and
United Taconite , LLC (collectively Taxpaye rs), when calculating their occupation tax
liability, to reduce a deduction claimed under federal law by the percentage that federal
law imposes on corporations. The Minnesota Tax Court concluded that, under the plain
meaning of the statutory phrase at issue here, the Taxpayers were entitled to compute their
Minnesota occupation tax liability without taking the percentage reduction imposed on
corporations for the federal deduction at issue. Because we hold that the plain meaning of
the language in subdivision 4 of section 298.01 does not require the Taxpayers to reduce
the amount of the claimed federal deduction by the percentage imposed on corporations,
we affirm the decision of the Minnesota Tax Court.
FACTS
The facts are stipulated and undisputed. The Taxpayers are “engaged in the business
of mining,” and thus both are subject to the Minnesota occupation tax. 1 See Minn. Stat.

1 Hibbing Taconite Company is a joint venture that owns and operates a taconite mine
near Hibbing. United Taconite is a limited liability company that owns and operates a
taconite mine near Eveleth.

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§ 298.01, subd. 4 (2012).2 The occupation tax, which is imposed on taxable income, “is
determined in the same manner as the tax imposed by section 290.02,” id., and includes
some, although not all, of the modifications to income set out in section 290.01,
subdivisions 19c and 19d , see id., subd. 4b (2012) (excluding some modifications to
income allowed under section 290.01). Minnesota Statutes § 290.02 (2012), imposes a
franchise tax on the taxable income of corporations with contacts in this state. It is
undisputed that the Taxpayers are not corporations; both are classified as partnership s for
state and federal tax purposes.
The Taxpayers timely filed their Minnesota occupation tax returns for tax years
2012 and 2013. In computing the income subject to the occupation tax for these years, the
Taxpayers claimed a deduction allowed under federal law as a “reasonable allowance for
depletion,” I .R.C. § 611(a) ; they did not reduce that deduction by the percentage that
federal law requires corporations to take , referred to here as the federal percentage
depletion deduction. See I.R.C. § 291(a)(2) (requiring corporations to reduce the depletion
deduction by 20 percent).3

2 The tax years at issue are 2012 and 2013. Although some of the relevant tax laws
were amended in 2013, to avoid confusion and for consistency with the approach used by
the tax court, we cite only to the 2012 version of the statutes at issue.

3 The depletion deduction is further calculated acco rding to I .R.C. § 613 , and the
percentage reduction is calculated as explained in I.R.C. § 291(a)(2) . Minnesota law
requires corporations to modify federal taxable income by adding back the amount taken
as a federal percentage depletion deduction. Minn. Stat. § 290.01, subd. 19c(9). For
Minnesota’s occupation tax, a taxpayer does not use the modification in subdivision 19c(9)
in calculating the income subject to the tax. See Minn. Stat. § 298.01, subd. 4c (a) (2012)

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In September 2017, following an audit, the Commissioner of the Minnesota
Department of Revenue (Commissioner) iss ued a Notice of Change in Tax to the
Taxpayers. In the notice, the Commissioner adjusted the Taxpayers ’ 2012 and 2013
occupation tax liability by applying the federal 20-percent reduction to their claimed
federal depletion tax deduction—in other words, generally, the Commissioner reduced the
amount of the deduction, thus increasing the amount of taxable income, which in turn
resulted in additional Minnesota occupation tax owed for those tax years . The
Commissioner reasoned that the statutory phrase “d etermined in the same manner as the
tax imposed by section 290.02 ” contained in Minn. Stat. § 298.01, subd. 4, requires
taxpayers subject to the occupation tax to be treated the same as corporations subject to the
corporate franchise tax under Minn. Stat. § 290.02. Because corporations are subject to
tax under Minn. Stat. § 290.02, and because corporations are required by federal law to
reduce a depletion tax deduction by 20 percent , the Commissioner concluded that the
Taxpayers were required to reduce their claimed federal depletion deduction by 20 percent
as well . See I.R.C. § 291(a)(2) (imposing a 20 percent reduction of the depletion
deduction).
After t he Commissioner’s notice was affirmed on administrative appeal , the
Taxpayers each appealed to the Minnesota Tax Court. The two appeals were consolidated
and the Taxpayers moved for summary judgment , which the tax court granted . The tax

(stating that “the provisions of section 290.01” subdivision 19c(9) are “not used to
determine taxable income”) . Therefore, in general terms , while the federal deduction is
added back when calculating taxable income for the corporate franchise tax, it re mains a
deduction—a reduction of taxable income—for the occupation tax.

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court concluded that the legislative direction to determine the occupati on tax liability “in
the same manner as the tax imposed by section 290.02” “is to be understood as procedural
rather than as substantive.” Hibbing Taconite Co. v. Comm’r of Revenue, Nos. 9266-R &
9267-R, 2020 WL 2843472 at *4 –5 (Minn. T.C. May 27, 2020). The tax court also
concluded that , because the Taxpayers were not required to add the federal depletion
deduction back to their income in calculating their occupation tax liability, “they were
entitled to retain the full deductions they actually took, without 20% reductions.” Id. at *5.
The Commissioner filed a writ of certiorari with our court, appealing the decision
of the tax court.
ANALYSIS
The Legislature requires the state’s occupation tax to be “determined in the sam e
manner as the tax imposed by section 290.02.” See Minn. § 298.01, subd. 4 (2012). There
is no dispute here that the Taxpayers are entitled to claim the federal depletion deduction
in calculating the income subject to Minnesota’s occupation tax. The di spute is simply
over the amount of that deduction: is it with or without the 20-percent reduction that federal
law imposes on corporations.
The Commissioner argues that because only corporations are subject to the tax
imposed by Minn. Stat. § 290.02, and because corporations are required under federal law
to apply a 20 -percent reduction to any claimed depletion tax deduction , the Legislature
intended that all taxpayers claiming this deduction under section 298.01 be treated the
same. In other words, the Commissioner asserts that the directive to determine the
occupation tax “in the same manner as the tax imposed by section 290.02 ” requires the

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Taxpayers, even though not organized as corporations, to nonetheless apply the same
reduction to their claimed federal depletion deduction that a corporation would apply—20
percent—for tax years 2012 and 2013.
The Taxpayers argue that the tax court correctly concluded that the statutory phrase
“[t]he tax is determined in the same manner as the tax imposed by section 290.02” merely
requires the occupation tax be computed using the same method or procedure of
computation as the corporate franchise tax , rather than requiring the same treatment of
noncorporations and corporations. The Taxpayers also argue that the Commissioner
ignores the plain language of the federal percentage depletion tax deduction provision,
I.R.C. § 291(a), which applies the 20-percent reduction to any claimed federal percentage
depletion tax deduction only “in the case of a corporation.” Because, the Taxpayers argue,
it is undisputed that they are not corporations, the tax court correctly concluded that they
are not required to reduce the amount of their claimed deductions by 20 percent.
We review t he tax court’s interpretation of stat utes de novo. Manpower, Inc. v.
Comm’r of Revenue , 724 N.W.2d 526, 528 (Minn. 2006). On questions of statutory
interpretation, our objective is to effectuate the Legislature’s intent. Chapman v. Comm’r
of Revenue, 651 N.W.2d 825, 831 (Minn. 2002); see also Minn. Stat. § 645.16 (2020) (“The
object of all interpretation and construction of laws is to ascertain and effectu ate the
intention of the legislature.”). We “read a statute as a whole and give effect to all its
provisions.” Waters v. Comm’r of Revenue, 920 N.W.2d 613, 615 (Minn. 2018) (quoting
State v. Henderson, 907 N.W.2d 623, 625 (Minn. 2018)).

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We begin with the words of the statute. The Legislature did not provide any specific
clues to the meaning of the statutory phrase “[t]he tax is determined in the same manner as
the tax imposed by section 290.02” contained in Minn. Stat. § 298.01, subd 4. The parties
and the tax court focused primarily on two words in this phrase : determine and manner.
Accordingly, we consult other interpretive tools to ascertain the plain meaning of these
terms, including dictionary definitions. See Waters, 920 N.W.2d at 615.
One definition ascribed to the word “determine” is “to find out or come to a decision
about by investigation, reasoning, or calculation. ” Merriam–Webster’s Collegiate
Dictionary 340 (11th ed. 2014). Another source defines “determine” as “to settle or decide
(a dispute, question, etc.) by an authoritative or conclusive decision.” The Random
Dictionary of the English Language 542 (2d ed. 1987). Lastly, Black’s Law Dictionary
defines “determine” as “[t]he act of finding the precise level, amount, or cause of
something.” Determine, Black’s Law Dictionary (11th ed. 2019) . To summarize, these
unambiguous and synonymous definitions of “determine” mean the process of making a
decision.
Next, the term “manner” is defined as “a mode of procedure or way of acting.”
Merriam–Webster’s Collegiate Dictionary 756. Random House defines “manner” as “a
way of doing, being done, or happening mode of action, occurrence” and “mode of action,
occurrence.” The Random Dictionary of the English Language 1170. These two

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definitions of the term “manner” unambiguously and synonymously mean a particular
method or procedure.4
We now return to the specific language at issue. Minnesota Statutes § 298.01, subd.
4, states: “The tax is determined in the same manner as the tax imposed by section 290.02.”
This language plainly mandates that the occupation tax be ascertained using the same
method or procedure used for ascertaining the tax liability imposed under Minn. Stat.
§ 290.02.5
The Commissioner argues that, by imposing the occupation tax on a single, but
broad, class—persons—and then directing those persons to determine their occupation tax
liability “in the same manner” as corporations, the Legislature “erased the distinction ”
between types of entities. See Minn. Stat. § 298.001, subd. 3 (2012) (defining “person” by
including partnerships and corporations, among others); see also Minn. Stat. § 298.01,
subd. 4 (imposing the occupation tax on “[a] person engaged in the business of mining”).

4 The tax court consulted the American Heritage Dictionary to determine the plain
language meaning of the terms “determine” and “manner” as well. See Hibbing Taconite
Co., 2020 WL 2843472 at *4. The tax court deemed the term “determine” to mean “[t]o
establish or ascertain definitely, as after consideration, investigation, or calculation” and
the term “manner” to mean “a way of doing something” and concluded that the statutory
phrase at issue means “to ascertain by calculating in the same way.” Id. Our plain language
analysis tracks with the tax court’s analysis.

5 The Taxpayers rely on decisions from other jurisdictions, as well as a decision from
our court, State v. Rock Island Motor Transit Co., in which the Taxpayers claim that similar
phrasing was at issue. See 295 N.W. 519, 524 (Minn. 1940) (considering statutory
language authorizing an appeal “in the same manner” as appeals in other civil cases).
Because the statutory language at issue in these cases did not address tax calculation issues
as between two different tax types, and because we conclude that the plain meaning of the
words in the phrase at issue here are unambiguous, we do not rely on these decisions.

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In other words, the Commissioner contends that the Legislature intended all entities subject
to the occupa tion tax be treated as corporations regardless of actual legal entity status.
Thus, the Commissioner asks us to interpret the language at issue here —“the tax is
determined in the same manner as the tax imposed under section 290.02” —to mean,
“determined as if the taxpayer were a corporation.”
We reject this interpretation for two reasons. First, the Commissioner incorrectly
looks to who is liable for the tax—persons—and then incompletely analyzes the statutory
phrase at issue here. As previously stated, we give effect to all provisions in a statute. See
Waters, 920 N.W.2d at 615. The Commissioner ’s argument depends heavily on the
language “determined in the same manner as the tax imposed by section 290.02.” This
approach improperly narrows the focus and fails to give effect to the controlling noun
here—“The tax.” See Minn. Stat. § 645.16 (favoring a construction that gives effect to all
provisions). When read in its entirety, the statutory phrase at issue provides: “The tax is
determined in the same manner as the tax imposed by section 290.02.” Minn. Stat. 298.01,
subd. 4 (emphasis added). The Legislature’s use of “The tax” plainly shows that the object
of the phrase is the occupation tax, not the entity status of the parties subject to that tax.
Second, the conclusion that the Commissioner draws from linking who is liable for
the tax—a “person”—with the tax determination method—“the same manner as in section
290.02”—is not reasonably supported by the text of Minn. Stat. 298.01, subd. 4 . Nothing
in the plain language of the text provides a reasonable basis to conclude that the Legislature
intended to ignore the entity status f or occupation tax purposes. To the contrary, the
Legislature directed the Taxpayers not to follow the approach that corporations use under

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section 290.01 when it comes to the federal depletion deduction ; that is, clause 9 of
subdivision 19c, which directs corporations to add the federal depletion deduction back to
federal taxable income, is “not used to determine taxable income” when calculating
occupation tax liability. Minn. Stat. § 298.01, subd. 4c(a). Surely the Legislature would
have used more specific language to direct persons subject to the occupation tax to reduce
that deduction by the same percentage used by corporations under federal law, even though
it had decided to treat these taxpayers differently from how corporations are treated under
clause 9 of subdivision 19c. To interpret the statutory language as the Commissioner urges
us to do would require that we assume that the Legislature intended for the occupation tax
to be “ determined for purposes of the federal percentage depletion deduction as if the
taxpayer is a corporation .” Such an interpretation would require us to add words to the
statute, which we cannot do. State v. Carufel, 783 N.W.2d 539, 545 (Minn. 2010) (stating
that we “cannot add words to a statute not supplied by the legislature.”)
CONCLUSION

For the foregoing reasons, we affirm the decision of the tax court.6

Affirmed.

6 Because our holding rests solely on the interpretation of unambiguous language in
state statute, we do not reach the Taxpayers’ argument that the plain meaning of the federal
provisions implicated here—including I.R.C. § 291(a)(2)—also permits them to claim their
federal percentage depletion tax deduction without applying a 20-percent reduction.