The Minnesota Tax Court lacked jurisdiction to hear an appeal of a sales tax assessment by a home repair and remodeling contractor because there was no appealable order. In addition, the contractor’s claim was barred by the doctrine of res judicata because the contractor had already appealed the assessment and the case was fully litigated. Furthermore, the contractor was not entitled to a refund because he had not paid sales tax to the state.
This was the contractor’s second appeal involving a sales tax assessment that was previously upheld by the Minnesota Supreme Court. In the first case, Schober v. Commissioner of Revenue (Schober 1), the state supreme court held that the contractor was properly assessed for Minnesota sales tax that he collected from customers but did not remit to the state. After the supreme court decided Schober 1, the Department of Revenue began collection efforts against the contractor and the contractor requested a refund even though he had paid no sales tax to the department.
No Appealable Order
After receiving the contractor’s formal request for a refund, the department sent the contractor a letter stating that the years at issue were covered in the Schober 1 case. In filing an appeal in the instant case, the contractor cited the department’s letter as the “order” he was appealing. The tax court held that this letter was not an order that could be appealed, and, therefore, the court lacked subject matter jurisdiction.
The tax court found that all factors establishing res judicata were satisfied in the instant case. The appeal in the instant case was based on the same facts as the prior litigation; the appeal involved the same parties as the prior case; a final decision was made against the contractor/appellant in the prior case; and the appeal was heard by the tax court and the state supreme court so the contractor had a full and fair opportunity to litigate the matter.
Under statute, a refund claim is available to a taxpayer who has paid tax in excess of the taxes lawfully due. In this case, the contractor admittedly failed to pay sales tax and failed to file a return. Thus, there was nothing that could have been refunded to the contractor.
Schober v. Commissioner of Revenue, Minnesota Tax Court, No. 8352-R, March 2, 2012, ¶203-707