Nagaraja v. Commissioner of Revenue, C1-83-572

• Decision Date: 22 June 1984
• Docket Number: No. C1-83-572,C1-83-572
• Citation: 352 N.W.2d 373
• Parties: Kakambi NAGARAJA, et al., Relators, v. COMMISSIONER OF REVENUE, Respondent.
• Court: Minnesota Supreme Court

Page 373

352 N.W.2d 373

Kakambi NAGARAJA, et al., Relators, v. COMMISSIONER OF REVENUE, Respondent.

No. C1-83-572.

Supreme Court of Minnesota.

June 22, 1984.

Syllabus by the Court

For purposes of determining whether a taxpayer is a claimant under Minn.Stat. Sec. 290A.03, subd. 8 (1982 and 1983 Supp.), visa status does not control the intent required to establish domicile.

Kathryn J. Sedo, Minneapolis, for relators.

Hubert H. Humphrey, III, Atty. Gen., Thomas K. Overton, Sp. Asst. Atty. Gen., Dept. of Revenue, St. Paul, for respondent.

Heard, considered, and decided by the court en banc.

AMDAHL, Chief Justice.

This case requires us to construe the Property Tax Refund Act, Minn.Stat. Secs. 290A.01-.23 (1982 & 1983 Supp.). More specifically, we must determine whether the Tax Court erred in holding that relators are not "claimants" under Minn.Stat. Sec. 290A.03, subd. 8 (1982 & 1983 Supp.).

Relators were denied property tax refunds under chapter 290A of the Minnesota Statutes, the Property Tax Refund (Act), for the tax year 1979. Relators filed timely protests of the denial with the Department of Revenue in November of 1980. Subsequently, in July of 1981, the Department extended the denial of property tax refunds to include previously allowed and paid refunds for the years 1976, 1977 and 1978. The Commissioner of Revenue consolidated all the protests and issued a final order on October 15, 1981 which denied all refunds granted or requested from 1976 to 1980. The relators filed timely appeals to the Minnesota Tax Court.

In February 1982, the Tax Court held a pretrial and shortly thereafter (on March 10, 1982) transferred the case to Ramsey County District Court. The case was transferred because it was thought that the Tax Court did not possess original jurisdiction to decide the constitutional questions raised by relators.

On March 31, 1982, the Ramsey County District Court transferred the case back to the Tax Court for trial on all issues pursuant to Minn.Stat. Sec. 271.01, subd. 5 (1980). The Commissioner objected to the transfer of the case back to the Tax Court. ¹

On June 30, 1982, a hearing on the merits was held and on March 3, 1983, after extensive post-trial briefing by the parties, the Tax Court issued its Findings of Fact, Conclusions of Law, Order for Judgment and Memorandum. On April 25, 1983, relators filed a petition for a writ of certiorari with this court and the writ was issued the same day. ²

The essential facts in this case are undisputed and simple. The relators are all nonimmigrant aliens ³ who lawfully entered the United States and State of Minnesota between 1974 and 1977. Four of the relators entered this country specifically to pursue graduate education at the University of Minnesota. Relator Tafesse came to the United States for open heart surgery. Subsequent to surgery and while he continued treatment for his heart condition, he enrolled in a computer graduate program at the University of Minnesota. All of the relators, except Tafesse, worked at the University of Minnesota as research or teaching assistants and paid federal, Minnesota and social security taxes on all of their income.

Dr. Nagaraja is a native of India who enrolled in the Ph.D. program in Veterinary Microbiology at the University of Minnesota in 1974. He completed his degree in 1979 and was appointed a research fellow at the University. While attending the University, he paid in-state tuition.

After being appointed as a research fellow in 1979, Dr. Nagaraja received a training visa and labor certificate allowing him to work full time. He paid income and social security taxes. Later, he applied for and was granted permanent resident status and plans to become a United States citizen upon completion of the naturalization process.

Nagaraja has a valid Minnesota driver's license and owns an automobile which required payment of Minnesota sales tax upon purchase of the vehicle. He intends to remain in Minnesota and to make it his permanent home.

For the years 1977 through 1979, Dr. Nagaraja applied for and received a property tax refund as a renter. In 1980 he received a letter stating that all of his refunds were disallowed and requiring him to pay back the previous refunds.

In 1976 relator Charmchi enrolled in the mechanical engineering Ph.D. program at the University of Minnesota. He is a citizen of Iran but because of political and professional reasons, does not plan to return to his native country. Currently, he lives in Farmington, Massachusetts, where he moved in 1979 when unable to secure employment in Minnesota.

Like Dr. Nagaraja, Charmchi has a Minnesota driver's license and owns an automobile purchased in Minnesota. Similarly, he paid in-state tuition while attending the University, worked as a research assistant because of visa restrictions and paid Minnesota and federal taxes on the income he earned at the University. Charmchi also received property tax refunds (renters' credit) for 1976, 1977, 1978 and was denied a property tax refund in 1979. The Commissioner of Revenue disallowed the previously paid refunds for the years 1976 through 1978 and requested that the refunds be paid back with interest.

Charmchi presently is in this country on a student visa with practical training status. If his present employer is satisfied with his work, then the company will apply for permanent residency status for him. He also hopes to become a U.S. citizen.

Relator Lee is a citizen of Taiwan. Lee entered this country in 1975 to pursue a Phd.D. in Pharmaceutics at the University of Minnesota. She worked as a research assistant while attending graduate school and paid both Minnesota and federal income taxes. This was her only source of income.

Lee married another graduate student from Taiwan while at the University. Her husband teaches at Penn State University where she plans to move upon completion of her Ph.D. Both Lee and her husband would like to receive permanent resident status and make the United States their home.

Lee filed state income tax returns from 1976 on and received property tax refunds until 1980 when her refund was denied. When the state denied Lee's property tax refund in 1980, it also requested that she pay back all previous refunds.

Relator Tehrani is a citizen of Iran who enrolled in the mechanical engineering Ph.D. program at the University of Minnesota in 1976. He received his degree in 1982 and currently is employed as a consultant at the University of Sherbrook, Quebec, Canada. While at the University of Minnesota, he paid in-state tuition and worked as a research assistant from March 1976 until December 1981. Tehrani paid Minnesota and federal income tax on the income he received while he lived in Minnesota. Tehrani moved to Canada after completing his Ph.D. because he was unable to secure employment in Minnesota. He has a Minnesota driver's license and owned an automobile in Minnesota from 1978 through 1982.

Tehrani received property tax refunds, as a renter, in 1976, 1977 and 1978; in 1980 the Commissioner of Revenue disallowed all his previous refunds and denied a refund for 1979.

Tafesse is a citizen of Ethiopia. After Tafesse's open-heart surgery, his physician wrote the Immigration and Naturalization Service (INS) and recommended that Tafesse be allowed to remain in this country for further medical treatment. Meanwhile, Tafesse started studying computer science at the University. Mr. Tafesse has received student loans from the State of Minnesota and pays in-state tuition. He has no present plans to return to Ethiopia. He wishes to become a permanent resident of the United States. He also has a Minnesota driver's license and purchased an automobile in Minnesota.

While attending the University, Tafesse did assembly line work at Control Data. He paid Minnesota and federal income tax and did not receive any economic aid from his family. He applied for and received, as a renter, property tax refunds in 1977 and 1978. In 1980, his claim for a 1979 property tax refund was denied and his earlier refunds were disallowed.

Review of Tax Court determinations is generally limited to determining whether there is sufficient evidence to support the Tax Court's decision. Miller's Estate v. Commissioner of Taxation, 240 Minn. 18, 20, 59 N.W.2d 925, 926 (1953). See also Commissioner of Revenue v. Stamp, 296 N.W.2d 867, 870 (Minn.1980) (court must determine whether Tax Court's decision is supported by the record). Although review of questions of fact is limited, this court has plenary power with respect to questions of law.

In 1975, the legislature enacted what is currently called the State of Minnesota Property Tax Refund Act (hereinafter "the Act"). State of Minnesota Income-Adjusted Homestead Credit Act, c. 437, art. 1, Secs. 1-21, 1975 Minn.Laws 1573-81 (currently codified at Minn.Stat. ch. 290A (1982)). The express purpose of the Act was to "provide property tax relief to certain persons who own or rent their homesteads." Minn.Stat. Sec. 290A.02 (1982). See Murphy v. Hiniker, 261 N.W.2d 836 (Minn.1978)

The legislative intent in enacting the Income-Adjusted Property Tax Credit Act [the Act] was to shift property tax burdens according to a family's ability to pay * * *. Furthermore, it is clear that the overall purpose is equalization, not only economic and social, but geographical.

Id. at 840. Since its enactment the Act has been amended in every legislative session. ⁴

Under the Act persons satisfying the definition of claimant are entitled to a credit. ⁵ In the original Act a claimant was "a person who filed a claim authorized by sections 1 to 21 and who was domiciled in this State during the calendar year for which the claim for relief was filed." Act, ch. 437, Sec. 3, 1975 Minn.Laws 1575. The Act also included part time Minnesota residents within its definition of claimant. ⁶ Throughout the Act's history, the basic definition of claimant has remained the same: " 'claimant'...