Justia South Dakota Supreme Court Opinion Summaries

In the case before the Supreme Court of the State of South Dakota, a Minnesota-based company, Ellingson Drainage, Inc., was charged a use tax by the South Dakota Department of Revenue (DOR) after an audit revealed Ellingson had not paid use tax on equipment used in South Dakota but purchased elsewhere. Ellingson challenged the constitutionality of the tax in an administrative appeal, which was dismissed. The company then appealed to the circuit court, which affirmed the imposition of the tax, holding it did not violate the Due Process Clause of the Fourteenth Amendment or the Interstate Commerce Clause. Ellingson appealed this decision and the Supreme Court of the State of South Dakota also affirmed the imposition of the tax.The Court determined that the use tax, imposed under SDCL 10-46-3, met all four prongs of the Complete Auto test, which is used to determine if a tax violates the Interstate Commerce Clause. The Court found that Ellingson had a sufficient connection to South Dakota, the tax was fairly related to benefits provided to the taxpayer, the tax did not discriminate against interstate commerce, and the tax was fairly apportioned. Moreover, the Court concluded that the use tax did not violate the Due Process Clause of the Fourteenth Amendment, as Ellingson had a sufficient connection to South Dakota and the statute was rationally related to South Dakota values.The Court rejected Ellingson's argument that the tax was unfairly disproportionate to the extent of the equipment’s usage in South Dakota, stating that "use is use" and that the provisions of SDCL 10-46-3 do not contemplate a formula by which to measure use. The Court concluded that such a change is not a judicial one, but rather one better suited to the formulation of public policy by the Legislature. View "Ellingson Drainage v. Dep’t Of Revenue" on Justia Law

In South Dakota, McLane Western, Inc. and McLane Minnesota, Inc., South Dakota-licensed wholesalers of tobacco products, purchased Other Tobacco Products (OTP) from U.S. Smokeless Tobacco Brands, Inc. (UST Sales), who in turn purchased the products from U.S. Smokeless Tobacco Manufacturing Company, LLC (UST Manufacturing), a federally licensed tobacco manufacturer. McLane brought the OTP into South Dakota and paid the state's 35% tobacco tax. They calculated the tobacco tax they owed using the amount they paid to UST Sales for the OTP, a price higher than what UST Sales paid UST Manufacturing for the same OTP. McLane later submitted numerous refund requests to the South Dakota Department of Revenue, arguing that they overpaid their tax obligations as their tax should have been based on the price UST Sales paid UST Manufacturing.The Supreme Court of the State of South Dakota agreed that McLane overpaid its tobacco tax as it was based on the higher price it paid to UST Sales instead of the price at which UST Manufacturing sold tobacco products to UST Sales. However, the court also concluded that McLane was not entitled to a refund for the overpaid amounts. The court reasoned that although McLane overpaid its advance tax obligation, it fully recovered the advance tax it paid from the dealers to whom it subsequently sold the OTP. The dealers then recovered that tax from the consumers who purchased the OTP. Thus, McLane was made whole by its resale of the OTP and is not entitled to any refund. The court affirmed the Department’s denial of McLane’s request for a refund. View "Mclane Western, Inc. v. South Dakota Department Of Revenue" on Justia Law

The Supreme Court reversed the decision of the circuit court granting summary judgment for Lakota Lakes and denying Emily Bialota's cross-motion for summary judgment in this quiet title action, holding that Bialota accomplished valid service on the Minnesota Secretary of State.Bialota brought an action to quiet title in Pennington County, alleging that she had fee simple ownership in real property previously owned by Lakota Lakes but later sold at a tax sale. In its summary judgment motion, Lakota Lakes claimed that it had not been validly served with the notice of intent to take tax deed, rendering the tax deed void. In her cross-motion for summary judgment, Bialota argued that service upon Lakota Lakes was proper and that Pennington County had correctly issued a tax deed based upon her affidavit of completed service. The Supreme Court reversed, holding (1) South Dakota law controlled this Court's determination whether Bialota personally served the Secretary as Lakota Lakes' registered agent; (2) Bialota accomplished valid service on the Secretary; and (3) Bialota was entitled to the tax deed to the property. View "Bialota v. Lakota Lakes, LLC" on Justia Law

The Supreme Court affirmed the judgment of the South Dakota Department of Revenue rejecting U.S. Bank's method of calculating its federal income tax deduction from net income subject to the state's bank franchise tax for tax years 2010 through 2012, holding that there was no error.In rejecting U.S. Bank's method of calculating its federal income tax deduction from net income subject to South Dakota's bank franchise the Department denied the bank's request for a refund for the tax years 2010 and 2011 and disallowed the entire deduction for 2012. The Department then issued a certificate of assessment for additional tax and interest for 2012. The circuit court affirmed. The Supreme Court affirmed, holding that the circuit court correctly construed the "taxes imposed" text of S.D. Codified Laws 10-43-10.3(3). View "U.S. Bank National Ass'n v. S.D. Dep't of Revenue" on Justia Law

The Supreme Court affirmed the decision of the circuit court affirming the decision of the Oglala Lakota County Commission denying Wings as Eagles Ministries, Inc.'s petition seeking an abatement of its property taxes for 2014 and 2015, holding that the circuit court did not err.Wings applied for property tax exempt status for the 2014 and 2015 tax years. The applications were denied and became final determinations of the property's exempt status for those years. Wings then filed its abatement petition, which the Commission denied. The circuit court affirmed, concluding that Wings was unable to meet the threshold eligibility element for an abatement because the final determinations denying exempt status conclusively established that Wings was not exempt for the 2014 and 2015 tax years. The Supreme Court affirmed, holding (1) the circuit court did not err when it concluded that Wings did not qualify for an abatement under S.D. Codified Laws 10-18-1(3); and (2) Wings' estoppel argument was unreviewable on appeal. View "Wings As Eagles Ministries, Inc. v. Oglala Lakota County" on Justia Law

The Supreme Court affirmed the judgment of the circuit court concluding that Plaintiffs had standing to bring this declaratory judgment action challenging ad valorem property taxes that Day County assessed against them and upholding the disputed taxes, holding that the circuit court did not err.Plaintiffs were the Pickerel Lake Outlet Association, a South Dakota domestic non-profit corporation, and forty non-Indian owners of permanent improvements around Pickerel Lake. Plaintiffs claimed that federal law preempted taxation because their structures were on land held in trust for the Sisseton-Wahpeton Oyate or its members. The State defended the County's authority to levy the taxes, arguing that preemption did not apply and challenging Plaintiffs' standing to sue. The circuit court concluded that Plaintiffs had standing and upheld the County's authority to assess the taxes. The Supreme Court affirmed, holding (1) Plaintiffs satisfied all the prerequisites for standing; and (2) the County was neither explicitly nor implicitly preempted by the provisions of 25 U.S.C. 5108 from assessing ad valorem taxes against Plaintiffs. View "Pickerel Lake Outlet Ass'n v. Day County" on Justia Law

The Supreme Court affirmed the decision of the circuit court affirming the assessed value of Appellants' agricultural land by the Meade County Commission sitting as a board of equalization (the Board), holding that the circuit court did not err.Before the Board, Appellants argued that the director of equalization incorrectly applied statutory provisions to determine their land's production value. The Board further adjusted the assessment from an average of $519 per acre down to an average of $512 per acre. Appellants appealed the Board's decision to circuit court. After a trial de novo, the circuit court affirmed the Board's tax assessment of the property. The Supreme Court affirmed, holding that the circuit court did not err when it determined that (1) the Board complied with the statutory provisions for evaluating agricultural land in their assessment of Appellants' property; and (2) the Board's tax assessment of the property did not violate provisions of the South Dakota Constitution that require uniform taxation at no more than its actual value. View "Trask v. Meade County Commission" on Justia Law

The Supreme Court affirmed the decision of the circuit court affirming Meade County's denial of Hunt Companies, Inc.'s request for an abatement and refund of taxes overpaid, holding that, although the County overvalued Hunt's leasehold interest in a housing development, the circuit court did not err by denying Hunt's application for abatement and refund under S.D. Codified Laws 10-18-1.Hunt built the housing development at issue on land leased from the United States government. Hunt paid taxes assessed by the County on the property for 2011 through 2013. Hunt successfully challenged the County's valuations in circuit court, but the County denied Hunt's request for an abatement and refund. The Supreme Court affirmed, holding that the County was not required to grant Hunt's application for abatement and refund of taxes overpaid for the tax years at issue where Hunt chose not to use the pay-and-protest provisions of S.D. Codified Laws 10-27-2. View "In re Tax Refund Of Hunt Companies, Inc." on Justia Law

The Supreme Court affirmed the decision of the circuit court affirming in part and reversing in part the decision of the South Dakota Department of Revenue issuing Carsforsale.com a certificate of assessment for alleged use tax violations, holding that Carsforsale was not entitled to an advertising exemption or a sale-for-resale exemption.Carsforsale was a web-based business that offered dealers and individuals an online forum to advertise their vehicle for sale and also provided website hosting, social media integration, and other services. The Department found that Carsforsale was not entitled to an advertising exemption on disputed services and dismissed Carsforsale’s argument that the purchases of domain names were exempt under the sale-for-resale exemption. The Supreme Court held (1) Carsforsale was not entitled to the advertising exemption; and (2) Carsforsale was not entitled to the sale-for-resale exemption. View "Carsforsale.com v. South Dakota Department of Revenue" on Justia Law

The Supreme Court affirmed the circuit court’s judgment affirming a hearing examiner’s decision that an exemption from taxation for real property be increased to 100 percent but reversed the award of attorney fees, holding that the circuit court correctly upheld the hearing examiner’s decision but erred in its award of attorney fees.The Pennington County Board of Equalization established an exemption of thirty-two percent for the 2017 tax year for real property owned by American Legion Home Association Post 22. On American Legion’s administrative appeal, the hearing examiner concluded that the real property qualified for a 100 percent exemption under S.D. Codified Laws 10-4-9.2. The Supreme Court held that the circuit court (1) did not err in affirming the hearing examiner’s decision that the property was entitled to a 100 percent exemption under the statute; but (2) awarded attorney fees without sufficient information to determine a reasonable fee. The Court remanded the attorney fee issue. View "American Legion Home Ass’n Post 22 v. Pennington County" on Justia Law