                              STATE OF MINNESOTA
                                IN SUPREME COURT

                                       A15-1847

Tax Court                                                                   Hudson, J.

Michael and Jean Antonello,

                           Respondents,

vs.                                                             Filed: August 31, 2016
                                                             Office of Appellate Courts
Commissioner of Revenue,

                           Relator.

                              _______________________

Thomas E. Brever, Foster Brever Wehrly, PLLC, Saint Anthony, Minnesota, for
respondents.

Lori Swanson, Attorney General, Michael Goodwin, Assistant Attorney General,
Saint Paul, Minnesota, for relator.
                               ________________________

                                      SYLLABUS

       1.    The tax court did not abuse its discretion by excluding evidence of a

computational error in calculating respondents’ tax liability when the evidence was not

relevant to the deduction-disallowance issue before the tax court during the summary

judgment proceeding.

       2.    The tax court’s order was justified by the evidence and in conformity with

the law.

       Affirmed.


                                           1
                                       OPINION

HUDSON, Justice.

       This case comes to us after the Minnesota Tax Court granted Michael and Jean

Antonello’s motion for partial summary judgment, which reversed the Commissioner of

Revenue’s order disallowing certain charitable-contribution deductions claimed on an

income tax return. In doing so, the tax court excluded evidence offered by relator

Commissioner of Revenue regarding a computational error made in calculating the

Antonellos’ tax liability. The Commissioner now seeks review of the tax court’s decision

to grant the Antonellos’ summary judgment motion without also correcting their tax

liability to account for the Commissioner’s computational error. We must decide whether

the tax court erred in excluding the evidence of that error. Because we conclude the tax

court did not abuse its discretion in excluding the Commissioner’s evidence of a

computational error and the evidence properly before the tax court supports the tax liability

imposed, we affirm.

       The Antonellos jointly filed federal and state individual income tax returns for tax

year 2006, claiming deductions of $3,847,644 for charitable contributions.              Four

contributions, totaling $500,000, were made to the MacPhail Center for Music based on

the Antonellos’ written pledge to donate $1.5 million for the construction of a new music

building.

       On February 16, 2011, the Minnesota Department of Revenue notified the

Antonellos that their 2006-2009 Minnesota income tax returns had been selected for



                                             2
review; the Department requested substantiation of the charitable-contribution deductions

claimed in those returns. Following an audit, the Department disallowed all of the claimed

2006 charitable-contribution deductions, which increased the Antonellos’ taxable income

by $2,873,742 to a total of $5,674,390, resulting in a total tax liability of $276,418. The

Antonellos filed an administrative appeal of the audit order under Minn. Stat. § 270C.35,

subd. 1 (2014), which allows a taxpayer to obtain reconsideration by the Commissioner of

an order assessing taxes.

       During the administrative appeal, the Antonellos provided the appeals officer with

documents to substantiate the claimed charitable-contribution deductions. On July 13,

2012, the Commissioner issued a Notice of Determination on Appeal (“Determination”),

which explained that “[a]t issue” was the decision “to disallow the cash charitable

contributions claimed” on the Antonellos’ 2006 tax return. After reviewing the Antonellos’

documentation, the Commissioner allowed deductions for some of the charitable

contributions originally claimed, but disallowed the deductions for the MacPhail

contributions based on a lack of substantiation. 1        Based on these decisions, the


1
        The Determination included a spreadsheet detailing each contribution claimed,
whether a deduction for the contribution was allowed or disallowed, the deductibility limit,
and notes regarding the Commissioner’s action with respect to each contribution. Although
the Commissioner allowed deductions for contributions made to the Antonello Family
Foundation, the charity was re-categorized as a “30% Limit Organization,” thereby
restricting the amount the Antonellos could claim as a deduction.

        The Antonellos maintain that this re-categorization was a new issue raised for the
first time before the tax court. The spreadsheet, however, conclusively shows that the re-
categorization properly occurred during the administrative appeal process. The issue



                                             3
Commissioner determined that the Antonellos owed $15,993 before interest for the 2006

tax year, and assessed this liability. 2

       Pursuant to Minn. Stat. § 271.06, subd. 1 (2014), the Antonellos filed a Notice of

Appeal with the Minnesota Tax Court, stating that “[t]he Department erroneously

disallowed charitable contributions made pursuant to a pledge to a qualified charity.” In a

Joint Statement of the Case later filed with the tax court, the parties identified one issue for

the tax court’s resolution: whether the Antonellos “me[t] the substantiation requirements

imposed by the Internal Revenue Code for [the disallowed] charitable contributions

claimed as deductible on their 2006 tax return.” The Commissioner notified the tax court

that the Commissioner anticipated “bringing a summary judgment motion regarding

whether the substantiation provided” by the Antonellos met the “requirements of the

Internal Revenue Code.” Some months later, both parties filed partial summary judgment

motions addressing the disallowance of the MacPhail deductions.

       In preparing the motion for summary judgment, the Commissioner discovered that

the tax liability assessed in the 2012 Determination, $15,993 before interest, was

miscalculated “due to a transposition of numbers.” Specifically, in calculating the amount



before us, then, is whether the tax court abused its discretion in excluding evidence of the
computational error, and not whether the Commissioner erred in re-categorizing the legal
status of the Foundation.
2
        The Commissioner’s Determination represents an assessment imposing a tax
liability. Minn. Stat. § 270C.33, subd. 4 (a)(1) (2014) (“The commissioner may issue an
order of assessment [when] the commissioner determines that the correct amount of tax is
different than that assessed on a return filed with the commissioner.”).


                                               4
of tax the Antonellos owed based on the allowances and disallowances made in the

administrative appeal, the Department explained that it incorrectly used the “Net change”

in taxable income reported in the audit ($2,873,742) instead of the corrected Minnesota

taxable income ($5,674,390). The Department also failed to deduct from the amount owed

the $147,251 paid by the Antonellos when they filed their 2006 tax return. Thus, because

the calculations began with the wrong income figure and failed to account for previous

payments made, the tax liability assessed in the Determination was incorrect.

       In her summary judgment motion, the Commissioner explained that, calculated

correctly, the Antonellos owed $88,592 if the contested MacPhail deductions were

disallowed, or $49,327 if the MacPhail deductions were allowed. The Commissioner asked

the tax court to grant summary judgment “holding the disallowance of charitable

deductions . . . was proper” and determine “that the amount of tax owed by [the Antonellos]

as a result of the disallowance” was $88,592 before interest. The Antonellos objected to

the Commissioner’s attempted modification of her own order, arguing that under Minn.

Stat. § 271.06, subd. 5 (2014), the Commissioner could not modify her own order absent

their consent.

       The tax court granted the Antonellos’ motion for partial summary judgment and

allowed the MacPhail deductions.        In doing so, the tax court excluded from its

consideration the Commissioner’s evidence of the computational error, concluding that the

taxpayers’ “appeal of a single, discrete issue” did not “allow the Commissioner to present

evidence concerning any other issues [] considered necessary” to a resolution of the appeal.



                                             5
Because the only issue the Antonellos appealed was the denial of “certain of their charitable

contribution deductions,” namely the MacPhail contributions, the tax court concluded “the

Commissioner fail[ed] to show that his miscalculation of appellants’ tax liability [was]

properly before [the court].” Though the tax court recognized that the Commissioner’s

recalculation was correct, it concluded that the Commissioner’s Determination could be

modified only if the Antonellos’ actual tax liability was less than the amount assessed in

the Determination.

       On August 31, 2015, after agreeing that no other charitable-contribution deductions

were disputed, the parties stipulated that the Antonellos’ tax liability was at least $15,993

before interest. The tax court entered judgment based on the parties’ stipulation. The

Commissioner now seeks review of the tax court’s determination that the Antonellos’ total

tax liability, after allowing the MacPhail deductions, is $15,993.

       We review the tax court’s decision to determine whether: “(1) the tax court had

jurisdiction; (2) the tax court’s decision was supported by the evidence and was in

conformity with the law; and (3) the tax court committed any other error of law.” Conga

Corp. v. Comm’r of Revenue, 868 N.W.2d 41, 46 (Minn. 2015) (citing Minn. Stat. § 271.10,

subd. 1 (2014)). We review the tax court’s conclusions of law and interpretation of statutes

de novo, Eden Prairie Mall, LLC v. Cty. of Hennepin, 830 N.W.2d 16, 20 (Minn. 2013),

and its findings of fact for clear error, Conga Corp., 868 N.W.2d at 46. Our review of a

tax court’s final decision is limited and deferential. Singer v. Comm’r of Revenue, 817

N.W.2d 670, 674 (Minn. 2012).



                                             6
       The Commissioner asserts that the tax court erred in failing to correct the

Antonellos’ tax liability by using the corrected tax computations to modify the

Determination. In the alternative, the Commissioner argues that the undisputed facts in the

record demonstrate that the Antonellos’ tax liability was greater than $15,993, and

therefore the tax court’s order is not justified by the evidence and is not in conformity with

the law. We address each argument in turn.

                                              I.

       The Commissioner first argues that the tax court erred in holding that it was without

authority to use the Commissioner’s corrected computations to determine the Antonellos’

tax liability. The Commissioner asserts that Minn. Stat. §§ 271.05–.06 (2014) grant the

tax court broad authority to “review and redetermine orders or decisions of the

commissioner of revenue,” including the power to “set aside or modify” a determination

on appeal. Citing Conga Corp., 868 N.W.2d at 47, the Commissioner contends that the

tax court’s de novo standard of review extends not only to review of the Commissioner’s

order on appeal, but also to review of the “underlying decisions reflected in that order.”

Thus, the Commissioner argues, the tax court must independently examine the evidence

presented by both parties and then determine the correct amount of tax owed. For their

part, the Antonellos maintain that the tax court properly determined their tax liability based




                                              7
on the Commissioner’s assessment in the Determination because the computational error

was not raised until the summary judgment stage of the tax court proceeding. 3

       The parties frame this dispute as a question of the tax court’s “jurisdiction” or

“authority” to modify the Commissioner’s order. The tax court has the authority to “review

and redetermine” the Commissioner’s order when an appeal is taken from such order.

Minn. Stat. § 271.05. The question presented by this appeal is whether the tax court was

required to consider the evidence of the Commissioner’s computational error simply

because it was offered to the tax court. See Minn. Stat. § 271.06, subd. 6 (stating that the

parties to an appeal before the tax court “have an opportunity to offer evidence and

arguments” to the court).

       The setting in which the Commissioner offered evidence of the computational error

was a motion for summary judgment that asked the tax court to resolve a single legal

question: whether the Commissioner “correctly disallow[ed] the deductions claimed by

[the Antonellos] for contributions to MacPhail.” Summary judgment is a procedure that

permits judgment to be entered if there is “no genuine issue as to any material fact.” Minn.

R. Civ. P. 56.03. “The substantive law identifies which facts are material,” Bond v.

Comm’r of Revenue, 691 N.W.2d 831, 836 (Minn. 2005), and the decision to exclude


3
        The Antonellos also argue that by asking the tax court to impose a greater tax
liability than the amount assessed in the Commissioner’s Determination, the Commissioner
attempts to assert a counterclaim or appeal from her own order. According to the
Antonellos, this is not permissible under the statutes governing the appeal process. See
Minn. Stat. § 271.06. Because we conclude that the tax court did not abuse its discretion
in concluding that the computational error was not properly before the court, we need not
address these arguments.


                                             8
evidence from consideration in deciding a summary judgment motion will not be disturbed

absent an abuse of discretion. See Doe v. Archdiocese of St. Paul, 817 N.W.2d 150, 164

(Minn. 2012) (stating, in considering whether summary judgment was improperly granted

after excluding certain expert evidence, “[w]e review a district court’s evidentiary rulings

. . . for an abuse of discretion”). A “material” fact for purposes of summary judgment is a

fact that, once resolved, will affect the outcome of the case. Bond, 691 N.W.2d at 836

(quoting Zappa v. Fahey, 310 Minn. 555, 556, 245 N.W.2d 258, 259-60 (1976)).

       The tax court determined that the evidence regarding the Commissioner’s

computational error was outside the “scope” of its review and that the Commissioner did

not demonstrate that the accuracy of the Commissioner’s mathematical calculations was

properly before the tax court. We understand the tax court’s explanation to reflect a

decision to exclude evidence from consideration that was presented to the court in the

course of summary judgment proceedings that led to a determination that the Antonellos’

tax liability was $15,993. Thus, we consider whether the tax court erred in excluding the

evidence. See, e.g., Doe, 817 N.W.2d at 163 (stating the court “may affirm a grant of

summary judgment if it can be sustained on any grounds”).

       The only issue raised in the Notice of Appeal the Antonellos filed with the tax court

was whether the Commissioner erred in disallowing their claimed charitable-contribution

deductions. In their Joint Statement of the Case, the only issue the parties identified as

before the tax court was whether the Antonellos met the IRS’s substantiation requirements




                                             9
for charitable-contribution deductions. 4 Finally, the sole issue the parties identified in their

respective summary judgment motions was whether the Commissioner properly

disallowed the charitable-contribution deductions. Resolution of this single issue, the tax

court correctly recognized, required consideration of federal laws that allow deductions for

charitable contributions “only if verified under regulations prescribed by” the IRS. See 26

U.S.C. § 170(a)(1) (2012).        After excluding consideration of the Commissioner’s

computational error, the tax court concluded “the various documents MacPhail sent to [the

Antonellos] . . . satisfy the contemporaneous written acknowledgement substantiation

requirement of” the federal regulations. The Commissioner does not challenge this

determination in the appeal to our court. Nor does she argue that the evidence of her

computational error was relevant to the Antonellos’ ability to demonstrate that they

satisfied “the contemporaneous written acknowledgment substantiation requirement.” Her

only argument is that the tax court erred in failing to consider the evidence she offered of

a computational error after the tax court had resolved the legal question presented by the

Antonellos’ appeal. We do not agree.

       The decision whether to exclude evidence rests with the tax court, “and the ruling

will not be disturbed absent indications of an erroneous legal view or abuse of discretion.”

TMG Life Ins. Co. v. Cty. of Goodhue, 540 N.W.2d 848, 851 (Minn. 1995). Once the tax

court resolved the deduction issue in the Antonellos’ favor, no material facts remained to


4
       In Minnesota, qualified charitable contributions are allowable as deductions by the
Internal Revenue Service. Minn. Stat. § 290.01, subd. 19b(6) (2014); see 26 U.S.C.
§ 170(a)(1) (2012).


                                               10
be considered regarding their tax liability for purposes of summary judgment. See Bond,

691 N.W.2d at 836. The evidence of the Commissioner’s computational error was, in other

words, irrelevant to the issue that the Antonellos appealed. See Minn. R. Evid. 103(a).

       The Commissioner argues that the Antonellos placed the amount of their tax liability

at issue in their Notice of Appeal when they “squarely placed all issues regarding their

charitable deductions before the Tax Court.” Relying on our decision in Conga Corp., 868

N.W.2d 41, the Commissioner argues that because the Antonellos’ ultimate tax liability

and the calculations made to identify that liability are an “underlying decision” in her order,

the tax court should have considered whether the Antonellos’ tax liability was correct once

the legal issue regarding their claimed deductions was resolved. See Conga Corp., 868

N.W.2d at 47 (holding that the standard of review provided in Minn. Stat. § 271.06, subd.

6, “applies to the Commissioner’s underlying decisions reflected in” the appealed order).

The Commissioner stretches our holding in Conga Corp. too far.

       In Conga Corp., the underlying decision challenged on appeal was the

Commissioner’s decision to use a particular audit method, specifically an “indirect audit,”

to determine the amount of tax Conga owed.              Id. at 46.    The challenge to the

Commissioner’s use of an indirect audit was explicitly raised in Conga’s notice of appeal

to the tax court, where Conga argued that “the Commissioner’s decision to use an indirect

audit was improper and therefore the assessment was invalid.” Id. at 45. Here, no one

challenged the accuracy of the Commissioner’s mathematical calculations until the

Commissioner moved for summary judgment. In other words, the parties did not identify



                                              11
a link between the disallowance of the charitable-contribution deductions and the

computational error. Our decision in Conga Corp. does not compel a review of the

Department’s calculations of the Antonellos’ tax liability simply because at some point in

the appeal the Commissioner asked the tax court to do so.

        The Commissioner also relies on our decision in Eden Prairie Mall, LLC v. County

of Hennepin, 797 N.W.2d 186 (Minn. 2011), in which we recognized the authority of the

tax court to increase a property-tax valuation on appeal from an administrative

determination. In Eden Prairie Mall, 797 N.W.2d at 193, however, such an increase was

explicitly allowed by statute, see Minn. Stat. § 278.05, subd. 1 (2014), and the market value

of the property was the sole issue on appeal to the tax court. Here, the sole issue before

the tax court was the disallowance of certain charitable-contribution deductions. The tax

court did not abuse its discretion in refusing to consider evidence that was not material to

that issue. 5




5
        The Commissioner also relies on HBM Servs., Inc. v. Comm’r of Revenue, No. 8004,
2011 WL 2200596 (Minn. T.C. July 15, 2010); Artistic Drapery Servs., Inc. v. Comm’r of
Revenue, No. 7954 R, 2009 WL 1585854 (Minn. T.C. June 3, 2009); and Higgins v.
Comm’r of Revenue, Nos. 6734, 6735, 6733, 1997 WL 428064 (Minn. T.C. July 28, 1997),
to argue that the tax court has the authority to correct the Commissioner’s computational
errors. These decisions are not binding on us, A&H Vending Co. v. Comm’r of Revenue,
608 N.W.2d 544, 546 (Minn. 2000), and in each case, re-computation of the tax liability
was based on evidence at trial that resulted in a decrease in the liability assessed in the
order on appeal, see HBM Servs., Inc., 2011 WL 2200596 at *1-2 (explaining the decrease
from assessment to tax court’s conclusions on appeal), or was by agreement of the parties,
Higgins, 1997 WL 428064 at *3 (“We . . . leave the correction [of any mathematical error]
to the parties.”).



                                             12
       Finally, the Commissioner argues that excluding evidence of the computational

error allows “the taxpayer to keep the amount of tax owed out of the Tax Court’s scope of

review,” which makes the tax court “a vehicle only for the benefit of” the taxpayer. The

Commissioner also argues that the public interest is best served only when taxpayers pay

the correct amount of tax owed. We agree that the public interest is best served by accuracy

in the administrative process of assessing and paying taxes. But in this particular case, the

taxpayer did not prevent the tax court from considering the amount of tax owed. That result

was dictated by issues the parties raised and by the tax court’s decision on an evidentiary

matter that fell within the tax court’s discretion in resolving the parties’ motions for

summary judgment.

       In sum, the tax court did not abuse its discretion by disregarding evidence of a

computational error in calculating the tax liability when that evidence was not relevant to

the legal issue before the tax court during the summary judgment stage of the proceeding. 6

                                             II.

       The Commissioner next contends that the tax court’s order, which affirmed the

original assessment of $15,993 tax before interest, is not justified by the evidence or in

conformity with the law. The Commissioner argues that she produced undisputed evidence




6
       Because we conclude that the tax court, in this instance, did not abuse its discretion
in disallowing evidence of the computational error at the summary judgment stage, we
need not reach the issue of whether an increase in tax liability would have violated the
applicable statute of limitations.



                                             13
in her motion for summary judgment that the Antonellos’ income tax liability for 2006 was

$49,327 before interest if, as the tax court decided, the MacPhail deductions were allowed.

       We review a tax court’s finding of fact for clear error, and will sustain that finding

if it is “reasonably supported by the evidence as a whole.” Turner v. Comm’r of Revenue,

840 N.W.2d 205, 208 (Minn. 2013) (quoting Cont’l Retail, LLC v. Cty. of Hennepin, 801

N.W.2d 395, 398 (Minn. 2011)). In other words, we defer to the tax court’s factual findings

unless we have a “firm conviction that a mistake has been made.” Krech v. Comm’r of

Revenue, 557 N.W.2d 335, 338 (Minn. 1997). An assessment made by the Commissioner

enjoys a presumption of validity and the taxpayer bears the burden of establishing that the

assessment is incorrect.    Minn. Stat. § 270C.33, subd. 6 (2014).         Even when the

presumption of an assessment’s validity is overcome, the burden remains with the taxpayer

to prove the correct amount of taxes owed. Conga Corp., 868 N.W.2d at 53. 7

       The tax court’s judgment against the Antonellos for $15,993 plus interest is justified

by the evidence that was properly before the tax court. See Red Owl Stores, Inc. v. Comm’r

of Taxation, 264 Minn. 1, 10, 117 N.W.2d 401, 407 (1962) (stating the tax court is limited

in its review to “all the testimony determinative of the issues before it.”). The tax court’s

order is consistent with the Commissioner’s Determination. As discussed above, the tax

court did not abuse its discretion by excluding evidence of the Commissioner’s



7
      This case is markedly different from most tax appeals. The Commissioner has come
forward with information regarding a Department error, thus effectively challenging the
presumption of validity accorded to her own order, even though in her Answer to the
Antonellos’ Notice of Appeal, the Commissioner alleged that her order “is correct.”


                                             14
recalculation of the Antonellos’ tax liability that came during summary judgment

proceedings.

      The tax court’s finding regarding the Antonellos’ tax liability is supported by the

record. The Commissioner’s Determination is “an Official Order of the Commissioner of

Revenue” that “supersede[d] the prior notice” the Antonellos received following the audit.

This Determination was “final when made” and presumptively valid.             Minn. Stat.

§ 270C.33, subds. 4(d), 6. This Determination therefore enjoys a presumption of validity;

indeed, the Determination itself attests that “[t]he commissioner’s order of assessment is

correct and valid.”   The tax court affirmed “the amount of taxes assessed in the

Commissioner’s order,” Conga Corp., 868 N.W.2d at 53, as it is allowed to do under our

case law, and entered the relief requested in the parties’ stipulation. The tax court’s

decision is therefore justified by the evidence and in conformity with Minnesota law.

      Affirmed.




                                           15
