Minnesota Cases July 07, 2020: Dhante v. Commissioner of Revenue

Case Description

This matter came before the Honorable Jane N. Bowman, Judge of the Minnesota Tax Court, on the Commissioner's motion for summary judgment.

Appellant Suleeqa A. Dhante is self-represented in these proceedings.

Mawerdi Hamid, Assistant Minnesota Attorney General, represents appellee Commissioner of Revenue.

ORDER GRANTING COMMISSIONER'S MOTION FOR SUMMARY JUDGMENT

The Commissioner of Revenue asked this court to grant her motion for summary judgment, affirming a portion of her Order and reversing another portion. Based on the files, records, and proceedings herein, the court makes the following:

ORDER

1. Appellee Commissioner of Revenue's motion for summary judgment is granted.

2. The Commissioner of Revenue's Order and Notice of Determination on Appeal assessing Appellant $1, 147.11 in individual income tax and interest for tax year 2015 is affirmed.

3. The Commissioner of Revenue's Order and Notice of Determination on Appeal assessing Appellant $1, 172.41 in individual income tax and interest for tax year 2017 is reversed.

IT IS SO ORDERED. THIS IS A FINAL ORDER. LET JUDGMENT BE ENTERED ACCORDINGLY.

MEMORANDUM

Jane N. Bowman, Judge

This appeal concerns the Commissioner of Revenue's Order dated April 18, 2019 ("Order") rejecting Ms. Suleeqa Dhante's claims for dependent exemptions and the Minnesota Working Family Credit for tax years 2015 and 2017. Upon reviewing documents submitted after this action was filed, the Commissioner agrees that Ms. Dhante is entitled to the dependent exemptions and Minnesota Working Family Credit for the children she claimed in 2017. Accordingly, the Commissioner forthrightly asks us to reverse the 2017 portion of her Order. However, because Ms. Dhante has not presented any evidence to substantiate a dependent exemption and working family credit claimed for the 2015 tax year, the Commissioner asks this court to affirm her Order concerning 2015.

I. Background

For 2015, Ms. Dhante claimed on her Minnesota individual income tax return one son and one nephew for dependent exemptions and the Minnesota Working Family Credit. For 2017, Ms. Dhante claimed her four children for the dependent exemptions and the Minnesota Working Family Credit.

In June 2018, the Commissioner sent Ms. Dhante a letter notifying her of an audit of her individual income tax returns for tax years 2015, 2016, and 2017. When Ms. Dhante did not respond, the Commissioner concluded the audit based on the information available, resulting in orders dated August 28, 2018 (for tax year 2016), and August 27, 2018 (for tax years 2015 and 2017). The latter order adjusted Ms. Dhante's individual income tax liability for 2015 and 2017, in the following respects: (1) by changing Ms. Dhante's filing status from head of household to single; (2) by disallowing all of her claimed dependents and related dependent exemptions; and (3) by disallowing the Minnesota Working Family Credit.

Ms. Dhante, on September 14, 2018, requested an administrative appeal of these two orders; she provided additional documentation to support some of her claims, including: (1) a Final Certificate of Analysis for genetic testing showing three of her children were biologically hers; (2) proof that these three children attended high school; and (3) proof that a fourth child, A.M., lived with her from November 1, 2013 to September 30, 2016.

In February 2019, the Commissioner sent Ms. Dhante two separate letters requesting information to support her remaining claims for dependent exemptions and the Minnesota Working Family Credit. When Ms. Dhante did not respond, the Commissioner closed the administrative appeals and issued two notices of determination on appeal.

For the 2015 and 2017 tax years, the Commissioner issued a single Order dated April 18, 2019, with these changes: (1) allowing Ms. Dhante head of household status; and (2) determining A.M. a qualifying child for the dependent exemption and the Minnesota Working Family Credit. However, the Order affirmed the disallowance of one child, A.A., as a qualifying child for 2015, and the disallowance of the remaining three children for the Minnesota Working Family Credit for 2017, because Ms. Dhante had not shown they lived with her for more than half the year.

On July 9, 2019, Ms. Dhante timely filed a Notice of Appeal challenging the April 18, 2019 Order. With her Notice of Appeal, Ms. Dhante provided immigration documents showing three of her children arrived in the United States on June 1, 2017, which the Commissioner acknowledges established residency for those children for 2017.

During the appeal, the Commissioner served Ms. Dhante with written discovery, including the following requests for admissions:

• "Admit that [A.A.] did not reside in the same household as you for more than half of the year in 2015."

• "Admit that [A.A.] is not your biological son."

• "Admit that you have not adopted [A.A.] as your son."

• "Admit that [A.A.] is not related to you, is not your descendent, nor your decedants' [sic] child."

• "Admit that you did not provide at least one-half of the cost of maintaining the household for [A.A.'s] primary residence for the tax year 2015."

Ms. Dhante did not respond to the Commissioner's discovery, even after a follow-up letter reminding Ms. Dhante of her obligation to respond.

II. The Commissioner's Motion for Summary Judgment

The Commissioner's motion for summary judgment is premised on the notion that Ms. Dhante failed to dispute the 2015 portion of the Order, but that she submitted sufficient documentation to receive the dependent exemptions and Working Family Credit claimed for 2017. Ms. Dhante did not file a written response. The Commissioner's motion for summary judgment was heard via telephone on April 14, 2020; Ms. Dhante did not appear.

A. Relevant Legal Principals

1. Commissioner's orders are prima facie valid

Orders of the Commissioner are prima facie valid. Minn. Stat. § 271.06, subd. 6 (2018); Minn. Stat. § 270C.33, subd. 6 (2018). "[A] prima facie case simply means one that prevails in the absence of evidence invalidating it." Tousignant v. St. Louis Cty. , 615 N.W.2d 53, 59 (Minn. 2000) (quoting Trudeau v. Sina Contracting Co. , 241 Minn. 79, 87, 62 N.W.2d 492, 498 (1954)). Because the Commissioner's Order is presumptively valid, Ms. Dhante bears "the burden of going forward with evidence to rebut or meet the presumption." Conga Corp. v. Comm'r of Revenue , 868 N.W.2d 41, 53 (Minn. 2015) (citing S. Minn. Beet Sugar Coop v. Cty. of Renville , 737 N.W.2d 545, 558 (Minn. 2007)).

2. Requests for admissions

"A party may serve upon any other party a written request for the admission, for purposes of the pending action only, of the truth of any matters [that are relevant to the party's claim or defense]." Minn. R. Civ. P. 36.01, 26.02. "The matter is admitted unless within 30 days after service of the request … the party to whom the request is directed serves upon the party requesting the admission a written answer or objection …." Minn. R. Civ. P. 36.01. "Any matter admitted pursuant to this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission." Minn. R. Civ. P. 36.02; see Crossroads Business Ctr. LLC v. Cty. of Washington , No. 82-CV-13-2159, 2016 WL 916236, at *2 (Minn. T.C. Feb. 24, 2016) (holding unanswered requests for admission were deemed admitted 30 days after service, but allowing the petitioner to withdraw the deemed admissions because responses were eventually served); Dahle v. Aetna Cas. & Sur. Ins. Co. , 352 N.W.2d 397, 401-02 (Minn. 1984) (same).

3. Summary judgment standard

"The court shall grant summary judgment if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Minn. R. Civ. P. 56.01. Upon motion for summary judgment, the moving party carries the burden to prove no material fact disputes exist. See DLH, Inc. v. Russ , 566 N.W.2d 60, 69 (Minn. 1997). If the nonmoving party fails to point to specific facts for trial, then summary judgment "shall be entered" against that party. Id.

4. Dependent exemptions

For Minnesota income tax purposes, a taxpayer may claim a dependent exemption for a "qualifying child" as defined in I.R.C. § 152 (2018). See Minn. Stat. § 290.01, subd. 19 (2018) (incorporating the federal definition of taxable income and also noting that taxpayers may make "any elections … in accordance with the Internal Revenue Code"); see also I.R.C. § 151(a), (c) (2018) (allowing exemptions for dependents as they are defined in section 152). A "qualifying child," in relevant part (as Ms. Dhante described A.A. as her nephew), is an individual who is "a brother, sister, stepbrother, or stepsister of the taxpayer or a descendant of any such relative." I.R.C. § 152(c)(1)(A), (c)(2)(B). A "qualifying child" must also have "the same principal place of abode as the taxpayer for more than one-half of such taxable year." I.R.C. § 152(c)(1)(B).

5. Minnesota Working Family Credit

To claim a child under the Minnesota Working Family Credit, the child must be a "qualifying child" under the federal Earned Income Tax Credit (EITC). See Minn. Stat. § 290.0671, subd. 1(a) (2018); see also I.R.C. § 32 (2018). For EITC purposes, that term means a "qualifying child" of the taxpayer as defined in section 152(c). I.R.C. § 32(c)(3)(A). As noted above, in order to get the Minnesota Working Family Credit, the "qualifying child" must also meet residency requirements. I.R.C. § 152(c)(1)(B).

B. The 2015 Tax Year

For 2015, the Commissioner's April 18, 2019 Order assesses $1, 147.11, as a result of denying Ms. Dhante's claim for A.A. as a "qualifying child" for both the dependent exemption and the Minnesota Working Family Credit. As the party requesting summary judgment, the Commissioner carries the burden to prove no material fact disputes exist. See DLH, Inc. , 566 N.W.2d at 69. In support of her position that A.A. was not a qualifying child, the Commissioner submitted her Requests for Admissions. These Requests establish that A.A. did not reside with Ms. Dhante for more than half a year in 2015, and that A.A. is not related to Ms. Dhante. See Minn. R. Civ. P. 36.01-.02 (Since Ms. Dhante did not respond to the Requests for Admissions, they are admitted).

To qualify for both a dependent exemption and the Minnesota Working Family Credit, Ms. Dhante must establish A.A. was a "qualifying child." See I.R.C. §§ 151(a), (c), 152(c); Minn. Stat. §§ 290.01, subd. 19, 290.0671, subd. 1(a). In order to be a qualifying child, that child must be both a defined relative and reside with the taxpayer for more than half of the tax year. I.R.C. § 152(c)(1)(A)-(B), (c)(2)(B). Ms. Dhante has not established that A.A. is a relative or resided with her for more than half of 2015. Consequently, Ms. Dhante is not entitled to claim A.A. for the dependent exemption, or the Minnesota Working Family Credit.

C. The 2017 Tax Year

For 2017, the Commissioner's April 18, 2019 Order assesses $1, 172.41 as a result of denying Ms. Dhante's claim for the Minnesota Working Family Credit (because the Commissioner did not yet have evidence that three of her children met the residency requirement). "The court shall grant summary judgment is the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Minn. R. Civ. P. 56.01. Here, the Commissioner asks us to "reverse that part of the [Order] as to tax year 2017[.]" The Commissioner-after issuing her Order-received documentation that three of Ms. Dhante's children arrived in the United States on June 1, 2017, thereby satisfying the remaining residency requirement. Because the record shows that Ms. Dhante is entitled to the additional Minnesota Working Family Credit for 2017, the Commissioner's motion is granted.

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Notes:

Not. Appeal (filed July 9, 2019). As noted by the Commissioner, it is unclear if Ms. Dhante intended to include the 2015 tax year in her appeal. Comm'r's Mem. Supp. Mot. Summ. J. 1 n.1 (filed Feb. 24, 2020). Even if Ms. Dhante did not intend to include the 2015 tax year, the outcome would still be the same, as we are affirming the Order as to the 2015 tax year.

Comm'r's Mem. Supp. Mot. Summ. J. 1.

Comm'r's Mem. Supp. Mot. Summ. J. 1.

Comm'r's Mem. Supp. Mot. Summ. J. 1.

Aff. of Yeng Callahan Aff. (Feb. 24, 2020) ¶ 4.

Callahan Aff. ¶ 6; see id.Ex. 4.

Callahan Aff. ¶ 3, Ex. 1.

Callahan Aff. ¶ 7, Exs. 5-6.

Callahan Aff. ¶¶ 7-8, Ex. 6.

Callahan Aff. ¶¶ 9-10, Ex. 7.

Callahan Aff. ¶¶ 11-12, Exs. 8-9.

Callahan Aff. ¶¶ 13-14, Exs. 10, 11. One of the two orders concerned the 2016 tax year, not at issue here. Id., Ex. 10. As a result of the 2016 tax order, Ms. Dhante was issued a refund. Id.

Callahan Aff. ¶¶ 14-15, Ex. 11.

Callahan Aff. ¶ 16, Ex. 11.

Not. Appeal; Aff. of Mawerdi Hamid (Feb. 24, 2020) ¶ 2.

Hamid Aff. ¶ 3.

Hamid Aff. ¶ 5, Ex. 12.

Hamid Aff. ¶¶ 6-8, Ex. 13.

Comm'r's Mem. Supp. Mot. Summ. J. 1, 6-9.

Tr. 3, 20 (Apr. 14, 2020).

We note that although Ms. Dhante is self-represented, she is held to the same standards as represented litigants. See Fitzgerald v. Fitzgerald , 629 N.W.2d 115, 119 (Minn.App. 2001) ("Although some accommodations may be made for pro se litigants, this court has repeatedly emphasized that pro se litigants are generally held to the same standards as attorneys and must comply with court rules.").

We cite to the 2018 Minnesota Statutes because the Legislature's 2019 changes to Minnesota's individual income tax were not operative for the tax years at issue. See generally Act of May 30, 2019, ch. 6, arts. 1-2, 2019 Minn. Laws 1027, 1029-98 (providing conformity and nonconformity to certain federal tax laws and providing changes to individual income tax laws).

Callahan Aff. ¶ 14, Ex. 11, at 1, 3.

Hamid Aff. ¶¶ 5, 9, Exs. 12, 14.

Hamid Aff. ¶¶ 5-9, Exs. 12, 14.

In the alternative, the Commissioner's Order as to 2015 is affirmed by statute. "In case no appellant shall appear the Tax Court shall enter its order affirming the order of the commissioner of revenue or the appropriate unit of government from which the appeal was taken." Minn. Stat. § 271.06, subd. 6. Ms. Dhante did not appear at the hearing, thus the Order concerning Ms. Dhante's 2015 individual income tax is affirmed.

Callahan Aff. ¶¶ 14-16, Ex. 11, at 1, 4.

Comm'r's Mem. Supp. Mot. Summ. J. 6.

Hamid Aff. ¶ 3.

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