STATE OF MINNESOTA

                                  IN SUPREME COURT

                                       A23-1973


Tax Court                                                                Moore, III, J.
                                                  Took no part, Hudson, C.J., Gaïtas, J.
Dakota Drug, Inc.,

                     Respondent,

vs.                                                           Filed: November 6, 2024
                                                             Office of Appellate Courts
Commissioner of Revenue,

                     Relator.


                                ________________________


Keith Ellison, Attorney General, Jennifer A. Kitchak, Assistant Attorney General, Saint
Paul, Minnesota, for relator.

Masha M. Yevzelman, Lynn S. Linné, Fredrikson & Byron, P.A., Minneapolis, Minnesota,
for respondent.

                                ________________________

SYLLABUS

      Under 

, subd. 3 (2018), “gross revenues” does not include

rebate amounts paid to a wholesale drug distributor’s customer pursuant to a rebate

agreement.

      Affirmed.




                                           1

OPINION

MOORE, III, Justice.

      Respondent Dakota Drug, Inc. (“Dakota Drug”) is a wholesale drug distributor

subject to the Wholesale Drug Distributor Tax—a tax which partially funds Minnesota’s

subsidized health care program, MinnesotaCare. See generally Minn. Stat. ch. 256L

(2022).   This case concerns whether amounts that were invoiced to Dakota Drug’s

customers for the purchase of wholesale legend drugs—but were either credited to the

customer’s account or returned via check pursuant to a rebate agreement—must be

included in its “gross revenues” for purposes of the Wholesale Drug Distributor Tax.

, subd. 3 (2018). The tax court, considering the definition of “gross

revenues” as “total amounts received in money or otherwise,” 

, subd.

3 (2018), determined that Dakota Drug did not “receive” the rebate amounts because it was

contractually obligated to pay the amounts to customers once the rebates were earned.

Accordingly, the tax court granted summary judgment in favor of Dakota Drug. Because

we conclude that Dakota Drug did not “receive” rebate amounts for purposes of the

Wholesale Drug Distributor Tax, we affirm.

                                        FACTS

      The facts in this case are undisputed. Dakota Drug is a North Dakota corporation

with its principal place of business in Anoka. Dakota Drug operates as a wholesale drug

distributor selling “legend drugs” 1—including generic prescriptions (“generic Rx”) and


1
        “Legend drugs” are drugs that require a prescription under federal law. See 

, subd. 15 (2022).
                                             2
brand name prescriptions (“brand Rx”)—as well as over-the-counter medications, to

smaller pharmacies, retail drug stores, hospitals, and veterinarians. Dakota Drug’s gross

revenues from selling legend drugs are subject to the Wholesale Drug Distributor Tax

found in 

, subd. 3 (2018). 2 The dispute here centers around the effect,

if any, of Dakota Drug’s customer rebate program on its gross revenues. The mechanics

of the rebate program are as follows.

       The wholesale drug distribution market is highly competitive, and as such, many

wholesale drug distributors—including Dakota Drug—utilize rebate programs to attract

and maintain customers. Dakota Drug enters into written agreements with customers that

set out the terms and conditions for the rebate program. Dakota Drug uses two distinct

agreement forms—Rebate Agreements and Primary Supply Agreements. The agreements

offer very similar benefits, and both entitle customers to monthly, and sometimes quarterly,

rebates on generic Rx purchases and brand Rx purchases.

       The rebate amounts are calculated based on an agreed upon percentage of the

customer’s total purchases of both generic Rx and brand Rx from the previous month; as a

result, the rebate amount fluctuates as the customer’s purchase amount fluctuates. The

rebate percentage for generic Rx is standard for all customers, but the brand Rx percentage

varies from customer to customer. In addition, customers with Rebate Agreements (as



2
        In 2019, the Legislature amended the Wholesale Drug Distributor Tax to require a
tax equal to 1.8 percent of gross revenues. Act of May 30, 2019, ch. 6, art. 9, § 5, 

, 140 (codified as amended at 

, subd. 3 (Supp. 2019)).
At all times relevant to this appeal, the tax rate was 2 percent. 

, subd. 3
(2018).
                                              3
opposed to Primary Supply Agreements) are also eligible for an additional quarterly rebate

based on the customer’s “Generic Compliance Ratio.” This ratio is a percentage calculated

as follows:

                         (Customer’s Purchases of Generic Rx)


     (Customer’s Purchases of Brand Rx) + (Customer’s Purchases of Generic Rx)

       When Dakota Drug fulfills an order, it sends the customer an invoice. These

invoices state the full price of each product and the applicable MinnesotaCare tax

associated with each product. Customers have numerous invoices—often hundreds—

during a monthly or bi-monthly pay period. These invoices do not include any calculation

of the earned rebate amount.

       Customers do not pay individual invoices as they are received. Rather, at the end

of each pay period, the customer receives an account statement that aggregates the invoices

into a total account balance and calculates the rebate amount based on the customer’s

purchase amount and monthly Generic Compliance Ratio. The customer is ultimately

responsible for the total account balance minus the total rebate amount. Customers who

receive rebates via account credit will receive a monthly statement summarizing their

invoices and credits—the rebate is then applied to the customer’s total account balance.

Customers who receive rebates via check pay the full account balance and then receive a

check for the rebate amounts. If a customer is past due on their account, the rebate amount

will be applied to the past due amount.




                                            4
       The Primary Supply Agreements provide that “no rebates will be paid in the event

Customer is not maintaining the Primary Supplier Commitment as of the issue date of the

rebates.” (Emphasis added.) The Rebate Agreements have an identical requirement that

the customer use Dakota Drug as its primary wholesaler “at the time the rebate is due.”

(Emphasis added). During the tax years at issue, Dakota Drug did not apply these primary

supplier provisions against any customer. However, if a rebate was not paid because a

customer failed to meet the primary supplier requirement, Dakota Drug would include the

full invoiced amounts in its gross revenues.

       Dakota Drug posts every invoice and every rebate to its general ledger account. At

the end of the relevant tax filing period, Dakota Drug reports its “gross revenues” as all

invoiced amounts minus all rebate amounts. Dakota Drug also subtracts all refunds given

to customers for returned products. After the “gross revenue” is calculated, Dakota Drug

then deducts the only available statutory exclusion for drug wholesalers—revenue from

sales to veterinarians. See 

, subd. 1(c) (2022).

       Dakota Drug timely filed tax returns from 2016–2019, the tax years at issue in this

case. In those returns, Dakota Drug did not include the rebate amounts from its reported

gross revenues. Following an audit of Dakota Drug’s tax returns, on September 15, 2021,

the Commissioner of Revenue issued a tax order assessing additional tax plus interest,

totaling more than $500,000. The Commissioner concluded that Dakota Drug incorrectly

deducted the rebate amounts from its reported gross revenues under 

,

subd. 3, and as a result, assessed tax for the full invoiced amounts sent to customers. Dakota

Drug appealed the Commissioner’s assessment to the tax court.

                                               5
       Before the tax court, the parties filed cross-motions for summary judgment. Dakota

Drug emphasized that 

, subd. 3, defines “gross revenues” as the “total

amounts received in money or otherwise,” and argued that it never “received” the rebate

amounts because it was contractually obligated to return the rebates to customers, either by

account credit or check. The Commissioner, on the other hand, asserted that because

Dakota Drug pays rebates to customers who meet certain purchase commitments in the

month or quarter after the purchase is originally made, Dakota Drug does, in fact, “receive”

the full invoiced amounts.

       The tax court granted summary judgment in favor of Dakota Drug. The tax court

concluded that rebate amounts paid to customers do not constitute gross revenues for

purposes of the Wholesale Drug Distributor Tax—regardless of whether the rebates are

received by account credit or by check. Applying the dictionary definition of “receive,”

the tax court found that 

, subd. 3, unambiguously requires the taxpayer

to “come into possession of” the amounts reported as gross revenue.            Because the

agreements are non-discretionary and entitle the customer to receive the rebates once

earned, the tax court determined that Dakota Drug “[p]lainly . . . does not come into

possession of rebate amounts . . . .” Rather, when Dakota Drug pays a rebate, it is paying

money that it owes to the customer in exchange for the purchase of prescription drugs under

the Agreements.

       The Commissioner appealed to this court.




                                             6
                                        ANALYSIS

       “We review a tax court’s order granting summary judgment to determine whether

the tax court erred in applying the law and whether any material facts are disputed.” Billion

v. Comm’r of Revenue, 

 (Minn. 2013) (citation omitted) (internal

quotation marks omitted). Because the material facts here are undisputed, “the only

question before us is whether the tax court correctly applied Minnesota law.” 

 The tax

court’s conclusions of law and interpretation of statutes are reviewed de novo. YAM

Special Holdings, Inc. v. Comm’r of Revenue, 

, 441 (Minn. 2020).

       Minnesota Statutes section 295.52, subdivision 3, imposes a tax on the “gross

revenues” of wholesale drug distributors. The Legislature enacted this tax in 1992, among

similar taxes for hospital centers, surgical centers, and health care providers, to fund

MinnesotaCare. Act of Apr. 23, 1992, ch. 549, art. 9, § 7, 

, 1613

(codified at 

 (1992)). During the tax years at issue, the Wholesale

Drug Distributor tax was equal to 2 percent of gross revenues. 

, subd.

3 (2018).

       The Wholesale Drug Distributor tax is an aggregate tax based on the wholesaler’s

“gross revenues,” rather than a transactional tax based on individual purchases of wholesale

drugs. Minnesota Statutes section 295.50, subdivision 3 (2022), defines “gross revenues”

as “total amounts received in money or otherwise.” In calculating the taxable gross

revenues, 

, subd. 1(c) (2022), allows only one deduction for wholesale

drug distributors: amounts received “for legend drugs sold directly to veterinarians or

veterinary bulk purchasing organizations . . . .”

                                              7
                                              A.

       We begin by interpreting the plain meaning of “gross revenues,” defined in 

, subd. 3, as “total amounts received in money or otherwise.” “On questions

of statutory interpretation, our objective is to effectuate the Legislature’s intent.” Hibbing

Taconite Co. v. Comm’r of Revenue, 

, 329 (Minn. 2021). “The plain

language of the statute is our best guide to the Legislature’s intent.” Cities Mgmt., Inc. v.

Comm’r of Revenue, 

, 354 (Minn. 2023) (citation omitted) (internal

quotation marks omitted). If the meaning of the statute is unambiguous, the plain language

of the statute controls. 

 at 354–55. But “[i]f the statutory language is subject to more

than one reasonable interpretation, it is ambiguous and we look to other interpretative tools

to assist our inquiry into legislative intent.” 

. The court construes statutory words

and phrases “according to rules of grammar and according to their common and approved

usage.” 

(1) (2022). Dictionary definitions are among the tools

available to assist our inquiry into the plain meaning of a statute. State v. Beganovic, 

, 643 (Minn. 2023).

       The     parties   put    forth    conflicting    interpretations    of    the    phrase

“total amounts received in money or otherwise.” Dakota Drug argues that rebate amounts

paid to customers are never actually “received,” because Dakota Drug is contractually

obligated to return the amounts to the customer. When rebates are paid via account credits,

Dakota Drug reduces the customer’s account balance by eliminating its own payment

obligation to the customer. When rebates are paid via check, Dakota Drug essentially

refunds the customer the applicable “overpayment” after the customer pays the full invoice

                                              8
balance. In the Commissioner’s view, Dakota Drug’s interpretation effectively changes

the plain statutory language from “gross revenues” to “net revenues” by allowing deduction

of the rebate amounts from the amounts invoiced to its customers. According to the

Commissioner, Dakota Drug “receives” the full invoiced amounts when (1) the customer

pays the full invoiced amount for rebates paid via check, and (2) the customer uses the

rebate credit to purchase more legend drugs later for rebates paid via account credit.

       Our analysis begins with the plain meaning of the words “total amounts received in

money or otherwise.” See 

, subd. 3. “Total” as an adjective is defined

as “comprising or constituting a whole” or “entire.” Total, Merriam Webster’s Collegiate

Dictionary 1320 (11th ed. 2014). When used as a noun, “total” means “a product of

addition” or “an entire quantity.” 

 It follows that the reference to “total amounts” in

, subd. 3, means the added, entire amounts received.

       Next, “received” ordinarily means “to come into possession of” or “acquire.”

Received, Merriam Webster’s Collegiate Dictionary 1038 (11th ed. 2014). It is also

defined as “to get from some outside source.” Receive, Black’s Law Dictionary 1460 (10th

ed. 2014). Therefore, under the ordinary meaning of 

, subd. 3, a

taxpayer’s “gross revenues” are the “total amounts” that the taxpayer comes into

possession of or gets from some outside source “in money or otherwise.”

       Finally, “otherwise” means “something or anything else” or “something to the

contrary.” Otherwise, Merriam Webster’s Collegiate Dictionary 879 (11th ed. 2014); see

also Otherwise, Black’s Law Dictionary 1276 (10th ed. 2014) (defining “otherwise” as

“[i]n a different way; in another manner”). It then follows that “otherwise,” read in the

                                             9
context of its antecedent, “total amounts received in money or,” refers to non-monetary

benefits or tangible goods that a wholesale drug distributor receives from a third party,

perhaps as a part of a bartered transaction.

       Taking these definitions together, we conclude that the plain meaning of “gross

revenues,” defined as “total amounts received in money or otherwise,” is the entire amount

that a taxpayer comes into possession of either through money or non-monetary benefits

and goods. Furthermore, for something to be included in a taxpayer’s “gross revenues,”

the taxpayer must have come into possession of an amount from a third-party.

                                               B.

       We next apply the proper definition of “total amounts received in money or

otherwise” to the facts here. Specifically, we consider whether the rebate amounts Dakota

Drug paid to its customers constitute part of the “total amounts received in money or

otherwise” that must be included in “gross revenues” for purposes of the Wholesale Drug

Distributor Tax. 3

       The parties agree that Dakota Drug does not have discretion in paying the rebate

amounts to customers once earned; there is a contractual obligation to credit customers’


3
        At the outset, we note that the parties separate their arguments concerning rebates
paid via check and rebates paid via account credit. Although the parties make reasoned
arguments for why the two types of rebates may be analytically different, we do not find
that any distinctions between the two are outcome determinative. As the tax court aptly
stated, a rule that changes the tax treatment of rebate amounts under 

,
subd. 3, based on whether the customer chooses to receive the rebate via check or account
credit could create absurd and unreasonable results. See KSTP-TV v. Ramsey Cnty., 

 (Minn. 2011) (“When relying on the plain statutory text, we read words
and phrases to avoid absurd results and unjust consequences.” (citation omitted) (internal
quotation marks omitted)).
                                               10
accounts or send them a check. As a result, Dakota Drug cannot reasonably “come into

possession of” or “get from some outside source” the rebate amounts that it is contractually

obligated to pay out to customers. And therefore, the rebate amounts that Dakota Drug is

contractually obligated to pay cannot constitute part of the “total amounts received in

money or otherwise.” Functionally, for rebates paid via check, Dakota Drug returned

overpaid invoice amounts to customers via check. And for rebates paid via account credit,

Dakota Drug functionally offered discounted prices through account credits. In neither

circumstance were the rebates part of the “total amounts received in money or otherwise.”

       We reject the Commissioner’s contention that “gross revenues” should be

interpreted as “the full amounts invoiced” to Dakota Drug’s customers. By defining “gross

revenues” as “total amounts received in money or otherwise,” the Legislature did not

indicate a clear intention to require drug wholesalers to report the full invoiced amounts.

See Wayzata Nissan, LLC v. Nissan N. Am., 

 (Minn. 2016) (“When a

word is defined in a statute, we are guided by the definition provided by the Legislature.”).

And by the Commissioner’s own admissions, their interpretation of “gross revenues” as

“the full invoiced amounts” has notable exceptions.

       The Commissioner concedes that if a customer is given a refund for returned

products—even if those products are invoiced and fully paid—the refund is not included

in gross revenues. If Dakota Drug invoiced a customer, but the customer refused to pay

the invoice, that amount would not be included in gross revenues. And if a product was

sold at a specific discount listed on the invoice, only the discounted price would be included

in gross revenues. But the Commissioner disputes that Dakota Drug did not “receive”

                                             11
rebate amounts that it paid to its customers in the month following a purchase pursuant to

a rebate agreement.

       The Commissioner’s interpretation of 

, subd. 3, takes a form-

over-substance approach and prioritizes the method in which a wholesale drug distributor

reduces the purchase price of legend drugs. If Dakota Drug had calculated the rebate

amounts at the invoice level and listed said amounts on each invoice, it appears the

Commissioner would not object to Dakota Drug’s exclusion of the rebate amounts from

gross revenues. But this is a distinction without a difference. Dakota Drug is selling legend

drugs at a reduced price and does not “receive” the full invoiced amount, regardless of

whether it calculates rebates invoice-to-invoice or on a separate monthly statement. The

Commissioner’s interpretation of “gross revenues” as requiring Dakota Drug to report all

invoiced amounts as “received”—even though Dakota Drug was not entitled to the full

invoiced amount and was, in fact, contractually obligated to return the rebate amounts—is

an unreasonable reading of the statute.

       Notwithstanding the statutory language, the Commissioner also asserts that the tax

court’s decision in HealthPartners, Inc. v. Commissioner of Revenue, No. 6925, 

, at *6–7 (Minn. T.C. Mar. 4, 1999), is apposite to the facts presented here. In that

case, HealthPartners functioned as both a health care provider and health plan insurer that

provided insurance to its own employees. 

. HealthPartners was subject to a tax

based on its gross revenues as a health plan company—i.e., the amounts received as

insurance premiums, copayments, deductibles, coinsurance, and fees for patient services.

. In calculating its gross revenues, HealthPartners estimated the costs it would

                                             12
have paid an arm’s length health care provider for insurance for its employees and deducted

amounts those employees would have paid as contributions for that estimated cost. 

 at

*6–7. HealthPartners then included that amount in its gross revenues. 

       The tax court determined that HealthPartners, acting as both an insurer and a health

care provider, correctly included the value of the health insurance provided to employees

in its gross revenues. 

. The tax court explained:

       If the two functions were two separate arm’s length companies,
       HealthPartners, the health care provider, would have been paid by
       HealthPartners, the insurer for the services provided to the employees. That
       amount would have been taxable gross revenue to HealthPartners, the
       provider. Since they are one and the same entity, that cash transaction was
       forgone but the amount was nevertheless a benefit received.

 In other words, HealthPartners was receiving the benefits of a competitive health plan

in recruiting and retaining employees, who then provided services for the company. 

As a result, the value of the benefit was correctly characterized as “money or otherwise”

and properly included in gross revenues for tax purposes. 

 The tax court concluded that

HealthPartners’ subsequent deduction of this amount on its tax returns was improper

because such a deduction was not available under 

, subd. 2 (2022). 

       The Commissioner argues that HealthPartners is analogous to the facts here

because Dakota Drug receives a benefit—customer loyalty—through the primary supply

provisions in the rebate agreements. In the Commissioner’s view, the value of the

customer’s loyalty is equal to the amount Dakota Drug pays out as rebates, and

accordingly, the rebate amounts are “money or otherwise” that is received by Dakota Drug

and included in its gross revenues. We disagree.


                                            13
        Even if the HealthPartners decision were binding on our court, which it is not, it is

not factually apposite here. Although it is true that to receive a rebate, a customer must be

using Dakota Drug as its primary supplier at the time the rebate is issued, the rebate

agreements do not constitute a “customer loyalty program” as the Commissioner contends.

Rather, Dakota Drug’s rebate agreements entitle its customers to a rebate if they meet

certain historical purchasing requirements, with no provision in the rebate agreements

obligating customers to continue making purchases from Dakota Drug in the future.

Dakota Drug therefore does not “receive” anything in exchange for the rebates in the same

manner that HealthPartners received employee labor in exchange for the health care plan

its corporate structure enabled it to provide. See HealthPartners, 

, at

*6–7. We therefore agree with the tax court that the HealthPartners case is not persuasive

here.

        For the reasons stated above, we hold that under 

, subd. 3,

“gross revenues” does not include rebate amounts paid to a wholesale drug distributor’s

customer pursuant to a rebate agreement. Accordingly, the tax court did not err in granting

summary judgment in favor of Dakota Drug.

                                      CONCLUSION

        For the foregoing reasons, we affirm the decision of the tax court.

        Affirmed.



        HUDSON, C.J., took no part in the consideration or decision of this case.



                                             14
       GAÏTAS, J., not having been a member of this court at the time of submission, took

no part in the consideration or decision of this case.




                                             15