STATE OF MINNESOTA

                                  IN SUPREME COURT

                                       A23-1259


Tax Court                                                                Moore, III, J.
                                                              Took no part, Hennesy, J.

Christopher J. Wendell and Nancy A. Wendell,

                    Relators,

vs.                                                                 Filed: June 5, 2024
                                                             Office of Appellate Courts
Commissioner of Revenue,

                    Respondent.


                                ______________________

Christopher J. Wendell, Nancy A. Wendell, Hudson, Wisconsin, pro se.

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

                                ________________________

SYLLABUS

      1.     The Commissioner of Revenue has the authority to adjust a taxpayer’s

reported federal adjusted gross income when determining the correct amount of state

income tax owed by the taxpayer under our decision in Specktor v. Commissioner of

Revenue, 

 (Minn. 1981) and Minn. Stat. § 270C.33, subdivision 4 (2022).

      2.     The tax court did not err in granting summary judgment in favor of the

Commissioner of Revenue.


                                           2
      3.     The statutory penalty imposed for filing a frivolous tax return under Minn.

Stat. § 289A.60, subd. 7 (2022), is not unconstitutional under the Due Process Clauses and

Excessive Fines Clauses of the United States Constitution and Minnesota Constitution or

the Equal Protection Clause of the United States Constitution.

      Affirmed.

      Considered and decided by the court without oral argument.

OPINION

MOORE, III, Justice.

      The dispute here centers on two years of Minnesota individual tax returns filed by

Relators Christopher and Nancy Wendell (“the Wendells”).         In 2019 and 2020, the

Wendells, residents of Wisconsin, filed joint tax returns reporting no Minnesota taxable

income, despite receiving more than 1 million dollars in payments from Minnesota sources

over those 2 years. The Wendells asserted that the payments received from Minnesota

sources were not taxable wages or ordinary business income. Respondent Commissioner

of Revenue disagreed, modified the Wendells’ reported income accordingly, assessed

additional income tax, and imposed a 25 percent penalty for filing a frivolous tax return

under Minn. Stat. § 298A.60, subd. 7 (2022). The Wendells appealed the Commissioner’s

assessment and the Minnesota Tax Court granted summary judgment in the

Commissioner’s favor. Because we conclude that (1) the Commissioner of Revenue had

the authority to adjust the Wendells’ reported federal adjusted gross income, (2) the tax

court did not err in granting summary judgment in favor of the Commissioner, and (3) the




                                            3
statutory penalty for filing a frivolous return under Minn. Stat. § 289A.60, subd. 7 (2022),

is constitutional, we affirm the decision of the tax court.

                                           FACTS

       Relator Christopher Wendell, a resident of Wisconsin, is an anesthesiologist

licensed to practice medicine in Minnesota. In 2019, he received $551,214.69 in wages or

compensation from Associated Anesthesiologists, P.A. (“AAPA”), located in Plymouth.

From those wages, $43,315.12 was withheld by AAPA for Minnesota income taxes. He

also received $33,658 in ordinary business income from Associated Health Services, Inc.

(“AHS”), also located in Plymouth. In 2020, Dr. Wendell received $589,530.00 in wages

or other compensation from AAPA, from which $47,881.00 was withheld for Minnesota

income taxes. He also received $26,799 in ordinary business income from Health Billing

Systems, Inc. (“HBS”), a Minnesota business.

       Dr. Wendell and his wife, Nancy Wendell, filed timely joint Minnesota individual

tax returns for 2019 and 2020 tax years. On their 2019 tax return, the Wendells reported

$0 in federal adjusted gross income and $0 in Minnesota taxable income, despite receiving

over half a million dollars in payments from AAPA and AHS. On their 2020 tax return,

the Wendells reported $7,226 in federal adjusted gross income and $0 in Minnesota taxable

income. For both years, the Wendells declared no Minnesota individual income tax

liability and requested refunds of all state tax withheld from the payments to Christopher

Wendell from AAPA. In making this request, the Wendells asserted that the payments

from AAPA, AHS, and HBS to Christopher Wendell were not “connected with any activity

or of a status which would render payments to [them] subject to federal income excise tax.”


                                              4
The Wendells did not explain what the payments from AAPA, AHS, or HBS were, if not

taxable income, and they did not explain why these Minnesota businesses reported those

payments as wages or ordinary business income.

       The Commissioner of Revenue reviewed the Wendells’ 2019 and 2020 tax returns

separately after they were filed. Following these reviews, the Commissioner issued orders

adjusting the Wendells’ income tax liability, finding that they had unreported wages and

ordinary business income. The Commissioner then adjusted the amount of federal adjusted

gross income reported on the return, determined that no tax refund was owed to the

Wendells, and assessed additional tax and interest.

       As part of the adjustment to the 2019 tax return, the Commissioner warned the

Wendells that if they “continue[d] to file Minnesota income tax returns which the

[Minnesota Department of Revenue] considers frivolous,” a frivolous return penalty would

be imposed under Minn. Stat. § 289A.60, subd. 7. In 2020, after the Wendells again did

not report any Minnesota taxable income, the Commissioner assessed a 25 percent

frivolous return penalty, totaling $13,223.75.

       The Wendells requested administrative review of the Commissioner’s orders,

arguing that the Commissioner lacked the authority to amend their reported federal

adjusted gross income and challenging the imposition of the frivolous return penalty. The

Minnesota Department of Revenue filed two supervening Notices of Determination on

Appeal affirming the Commissioner’s tax determinations and adjustments.

       The Wendells appealed the Department of Revenue’s orders to the Minnesota Tax

Court, reiterating the arguments made during the administrative appeal. They further


                                             5
argued that the penalty for filing a frivolous tax return under Minn. Stat. § 289A.60, subd.

7, is unconstitutional. Following a motion for summary judgment by the Commissioner of

Revenue, the tax court granted partial summary judgment. The tax court first determined

that the Wendells failed to show any disputed material facts regarding whether the disputed

payments from AAPA, AHS, and HBS were, in fact, taxable income. Next, the tax court

concluded that the Commissioner plainly has the authority to adjust incorrect tax returns

and determined that the Wendells’ returns were validly adjusted to include the wages and

ordinary business income received from AAPA, AHS, and HBS. In addition, the tax court

determined that the frivolous return penalty had been properly imposed, but declined to

decide whether the penalty statute is constitutional for lack of jurisdiction. 1

       After staying the case and referring it to the District Court for the Second Judicial

District to obtain jurisdiction over the undecided constitutional issue, the tax court granted

summary judgment on the remaining issues in favor of the Commissioner. The tax court



1
       The tax court does not have original jurisdiction to hear constitutional matters but
can gain jurisdiction over constitutional issues through a process first articulated in Erie
Mining Co. v. Commissioner of Revenue, 

 (Minn. 1984). See 

, subd. 5 (2022) (“[T]he Tax Court shall be the sole, exclusive, and final
authority for the hearing and determination of all questions of law and fact arising under
the tax laws of the state . . . .”). Under this process, referred to as the “Erie shuffle,” the
tax court may stay proceedings and refer the case to the district court for determination of
the constitutional issues. Erie Mining Co., 

. If the district court declines
to make a constitutional determination and refers the case back to the district court, the tax
court may then exercise jurisdiction over the constitutional issue. Id.; see also Wilson v.
Comm’r of Revenue, 

 (Minn. 2000) (“In essence, the district court
transfers its legal and equitable powers to the tax court, thereby giving the tax court
jurisdiction to hear constitutional issues.”). This process occurred here and enabled the tax
court to obtain jurisdiction to rule on the Wendells’ properly raised constitutional claims
regarding the penalty statute.

                                               6
found that the Wendells’ tax liability was correctly calculated and adjusted, that no material

facts were in dispute, and that the frivolous return penalty statute was constitutional. 2 The

Wendells then appealed to this court by writ of certiorari. See 

 (2022).

                                        ANALYSIS

       The Wendells raise three issues on appeal. First, the Wendells assert that the

Commissioner of Revenue lacked the authority to modify their reported federal adjusted

gross income when determining their state tax liability. Second, the Wendells contend that

the tax court improperly granted summary judgment in favor of the Commissioner. Lastly,

the Wendells assert that the penalty for filing a frivolous tax return found in Minn. Stat.

§ 289A.60, subd. 7, is unconstitutional. We address each issue in turn.

                                              I.

       We begin with the question of whether the Commissioner of Revenue has the

authority to adjust or correct the amount of federal adjusted gross income reported on a

taxpayer’s Minnesota tax return to determine the amount of state tax owed. The tax court

below determined that the Commissioner did have this authority. We review “orders of

the tax court to determine whether the tax court lacked jurisdiction, whether its decision

was not justified by the evidence or did not conform to the law, and whether the tax court

otherwise committed an error of law.” Turner v. Comm’r of Revenue, 

 (Minn. 2013); see also 

, subd. 1.



2
       The tax court additionally granted summary judgment in favor of the Commissioner
on an issue relating to Minnesota’s ability to tax income from a brokerage account and
corresponding interest, which is not at issue in this appeal.

                                              7
      The amount of income tax owed under Minnesota law rests in part upon an

individual’s federal adjusted gross income. Minnesota law imposes income tax on the

“taxable income” of residents and non-residents. 

(1) (2022). The

income of non-residents, like the Wendells, is generally taxable “only to the extent that

income is derived from activities within Minnesota.” Luther v. Comm’r of Revenue, 

 (Minn. 1999). Non-resident taxable income includes the amount of the

taxpayer’s “net income” apportioned to Minnesota. 

, subds. 22, 29

(2022). 3 For an individual, Minnesota defines “net income” as the “federal adjusted gross

income” with certain state modifications permitted by statute. 

, subd.

19(b) (2022) (emphasis added). In turn, federal gross income is defined as:

      [A]ll income from whatever source derived, including (but not limited to) the
      following items: (1) Compensation for services, including fees,
      commissions, fringe benefits, and similar items; (2) Gross income derived
      from business; (3) Gains derived from dealings in property; (4) Interest; (5)
      Rents; (6) Royalties; (7) Dividends; (8) Annuities; (9) Income from life
      insurance and endowment contracts; (10) Pensions; (11) Income from
      discharge of indebtedness; (12) Distributive share of partnership gross
      income; (13) Income in respect of a decedent; (14) Income from an interest
      in an estate or trust.

I.R.C. § 61 (emphasis added).

      If net income reported on a Minnesota tax return is inaccurate, the Commissioner of

Revenue is authorized to assess additional tax if the Commissioner “determines that the

correct amount of tax is different than that assessed on a return filed with the



3
       The Wendells’ challenge is focused upon the Commissioner’s adjustment to their
reported “federal adjusted gross income.” Therefore, we do not address the manner in
which the amount of net income apportioned to Minnesota is determined.

                                            8
commissioner.” 4 Minn. Stat. § 270C.33, subd 4(a)(1) (2022). We addressed the issue of

the Commissioner’s authority to alter or adjust a taxpayer’s reported income—derived

from their federal adjusted gross income—in Specktor v. Commissioner of Revenue, 

 (Minn. 1981). 5

       In Specktor, the Commissioner adjusted the taxpayers’ tax liability after determining

that a federal taxation election and subsequent deduction of losses from the operation of

several apartment buildings that reduced their taxable income on Minnesota partnership

and corporate tax returns were incorrectly taken. 

. The tax court determined that

the Commissioner could not make independent adjustments to a taxpayer’s federal adjusted

gross income and, therefore, was bound by the federal determination of adjusted gross

income. 

 at 807–808. On appeal, we held that the Commissioner is authorized to “adjust

a taxpayer’s Minnesota gross income notwithstanding the federal government’s failure to

make a similar adjustment.” 

. Furthermore, and importantly, we held that




4
       In addition, the Commissioner has the authority to “audit and adjust the taxpayer’s
computation of federal adjusted gross income[] [and] federal taxable income . . . to make
them conform with the provisions of chapter 290 or section 298.01.” Minn. Stat.
§ 289A.35(a) (2022). The Commissioner did not invoke this statutory authority in
adjusting the Wendells’ tax liability, instead relying solely on Minn. Stat. § 270C.33, subd.
4.
5
       Specktor dealt with the taxpayer’s “gross income” under 

, subd.
20 (1980). 308 N.W.2d at 807–08. At the time Specktor was decided, “gross income” for
individuals, estates, and trusts was defined as “the adjusted gross income as computed for
federal income tax purposes.” 

, subd. 20. And “net income” was
defined as “gross income, as defined in subdivision 20” less the applicable statutory
deductions. 

, subd. 19 (1980). Because the dispute here likewise
concerns “federal adjusted gross income,” the reasoning in Specktor is applicable.

                                             9
“Minnesota’s definition of gross income as federal adjusted gross income refers to the

correct federal adjusted gross income.” 

 (emphasis added). 6

       The Wendells argue that the tax court misinterpreted Specktor, which they assert is

correctly interpreted as giving the Commissioner the authority only to correct allowable

additions or deductions to a taxpayer’s federal adjusted gross income. According to the

Wendells, the Commissioner cannot change their reported amount of federal adjusted gross

income when the federal government has made no modification. We disagree.

       We reaffirm that, under Specktor, the Commissioner of Revenue is authorized to

adjust incorrect Minnesota tax returns, including incorrectly reported federal adjusted gross

income. See also Minn. Stat. § 270C.33, subd. 4. The Wendells’ argument that Specktor

is distinct because it dealt more specifically with allowances and deductions is immaterial;

the reasoning applies generally to the Commissioner determining a taxpayer’s “correct

federal adjusted gross income.” 

 (emphasis added). As we noted in

Specktor, a conclusion to the contrary would make the statutory provisions relating to the

investigation and correction of tax returns, such as Minn. Stat. § 270C.33, a nullity. 

. Under Minnesota tax laws, purported factual declarations made on a tax

return—including those relating to the correct amount of federal adjusted gross income—




6
       In the Commissioner’s opening brief, the Commissioner improperly cited this quote
as “Minnesota’s definition of gross income and federal adjusted income refers to the
correct federal gross income.” (Emphasis added.) The Commissioner filed a citation to
supplemental authority correcting the misquote. Despite the Wendells’ arguments to the
contrary, this misquote appears to have been inadvertent and is not material to our
consideration of the issues.

                                             10
do not make that return impervious to investigation and subsequent correction, if errors are

found. 

; see also Minn. Stat. § 270C.33, subd. 4.

                                            II.

       Having determined that the Commissioner of Revenue has the authority to adjust a

taxpayer’s reported amount of federal adjusted gross income on their Minnesota tax return,

we now turn to the question of whether the tax court erred in granting summary judgment

in favor of the Commissioner. On appeal, we review orders of summary judgment from

the tax court to determine “(1) whether there are any genuine issues of material fact and

(2) whether the lower court erred in its application of the law.” Bond v. Comm’r of

Revenue, 

 (Minn. 2005).

       Summary judgment is appropriate 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. 7 The nonmoving party “ ‘must do more than rest on mere

averments’ to create a genuine issue of material fact that precludes summary judgment.”

Hagen v. Steven Scott Mgmt., Inc., 

, 172 (Minn. 2021) (quoting DLH, Inc.

v. Russ, 

, 70–71 (Minn. 1997)). “Summary judgment is ‘inappropriate when

reasonable persons might draw different conclusions from the evidence presented.’ ” See

Henson v. Uptown Drink, LLC, 

 (Minn. 2019) (quoting Osborne v.

Twin Town Bowl, Inc., 

 (Minn. 2008)).




7
      We note that the Minnesota Rules of Evidence and Rules of Civil Procedure
generally govern procedures in the tax court. 

, subd. 7 (2022).

                                            11
       The Wendells first contend that the tax court improperly relied on hearsay evidence

from the Commissioner in granting summary judgment. Evidence cited to support or

dispute a fact must be in a form that would be admissible in evidence. Minn. R. Civ. P.

56.03(b). Here, the tax court relied on declarations and exhibits from the Commissioner in

determining that there were no genuine issues of material fact. The exhibits submitted by

the Commissioner included W-2 wage and tax statement forms and K-1 shareholder

income forms produced by the Internal Revenue Service and the Minnesota Department of

Revenue, which would be admissible as records of regularly conducted business activity

and public records. Minn. R. Evid. 803(6), (8). The Commissioner’s exhibits also included

interrogatory answers provided by the Wendells and affidavits from attorneys at the

Department of Revenue, both of which are properly considered as evidence on summary

judgment. See Minn. R. Civ. P. 56.03(a) (stating that a party must support assertions by

“citing to particular parts of materials in the record, including . . . affidavits, . . . admissions,

interrogatory answers”). The Wendells’ objections to the admissibility and relevance of

this evidence are unpersuasive, and the tax court properly relied on such evidence in

determining whether summary judgment was appropriate.

       The Wendells also argue that the tax court failed to consider their affidavits

opposing the motion for summary judgment. These affidavits, however, contained “mere

averments,” rather than specific evidence creating a genuine dispute of material fact.

Hagen, 963 N.W.2d at 172. Nowhere in these affidavits do the Wendells provide a

colorable, supported explanation for what the payments made to Christopher Wendell by

AHS, AAPA, and HBS were, if not taxable wages and ordinary business income. And the


                                                 12
affidavits give no explanation as to why AAPA, AHS, and HBS reported the disputed

payments as taxable income on W-2 and K-1 tax forms. The affidavits merely assert that

“[t]o [Christopher Wendell’s] knowledge, [his] activities in 2019 and 2020 were not of a

class or kind taxable or reportable on an income tax return.” Statements such as this are

insufficient to create a genuine dispute of material fact, such that a trial on the issue would

be warranted. As the tax court correctly noted below, “disagreement with the facts

presented does not make them disputed.” See Hagen, 963 N.W.2d at 172.

       Considering the record before us, we conclude that the tax court properly evaluated

the admissibility of the evidence submitted on summary judgment. Furthermore, we

conclude that the tax court did not err in finding summary judgment appropriate; the

Commissioner demonstrated that there is no genuine issue of material fact, and the

Wendells did not create any genuine disputes of material fact that would preclude summary

judgment.

                                             III.

       We lastly address the Wendells’ constitutional challenges to the penalty for filing a

frivolous tax return found in Minn. Stat. § 289A.60, subd. 7. We review the tax court’s

determination of whether a tax statute is constitutional de novo. Olson v. Comm’r of

Revenue, 

, 607 (Minn. 2020).                State tax statutes are presumed

constitutional, and the party challenging a statute’s constitutionality “bears a heavy burden

to overcome that presumption.” Sheridan v. Comm’r of Revenue, 

, 716

(Minn. 2021). “[W]e ‘exercise our power to declare a statute unconstitutional with extreme

caution and only when absolutely necessary.’ ”           Fletcher Props., Inc. v. City of


                                              13
Minneapolis, 

, 9 (Minn. 2020) (citing Boutin v. Lafleur, 

 (Minn. 1999)).

       A summary of the frivolous return penalty is necessary before turning to the merits

of the Wendells’ constitutional claims. Minnesota Statutes section 289A.60, subdivision

7, details the frivolous return penalty as follows:

       If a taxpayer files what purports to be a tax return or a claim for refund but
       which does not contain information on which the substantial correctness of
       the purported return or claim for refund may be judged or contains
       information that on its face shows that the purported return or claim for
       refund is substantially incorrect and the conduct is due to a position that is
       frivolous or a desire that appears on the purported return or claim for refund
       to delay or impede the administration of Minnesota tax laws, then the
       taxpayer shall pay a penalty of the greater of $1,000 or 25 percent of the
       amount of tax required to be shown on the return. In a proceeding involving
       the issue of whether or not a taxpayer is liable for this penalty, the burden of
       proof is on the commissioner.

“Frivolousness” is determined objectively, and “a position is ‘frivolous’ if it has no basis

in law or fact.” Bond, 

 (citations omitted). “What is required to reach

the threshold of frivolity is that a position is without merit from the perspective of the tax

laws.” Weed v. Comm’r of Revenue, 

 (Minn. App. 1992), rev. denied

(Minn. Sept. 15, 1992).

                                              A.

       We first address the Wendells’ argument that Minn. Stat. § 289A.60, subd. 7,

violates due process because it fails to provide adequate notice for what constitutes a




                                              14
“substantially incorrect” or “frivolous” return. 8 The Wendells appear to be making a “void-

for-vagueness” due process claim and we analyze this claim accordingly.

       The Due Process Clauses of the United States and Minnesota Constitutions provide

that the government cannot deprive a person of “life, liberty, or property without due

process of law.” U.S. Const. amends. V, XIV; Minn. Const. art. I, § 7. A statute is

unconstitutionally vague under the Due Process Clause when, viewed objectively, a person

“of common intelligence must necessarily guess at its meaning.” St. Cloud Newspapers,

Inc. v. Dist. 742 Cmty. Schs., 

 (Minn. 1983) (quoting Broadrick v.

Oklahoma, 

 (1973)) (internal quotation marks omitted). “The fact that

taxpayers must rely on common sense and intelligence to determine whether their conduct

complies with the law does not render the law unconstitutionally vague on its face.” State

v. Enyeart, 

 (Minn. 2004). Additionally, there is a “greater tolerance”

of statutes with civil, rather than criminal penalties. Vill. of Hoffman Ests. v. Flipside,

Hoffman Ests., Inc., 

, 498–99 (1982).

       The Wendells’ argument that they could not reasonably discern what would

constitute a “frivolous” tax return is unpersuasive. Although Minn. Stat. § 289A.60, subd.

7, does not offer specific examples of frivolous conduct, it does provide a robust

description of what categories of conduct would qualify, including:


8
        The Wendells also argue that Minn. Stat. § 289A.60, subd. 7, is unconstitutional
under the First Amendment of the United States Constitution. See U.S. Const. amend. I.
This claim was first raised in the Wendells’ reply brief before this court and was not argued
before the tax court below. As a result, the Wendells have forfeited consideration of this
First Amendment claim. See Thiele v. Stich, 

 (Minn. 1988) (stating
that the court will not consider issues not presented earlier in the case).

                                             15
       [A] tax return . . . [that] contains information that on its face shows that the
       purported return or claim for refund is substantially incorrect and the conduct
       is due to a position that is frivolous or a desire that appears on the purported
       return or claim for refund to delay or impede the administration of Minnesota
       tax laws.

Under-reporting, misreporting, or otherwise failing to report taxable Minnesota income,

based on an unsupported assertion that the income is not taxable, would unquestionably

qualify as a “substantially incorrect” or “frivolous” return under an objective definition.

See, e.g., Bond, 

 (finding that a frivolous return is one that “has no basis

in law or fact”); Sullivan v. United States, 

 (1st Cir. 1986) (collecting

cases for the proposition that arguing that wages received were not taxable income is a

frivolous position); cf. Brintnall v. Comm’r of Revenue, No. 7495-R, 

,

at *3–4 (Minn. T.C. Apr. 8, 2003) (upholding the imposition of the frivolous return penalty

where taxpayer claimed to have no federal taxable income because of an improperly

claimed deduction). 9

       Here, the Wendells failed to report over a million dollars of income from Minnesota

sources over 2 years. After receiving a warning from the Commissioner of Revenue that a

penalty would be imposed if they “continue[d] to file Minnesota income tax returns which

the [Department of Revenue] considers frivolous,” the Wendells filed another tax return


9
        Even further, the Internal Revenue Service publishes an annual document that
details common tax contentions that have been deemed “frivolous” and may subject a
taxpayer to a frivolous return penalty under I.R.C. § 6702(a). One such frivolous argument
is that a taxpayer can avoid income tax “by filing a tax return that reports no income and
no tax liability (a ‘zero return’) even though they have taxable income.” Internal Revenue
Service, The Truth About Frivolous Tax Arguments 4–5 (March 2022). Another frivolous
tax argument listed is that “wages, tips, and other compensation received for personal
services are not income.” Id. at. 9–10.

                                             16
making the same argument that the payments received from Minnesota sources were not

taxable income. The tax court below found this position was “so untenable as to be

frivolous,” noting that “[t]he Wendells cannot escape taxation by renaming their income.”

We agree. Indeed, their blanket denial that the disputed payments from AAPA, AHS, and

HBS were not taxable income has no basis in law or fact. Because Minn. Stat. § 289A.60,

subd. 7, establishes that the Wendells’ position is of the type that would be considered

frivolous, they had adequate notice of the potential penalty for their conduct. See State v.

Calmes, 

 (Minn. 2001) (acknowledging that “citizens are presumed

to know the law”).

       For the reasons stated above, we hold that the penalty for filing a frivolous tax return

under Minn. Stat. § 289A.60, subd. 7, is not unconstitutional on due process grounds.

                                              B.

       Next, we address the Wendells’ contention that Minn. Stat. § 289A.60, subd. 7,

violates the Excessive Fines Clause. The Excessive Fines Clause of the United States

Constitution provides that: “Excessive bail shall not be required, nor excessive fines

imposed, nor cruel and unusual punishments inflicted.” U.S. Const. amend. VIII; see also

Minn. Const. art. I, § 5.

       Our inquiry into whether a statutory penalty is excessive focuses on proportionality;

in other words, does the penalty “bear some relationship to the gravity of the offense that

it is designed to punish?” Wilson v. Comm’r of Revenue, 

, 554–55 (Minn.

2003) (citation omitted) (internal quotation marks omitted). In evaluating proportionality,

we analyze three factors: (1) the gravity of the offense compared to the harshness of the


                                              17
penalty; (2) comparison of the contested penalty with other penalties imposed for other

offenses in the same jurisdiction; and (3) comparison of the contested fine with fines

imposed for the same offense in other jurisdictions. State v. Rewitzer, 

 (Minn. 2000).

       The Wendells argue that the frivolous return penalty—a fine of the greater of $1,000

or 25 percent of the amount of tax owed—violates the Excessive Fines Clause because it

is “unduly burdensome and excessive to many filers,” and that the penalty imposed is

disproportionate to the amount of harm, if any, caused by their conduct. 10 For the reasons

discussed below, this argument fails.

       We analyze the penalty imposed by Minn. Stat. § 289A.60, subd. 7, under the three-

part test articulated in Rewitzer. The first prong of that test asks us to evaluate the gravity

of the offense compared to the harshness of the penalty. Rewitzer, 

. We

conclude that the penalty imposed by Minn. Stat. § 289A.60, subd. 7, adequately balances

the gravity of the offense. The filing of frivolous tax returns creates unnecessary delay and

waste of government resources due to the investigation necessary to correct and adjust tax

assessments. A penalty of up to 25 percent of the tax amount actually owed is proportionate



10
        In addition, the Wendells cite to penalties imposed for serious felony offenses, such
as fifth-degree criminal sexual conduct, emphasizing that the penalty they received under
Minn. Stat. § 289A.60, subd. 7, is greater than the statutory maximum penalties for those
crimes. This citation is misplaced. In analyzing whether a penalty is unconstitutionally
excessive, the focus is on comparing the disputed penalty to the penalties for similar
offenses in the same jurisdiction. See Wilson, 656 N.W.2d at 555–56 (comparing the
disputed wage levy sanction in tax statute to “similar wage levy sanctions in Minnesota”);
Rewitzer, 617 N.W.2d at 414–15 (comparing the disputed fine for a criminal offense to
“other similarly ranked offenses” in the Minnesota Sentencing Guidelines).

                                              18
to the harm caused by the delayed administration of tax laws. See Weed, 489 N.W.2d at

528–29 (“The federal penalty statute was enacted to deter tax protestors from filing

frivolous returns”) (citing Baskin v. United States, 

 (8th Cir. 1984)).

       The second prong of the Rewitzer test requires us to compare the penalty in Minn.

Stat. § 289A.60, subd. 7, to the penalties imposed for similar offenses in Minnesota.

Rewitzer, 

. Indeed, the other subdivisions of Minn. Stat. § 289A.60

(2022) impose comparable fines. See Minn. Stat. § 289A.60, subd. 4(b) (20 percent penalty

for substantial understatement of tax liability), subd. 5 (10 percent penalty for intentional

disregard of rules or laws), subd. 5a (25 percent penalty for repeated failure to file returns

or pay taxes), subd. 6 (50 percent penalty for failure to file or filing a false or fraudulent

return), subd. 20 (20 to 50 percent penalty for promoting abusive tax shelters), subd. 24

(10 percent penalty for failure to notify the Commissioner about a change in a taxpayer’s

federal return), and subd. 27 (20 percent addition to tax amount for a “reportable transaction

understatement”).    Although some penalties in section 289A.60 are lower than that

prescribed in subdivision 7, some are also higher. We conclude that the penalty for filing

a frivolous return is comparable and proportional to penalties for other tax offenses of

lesser and greater seriousness in Minnesota.

       Lastly, we analyze the third prong of the Rewitzer test, which compares the penalty

in Minn. Stat. § 289A.60, subd. 7, to penalties imposed for the same offense in other

jurisdictions. Rewitzer, 

. Other states take varying approaches when

penalizing the filing of frivolous tax returns. For example, Iowa imposes a penalty of 75

percent of the amount claimed for “false or frivolous application for refund.” Iowa Code


                                             19
§ 421.27 6.a.(1) (2023). Other states do not feature a specific penalty for frivolous returns

but group frivolous returns with other types of erroneous filings. See, e.g., 

(1)(b)7 (2023) (imposing 100 percent penalty for “fraudulently fil[ing] an incorrect

claim for refund of tax”); 

 (2023) (imposing 10 percent

penalty for failure to file “a return or report which includes all taxable transactions”). Some

states impose a lower flat fee for frivolous returns. See, e.g., 

 (West 2023) ($500 penalty); 

 (2023) ($500 penalty); 

-2A-11(e) (2023) ($250 penalty); 

(a) (2023) ($1,000

penalty). Because the penalty in Minn. Stat. § 289A.60 falls somewhere in the middle of

penalties imposed in other jurisdictions, we conclude that this factor weighs in favor of a

finding of proportionality.

       On balance, we conclude that the penalty imposed for filing a frivolous tax return

under Minn. Stat. § 289A.60, subd. 7, is proportional to the gravity of the offense it is

designed to punish. Accordingly, Minn. Stat. § 289A.60, subd. 7, is not unconstitutional

under the excessive fines clause. 11




11
       Finally, the Wendells argue that the Minn. Stat. § 289A.60, subd. 7, violates the
Equal Protection Clause. The entirety of their argument is this statement: “Equal protection
concerns are thus raised, as well – Does the right to be free from excessive fines apply
more to people residing or working in other states than to those living or working in
Minnesota?” In response, the Commissioner asserts that “the tax court properly rejected
[the claim] as ‘nonsensical.’ ” Without more, the Wendells’ blanket assertion that the
frivolous return penalty in Minn. Stat. § 289A.60, subd. 7, violates the Equal Protection
Clause fails to overcome the presumption of constitutionality afforded to tax statutes.
Therefore, we conclude that Minn. Stat. § 289A.60, subd. 7, is not unconstitutional on
equal protection grounds.

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                                      CONCLUSION

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

       Affirmed.



       HENNESY, 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.




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