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Woodmen of the World Life Insurance S

a Nebraska not-for-profit fraternal bene

society, appellant, v. Nebraska Depart

of Revenue, an agency of the St

Nebraska, and Tony Fulto

Commissioner, appellees

___ N.W.2d ___

Filed February 16, 2018. No. S-17-319.

1. Administrative Law: Judgments: Appeal and Error. In an appeal 

under the Administrative Procedure Act, an appellate court may reverse, 

vacate, or modify the judgment of the district court for errors appearing 

on the record.

2. ____: ____: ____. When reviewing an order of a district court under 

the Administrative Procedure Act for errors appearing on the record, the 

inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.

3. Administrative Law: Statutes: Appeal and Error. The interpretation 

of statutes and regulations presents questions of law, in connection with 

which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below.

4. Statutes: Legislature: Intent. In construing a statute, a court must 

determine and give effect to the purpose and intent of the Legislature 

as ascertained from the entire language of the statute considered in its 

plain, ordinary, and popular sense.

5. Statutes: Appeal and Error. Absent a statutory indication to the contrary, an appellate court gives words in a statute their ordinary meaning.

6. Statutes. A court must attempt to give effect to all parts of a statute, 

and if it can be avoided, no word, clause, or sentence will be rejected 

as superfluous or meaningless.

7. ____. Statutes relating to the same subject matter will be construed 

so as to maintain a sensible and consistent scheme, giving effect to 

every provision.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

04/13/2018 01:14 AM CDT
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8. Taxation: Proof. The burden of showing entitlement to a tax exemption is on the applicant.

9. Statutes: Taxation. Statutory tax exemption provisions are to be 

strictly construed, and their operation will not be extended by judicial construction.

10. ____: ____. An exemption from taxation must be clearly authorized by 

the relevant statutory provision.

11. Taxation: Presumptions. An exemption from taxation is never 

presumed.

12. Appeal and Error. An appellate court is not obligated to engage in an 

analysis that is not necessary to adjudicate the case and controversy 

before it.

13. Taxation: Words and Phrases. Sales and use taxes are imposed on 

the activity of retail transactions, measured by gross receipts. It is a tax 

upon the sale, lease, rental, use, storage, distribution, or other consumption of tangible personal property in the chain of commerce.

14. Taxation: Sales. A sales tax is not imposed on the article sold, but, 

rather, upon the transaction called the sale.

15. Taxation: Words and Phrases. Both occupation taxes and sales taxes 

are excise taxes for the purpose of raising revenue. An excise tax is a 

tax imposed on the manufacture, sale, or use of goods or on an occupation or activity, and is measured by the extent to which a privilege is 

exercised by the taxpayer, without regard to the nature or value of the 

taxpayer’s assets. An excise tax is imposed upon the performance of 

an act.

16. Statutes: Taxation. The plain language of Neb. Rev. Stat. § 44-1095 

(Reissue 2010) exempts taxes on the “funds” of a fraternal benefit society, but it does not exempt the fraternal benefit society from sales and 

use taxes, because such taxes are imposed on its retail purchase activity, 

not on its funds.

17. Due Process. The first step in a due process analysis is to identify a 

property or liberty interest entitled to due process protections. If there 

is a protected interest at stake, the question then becomes what process 

is due.

18. ____. The fundamental requirement of due process is the opportunity to 

be heard at a meaningful time and in a meaningful manner.

19. Trial: Expert Witnesses: Appeal and Error. A trial court’s ruling in 

receiving or excluding an expert’s testimony which is otherwise relevant 

will be reversed only when there has been an abuse of discretion.

20. Expert Witnesses: Evidence. Expert testimony is relevant and admissible only if it tends to help the trier of fact understand the evidence or 

determine a fact issue, and expert testimony concerning a question of 

law does not tend to accomplish either of these goals. Consequently, 
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expert testimony concerning a question of law is generally not admissible in evidence.

21. Trial: Expert Witnesses: Testimony: Statutes. Expert testimony from 

legal scholars on the proper legal interpretation of statutes is generally 

irrelevant and should not reach a judge’s attention by way of the witness stand.

Appeal from the District Court for Lancaster County: 

Andrew R. Jacobsen, Judge. Aff

Mark E. Novotny, John M. Walker, and Daniel J. Hassing, of 

Lamson, Dugan & Murray, L.L.P., for appellant.

Douglas J. Peterson, Attorney General, and L. Jay Bartel 

for appellees.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, 

Funke, J

Stacy, 

This appeal requires us to determine whether the Legislature 

has exempted fraternal benefit societies from sales and use 

taxes imposed by the State of Nebraska. Woodmen of the 

World Life Insurance Society (Woodmen) requested an exemption from sales and use taxes and sought a refund of more 

than $2 million in such taxes previously paid. The Nebraska 

Department of Revenue (NDOR) denied Woodmen’s request, 

and after a hearing, the Tax Commissioner affirmed that 

denial. Woodmen sought judicial review, and the district court 

affirmed. Because we agree no statute exempts fraternal benefit societies from paying sales and use tax, we affirm the 

judgment of the district court.

I. FACTS

1. General Backg

Nebraska’s statutes regulating and relating to fraternal benefit societies are codified at Neb. Rev. Stat. §§ 44-1072 to 

44-10,109 (Reissue 2010 & Cum. Supp. 2016). A fraternal 

benefit society is defined to include:
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Any incorporated society, order, or supreme lodge, 

without capital stock, . . . conducted solely for the benefit 

of its members and their beneficiaries and not for profit, 

operated on a lodge system with ritualistic form of work, 

having a representative form of government, and which 

provides benefits in accordance with sections 44-1072 to 

44-10,109 . . . .1

Fraternal benefit societies operate “for one or more social, 

intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its 

members.”2 They may enter into contracts to provide benefits 

to their members, including death, endowment, annuity, disability, medical, and life insurance benefits.3

 A fraternal benefit 

society may “invest its funds only in such investments as are 

authorized by the laws of this state for the investment of assets 

of life insurers.”4 All assets must be held, invested, and disbursed for the use and benefit of the society.5

It is undisputed that Woodmen is a Nebraska fraternal 

benefit society. The primary issue in this appeal is whether 

Woodmen is exempt from paying Nebraska sales and use taxes. 

The answer to this question generally requires consideration 

of two statutes: § 44-1095 and Neb. Rev. Stat. § 77-2704.12 

(Reissue 2009).

(a) § 44-1095

With two exceptions not relevant here, the “funds” of a 

fraternal benefit society are exempt from taxation pursuant 

to § 44-1095 (Reissue 2010) which, until recently, provided: 

“Every [fraternal benefit society] shall be a charitable and 

benevolent institution, and all of its funds shall be exempt 

1 § 44-1072.

2 § 44-1076.

3 § 44-1087.

4 § 44-1092.

5 § 44-1093.
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from all and every state, county, district, municipal, and school 

tax other than taxes on real estate and office equipment.”

The version of § 44-1095 quoted above was in effect when 

Woodmen applied for the tax exemption and refund at issue 

in this appeal, and we confine our analysis to this statutory 

language. However, for the sake of completeness, we note the 

Legislature amended the statute in 2015.6 Section 44-1095 now 

provides that “all of [a charitable benefit society’s] funds and 

property shall be exempt from all and every state, county, district, municipal, and school tax.”7

(b) § 77-2704.12(1)

The Nebraska Revenue Act of 19678 imposes a sales tax on 

the gross receipts of retail sales of tangible personal property 

sold in this state9 and a use tax when tangible personal property 

purchased outside of Nebraska is stored, used, or consumed in 

Nebraska.10 Generally speaking, the sales tax applies when tangible personal property is purchased in Nebraska and the use 

tax applies when it is purchased outside Nebraska.11

The Legislature has exempted certain sales and uses 

from taxation.12 As relevant to this appeal, certain nonprofit 

organizations are exempt from sales and use taxes under 

§ 77-2704.12(1). The nonprofit organizations enumerated in 

§ 77-2704.12(1) include, for example, those created exclusively 

6 See 2015 Neb. Laws, L.B. 414, § 1 (operative January 1, 2016).

7 § 44-1095 (Cum. Supp. 2016) (emphasis supplied). See, also, Neb. Rev. 

Stat. § 77-202(1)(d)(iii)(B) (Cum. Supp. 2016) (adding “fraternal benefit 

society” to enumerated exemptions for property owned by “charitable 

organization”).

8 See Neb. Rev. Stat. § 77-2701 (Supp. 2017).

9 See Neb. Rev. Stat. § 77-2703(1) (Supp. 2017).

10 § 77-2703(2).

11 Interstate Printing Co. v. Department of Revenue, 236 Neb. 110, 459 

N.W.2d 519 (1990).

12 See, generally, Neb. Rev. Stat. §§ 77-2704.02 to 77-2704.30 (Reissue 

2009, Cum. Supp. 2016 & Supp. 2017).
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for religious purposes,13 private educational institutions,14 hospitals and health clinics,15 and certified organizations providing community-based services for persons with disabilities.16

To be exempt from sales and use tax, an “organization listed 

in [§ 77-2704.12(1)]” must apply for exemption using forms 

provided by the Tax Commissioner and, if approved, a certificate of exemption is issued.17 Fraternal benefit societies are 

not listed among the nonprofit organizations enumerated in 

§ 77-2704.12(1).

2. Procedural Backg

In October 2013, Woodmen filed an application for exemption from sales and use tax with NDOR, relying exclusively 

on § 44-1095. Woodmen used a standard NDOR form to seek 

the exemption. Because the standard form did not identify 

§ 44-1095 as a basis for seeking exemption from sales and use 

tax, Woodmen attached a letter explaining its position. NDOR 

denied Woodmen’s application using a standard letter which 

also did not reference § 44-1095. Instead, the reason given for 

denying the exemption was that Woodmen did not qualify as 

a religious organization. NDOR gave this reason because it 

concluded that of the available nonprofit exemptions, that one 

“fit the closest.”

In January 2014, Woodmen filed a claim for overpayment, 

seeking a refund of more than $2 million in sales and use 

tax, again relying on § 44-1095. NDOR denied this claim. 

Woodmen petitioned for redetermination of both its exemption 

application and its reimbursement claim. In response, counsel 

for NDOR sent Woodmen a letter explaining the legal basis for 

NDOR’s conclusion that § 44-1095 did not exempt Woodmen 

13 § 77-2704.12(1)(a).

14 § 77-2704.12(1)(c).

15 § 77-2704.12(1)(e)(i) and (ii).

16 § 77-2704.12(1)(h).

17 § 77-2704.12(2).
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from sales and use tax. The parties agreed to consolidate 

Woodmen’s requests and hold a single hearing before the Tax 

Commissioner on both the application for an exemption and 

the claim for overpayment.

Prior to such hearing, the parties conducted discovery, 

exchanged exhibit and witness lists (including witnesses’ 

expected testimony), and met to discuss the legal bases for 

their differing positions. The parties also filed prehearing 

motions that were ruled on by the hearing officer. As relevant 

to the issues on appeal, the hearing officer sustained NDOR’s 

motion in limine to exclude the testimony of Woodmen’s 

expert witness, a tax law professor. The hearing officer reasoned that although the professor was an accomplished and 

recognized legal scholar, his opinions on the proper interpretation of Nebraska law were more properly characterized as legal 

argument than testimony. The hearing officer invited Woodmen 

to include the tax law professor’s opinions in its posthearing 

briefing, but did not permit the professor to testify.

(a) Tax Commission Hearing

The hearing before the Tax Commissioner was held April 

13, 2015. The rules of evidence were not invoked.18 The parties stipulated that Woodmen was a fraternal benefit society, 

that it timely submitted both its application for an exemption 

and its request for a refund, and that both were properly before 

the hearing officer. The Tax Commissioner observed that 

because the parties presented no factual disputes: “Resolution 

of this dispute depends entirely upon the answer to the following question of law: Is the language of § 44-1095 sufficient in itself to confer [on Woodmen] an exemption from the 

Nebraska sales and use taxes . . . .?”

Evidence was adduced, and Woodmen made an offer of 

proof regarding the tax law professor’s excluded testimony. 

After posthearing briefing, the Tax Commissioner entered an 

18 See 316 Neb. Admin. Code, ch. 33, § 12.04A (2010) (request to be bound 

by rules of evidence must be served 3 days before hearing).
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order finding Woodmen was not exempt from sales and use tax 

under § 44-1095, and thus was not entitled to a refund.

The Tax Commissioner’s order analyzed each party’s proffered definitions of the term “funds” in § 44-1095, and ultimately rejected them all. Instead, he determined the meaning of 

“funds” by considering how the term was used in other statutes 

governing fraternal benefit societies.19 The Tax Commissioner 

noted that under § 44-1093(2), fraternal benefit societies are 

authorized to “create, maintain, invest, disburse, and apply 

any special fund or funds necessary to carry out any purpose 

permitted by the laws of such society.” Relying on § 44-1093, 

the Tax Commissioner concluded that “funds” under § 44-1095 

must refer to “those same special funds allowed in § 44-1093.” 

He thus reasoned that fraternal benefit societies were not 

exempt from sales and use taxes under § 44-1095, because that 

exemption applies only to taxes imposed on the “special funds 

themselves, not to the actions or transactions taken with respect 

to the funds.”

(b) Administrative Appeal

Woodmen sought judicial review of the Tax Commissioner’s 

final decision pursuant to the Administrative Procedure Act.20

The Lancaster County District Court conducted a de novo 

review and affirmed the Tax Commissioner’s denial of the 

exemption and refund.

After noting that fraternal benefit societies are not among 

the nonprofit organizations exempt from sales and use tax 

under § 77-2704.12(1), the district court confined its analysis 

to whether the language of § 44-1095 conferred an exemption 

from Nebraska sales and use tax.

First, the district court rejected Woodmen’s argument that 

§ 44-1095 conferred an entity-based tax exemption on fraternal 

benefit societies generally, as opposed to an exemption on just 

19 See §§ 44-1092 and 44-1093.

20 See Neb. Rev. Stat. §§ 77-27,128 (Reissue 2009) and 84-917 (Reissue 

2014).
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its funds. The district court noted the difference between the 

language used in § 44-1095 and the language used in statutes 

that provide entity-based tax exemptions21 and concluded that 

a plain reading of § 44-1095 indicated the Legislature intended 

to confer a tax exemption on the “funds” of a fraternal benefit 

society, but not on the entity itself.

Next, like the Tax Commissioner, the district court looked 

to other statutes governing fraternal benefit societies to discern 

the meaning of “its funds” in § 44-1095. The court observed 

that under § 44-1092, a fraternal benefit society is authorized 

to invest “its funds” only in certain investments, and that under 

§ 44-1093, a society may “create, maintain, invest, disburse, 

and apply any special fund or funds” necessary to carry out 

its permitted statutory purpose. Harmonizing these statutes, 

the district court reasoned that the “funds” exempted under 

§ 44-1095 must be the same funds referenced in §§ 44-1092 

and 44-1093.

Finally, the court examined the essential nature of sales 

and use taxes, including this court’s opinion in Anthony, Inc. 

v. City of Omaha,

22 and concluded that sales and use taxes 

are “‘a tax upon the privilege of buying tangible personal 

property’” and not a tax on funds. The district court reasoned 

that the tax exemption on funds in § 44-1095 did not apply to 

taxes on the retail transactions of fraternal benefit societies. 

As such, the court generally concluded there was no conflict 

between §§ 44-1095 and 77-2704.12(1), in that the former 

addressed exemptions for taxes on particular funds, while the 

latter addressed exemptions for taxes on retail transactions. 

Alternatively, the district court reasoned that if the two statutes 

21 Compare § 44-1095, with Neb. Rev. Stat. § 44-4232 (Reissue 2010) 

(“[t]he [Comprehensive Health Insurance Pool Distributive Fund] shall 

be exempt from any and all taxes assessed by the State of Nebraska”), 

and Neb. Rev. Stat. § 44-2715 (Reissue 2010) (“[t]he [Nebraska Life and 

Health Insurance Guaranty Association] shall be exempt from payment of 

all fees and all taxes levied by this state . . . except taxes levied on real 

property”).

22 Anthony, Inc. v. City of Omaha, 283 Neb. 868, 813 N.W.2d 467 (2012).
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were in conflict, then § 77-2704.12(1), as the more specific 

statute applying to sales and use tax, would control over the 

general exemption in § 44-1095.

The district court also addressed—and found meritless—several procedural and evidentiary errors assigned by Woodmen. 

As relevant to the errors assigned before this court, the district court rejected Woodmen’s claims that it was denied due 

process before the Tax Commissioner, and found no merit to 

Woodmen’s argument that the tax law professor should have 

been permitted to testify as an expert witness at the hearing.

Woodmen timely appealed from the district court’s order, 

and we granted its petition to bypass the Nebraska Court 

of Appeals.

II. ASSIGNMENTS OF ERROR

Woodmen assigns, restated, that the district court erred in 

failing to find Woodmen was (1) exempt from sales and use 

taxes under § 44-1095, (2) entitled to a refund for sales and 

use taxes previously paid, (3) denied due process when NDOR 

changed its rationale for denying the exemption, and (4) entitled to present expert testimony on the proper interpretation 

§ 44-1095.

III. STANDARD OF REVIEW

[1,2] In an appeal under the Administrative Procedure Act, 

an appellate court may reverse, vacate, or modify the judgment 

of the district court for errors appearing on the record.23 When 

reviewing an order of a district court under the Administrative 

Procedure Act for errors appearing on the record, the inquiry 

is whether the decision conforms to the law, is supported 

by competent evidence, and is neither arbitrary, capricious, 

nor unreasonable.24

23 Bridgeport Ethanol v. Nebraska Dept. of Rev., 284 Neb. 291, 818 N.W.2d 

600 (2012).

24 J.S. v. Grand Island Public Schools, 297 Neb. 347, 899 N.W.2d 893 

(2017).
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[3] The interpretation of statutes and regulations presents 

questions of law, in connection with which an appellate court 

has an obligation to reach an independent conclusion irrespective of the decision made by the court below.25

IV. ANALYSIS

[4-7] This appeal involves statutory interpretation, and our 

analysis is guided by familiar principles. In construing a statute, a court must determine and give effect to the purpose and 

intent of the Legislature as ascertained from the entire language 

of the statute considered in its plain, ordinary, and popular 

sense.26 Absent a statutory indication to the contrary, an appellate court gives words in a statute their ordinary meaning.27 A 

court must attempt to give effect to all parts of a statute, and if 

it can be avoided, no word, clause, or sentence will be rejected 

as superfluous or meaningless.28 Statutes relating to the same 

subject matter will be construed so as to maintain a sensible 

and consistent scheme, giving effect to every provision.29

[8-11] And because the statute at issue involves a tax 

exemption, our analysis is guided by additional principles. 

The burden of showing entitlement to a tax exemption is on 

the applicant.30 Statutory tax exemption provisions are to be 

strictly construed, and their operation will not be extended 

by judicial construction.31 An exemption from taxation must 

25 Bridgeport Ethanol v. Nebraska Dept. of Rev., supra note 23.

26 J.S. v. Grand Island Public Schools, supra note 24.

27 DMK Biodiesel v. McCoy, 290 Neb. 286, 859 N.W.2d 867 (2015); Coffey 

v. Planet Group, 287 Neb. 834, 845 N.W.2d 255 (2014).

28 Stick v. City of Omaha, 289 Neb. 752, 857 N.W.2d 561 (2015); Holdsworth 

v. Greenwood Farmers Co-op, 286 Neb. 49, 835 N.W.2d 30 (2013).

29 In re Interest of Katrina R., 281 Neb. 907, 799 N.W.2d 673 (2011); 

Maycock v. Hoody, 281 Neb. 767, 799 N.W.2d 322 (2011).

30 Lackawanna Leather Co. v. Nebraska Dept. of Rev., 259 Neb. 100, 608 

N.W.2d 177 (2000).

31 See Archer Daniels Midland Co. v. State, 290 Neb. 780, 861 N.W.2d 733 

(2015).
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be clearly authorized by the relevant statutory provision.32 An 

exemption from taxation is never presumed.33

With these principles in mind, we consider the relevant 

statutes to determine whether Woodmen, as a fraternal benefit 

society, is exempt from sales and use tax under Nebraska law.

1. § 77-2704.12(1) Does Not Exem

Woodmen From Sales and U

Section 77-2704.12(1) provides that sales and use taxes 

“shall not be imposed” on certain nonprofit entities, and it 

lists the types of nonprofit organizations subject to this exemption. Fraternal benefit societies are not among the enumerated 

nonprofit entities identified in § 77-2704.12(1), and Woodmen 

does not claim to fit the description of any other organization 

enumerated in that subsection.

An exemption from taxation must be clearly authorized by 

the relevant statutory provision.34 There is nothing in the plain 

language of § 77-2704.12 that exempts fraternal benefit societies from sales and use taxes, and the district court correctly 

concluded Woodmen is not exempt under this statute.

2. § 44-1095 Does Not Exempt Wood

From Sales and Us

Section 44-1095 provided: “Every [fraternal benefit society] 

shall be a charitable and benevolent institution, and all of its 

funds shall be exempt from all and every state, county, district, 

municipal, and school tax other than taxes on real estate and 

office equipment.”

In urging a construction of this statutory language that 

excludes it from paying sales and use taxes, Woodmen generally presents two theories. First, Woodmen argues that 

§ 44-1095 creates an entity-based exemption that necessarily 

includes sales and use taxes. Alternatively, Woodmen argues 

32 See Bridgeport Ethanol v. Nebraska Dept. of Rev., supra note 23.

33 Lackawanna Leather Co. v. Nebraska Dept. of Rev., supra note 30.

34 See Bridgeport Ethanol v. Nebraska Dept. of Rev., supra note 23.
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that the term “funds” in § 44-1095 should be construed broadly 

to exempt fraternal benefit societies from using its funds to pay 

any tax. We reject both these theories as inconsistent with the 

plain language of the statute and contrary to settled principles 

of statutory interpretation. We note the parties’ briefing focused 

on the term “funds.” Because the statutory phrase is actually 

“its funds,” we at times use that phrase in our analysis.

(a) § 44-1095 Is Not 

Entity-Based Exemption

Woodmen argues it

is exempt from “all and every state” tax. Because the 

sales and use tax is a tax imposed by the state, it falls 

within the ambit of § 44-1095. And because it falls within 

the ambit of § 44-1095, [Woodmen] is exempt from the 

sales and use tax. This case really is that simple.35

This argument urges a construction of § 44-1095 that effectively reads the phrase “its funds” out of the statutory language 

altogether and replaces it with “fraternal benefit society.” But 

the plain language of § 44-1095 does not exempt fraternal benefit societies from taxation; rather, it exempts fraternal benefit 

societies from taxes imposed on “its funds.”

A court must attempt to give effect to all parts of a statute, and if it can be avoided, no word, clause, or sentence 

will be rejected as superfluous or meaningless.36 Like the 

Tax Commissioner and the district court, we expressly reject 

Woodmen’s invitation to render meaningless the phrase “its 

funds” in order to judicially rewrite § 44-1095 into an entitybased exemption from all taxation.

Instead, we must strictly construe the exemption provisions 

of § 44-1095 and not extend their operation through judicial 

construction.37 When the Legislature has intended to create 

35 Brief for appellant at 19.

36 Stick v. City of Omaha, supra note 28; Holdsworth v. Greenwood Farmers 

Co-op, supra note 28.

37 See Archer Daniels Midland Co. v. State, supra note 31.
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an entity-based exemption, it has used plain and simple language.38 The Legislature did not exempt fraternal benefit societies in § 44-1095, but, rather, exempted “its funds.” This court 

will not write into a statute what the Legislature did not.

(b) Exemption for “[I]ts [F]unds” Does 

Not Impact Sales and Use Tax

Much of the parties’ briefing debates what the Legislature 

meant when it exempted a fraternal benefit society’s “funds” 

from “all and every state, county, district, municipal, and school 

tax other than taxes on real estate and office equipment.”39 The 

term “funds” is used throughout the statutes governing fraternal benefit societies, but no specific definition of the term is 

provided. The parties have not cited to legislative history discussing the intended meaning of the phrase “its funds” as used 

in § 44-1095, and until now, no Nebraska appellate court has 

been called upon to consider the issue.

[12] The parties advance alternative interpretations of the 

phrase “its funds” and each party argues that the rules of 

statutory construction support their preferred interpretation. 

Ultimately, however, we conclude it is not necessary to determine—in this case—a precise definition of “funds” or “its 

funds” under § 44-1095. An appellate court is not obligated 

to engage in an analysis that is not necessary to adjudicate the 

case and controversy before it.40 In this case, determining the 

precise definition of “its funds” under § 44-1095 is not necessary to resolve the issues on appeal, because no definition of 

“its funds” has been advanced that could plausibly implicate or 

apply to sales and use taxes.

38 See, e.g., § 44-4232 (“[t]he [Comprehensive Health Insurance Pool 

Distributive Fund] shall be exempt from any and all taxes assessed by 

the State of Nebraska”), and § 44-2715 (“[t]he [Nebraska Life and Health 

Insurance Guaranty Association] shall be exempt from payment of all fees 

and all taxes levied by this state . . . except taxes levied on real property”).

39 § 44-1095.

40 Greenwood v. J.J. Hooligan’s, 297 Neb. 435, 899 N.W.2d 905 (2017).
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[13-15] Sales and use taxes are not imposed on funds, they 

are imposed on the activity of retail transactions, measured 

by gross receipts.41 It is a tax upon the sale, lease, rental, use, 

storage, distribution, or other consumption of tangible personal 

property in the chain of commerce.42 A sales tax is not imposed 

on the article sold, but, rather, upon the transaction called the 

sale.43 As we explained in Anthony, Inc. v. City of Omaha:

Both occupation taxes and sales taxes are “excise 

taxes” for the purpose of raising revenue. An excise tax is 

a tax imposed on the manufacture, sale, or use of goods 

or on an occupation or activity, and is measured by the 

extent to which a privilege is exercised by the taxpayer, 

without regard to the nature or value of the taxpayer’s 

assets. An excise tax is imposed upon the performance of 

an act.44

Because sales and use tax is imposed on the performance of 

a transaction, such taxes have nothing to do with the value or 

nature of Woodmen’s funds. In other words, sales and use taxes 

are taxes imposed on Woodmen’s retail purchase activity, not 

on Woodmen’s funds.

Woodmen tries to get around this distinction by urging 

an interpretation of “its funds” that would include the activity of spending its funds. Woodmen argues that in order for 

§ 44-1095 to have meaning, “it must mean that [Woodmen] 

may not be required to spend its funds paying taxes on the 

purchase of goods. In other words, [Woodmen], as an entity, is 

exempt from the sales and use taxes.”45 We disagree.

For the reasons stated earlier, we reject Woodmen’s argument that § 44-1095 confers an entity-based exemption on 

41 See Anthony, Inc. v. City of Omaha, supra note 22.

42 See id.

43 316 Neb. Admin. Code, ch. 1, § 001.02 (2003).

44 Anthony, Inc. v. City of Omaha, supra note 22, 283 Neb. at 876-77, 813 

N.W.2d at 475-76 (emphasis supplied).

45 Brief for appellant at 21.
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fraternal benefit societies. Woodmen’s similar suggestion—that 

§ 44-1095 should be construed to exempt not just taxes on “its 

funds,” but also to exempt payment of any taxes using “its 

funds”—is also rejected. Such a construction would be contrary to the plain language of the statute, would impermissibly 

expand the statute through judicial construction, and would 

recognize an entity-based exemption that has not been clearly 

authorized by the statute.

Woodmen also argues that unless the phrase “its funds” is 

construed broadly to create “an exemption for all fraternal 

benefit societies that exempts the societies from paying sales 

and use taxes out of their funds,”46 then § 44-1095 provides 

no exemption at all from any current tax and “is nothing more 

than an ink blot in Nebraska’s statutes.”47

It is true that during oral argument before this court, the 

parties were not able to identify any current tax that, but for 

the exemption in § 44-1095, would be levied or imposed 

on a fraternal benefit society’s “funds.” NDOR and the Tax 

Commissioner argue that in 1931, when the tax exemption on a 

fraternal benefit society’s “funds” was first enacted,48 it effectively exempted such societies from taxes on intangible personal property in their funds, but the tax on intangible personal 

property was later repealed.49 NDOR and the Tax Commissioner 

describe § 44-1095 as “antiquated.” We express no opinion 

on whether this observation is correct, because whether a 

statute as written has become antiquated presents a question of tax policy more properly directed to the Legislature.50

46 Id. at 16.

47 Id. at 20.

48 See 1931 Neb. Laws, ch. 86, § 31, p. 246 (codified at Comp. Stat. 

§ 44-1261 (Supp. 1931)).

49 See 1967 Neb. Laws, ch. 498, § 3, p. 1691 (repealing Neb. Rev. Stat. 

§ 77-201.01 (Reissue 1966)).

50 See State, ex rel. Beatrice Creamery Co., v. Marsh, 119 Neb. 197, 227 

N.W. 926 (1929).
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It is the role of this court to declare the law as it finds it, and 

we decline Woodmen’s invitation to modernize statutory language through judicial legislation.

In summary, Woodmen asks us to either read “its funds” 

out of § 44-1095 altogether, and thereby create an entity-based 

exemption which the Legislature has not authorized, or construe the phrase “its funds” so broadly as to include the activity of spending funds. It is not the proper role of this court to 

do either.51

[16] For the reasons stated previously, we hold that the 

plain language of § 44-1095 exempts taxes on the “funds” of 

a fraternal benefit society, but it does not exempt the fraternal 

benefit society from sales and use taxes, because such taxes are 

imposed on its retail purchase activity, not on its funds.52 Other 

courts to have considered statutes similar to § 44-1095 have 

arrived at the same conclusion.53

In fact, Ohio has applied similar analysis to a similar 

statute. The Ohio statute provides: “‘Every fraternal benefit 

society organized or licensed under this chapter is hereby 

declared to be a charitable and benevolent institution, and all 

of its funds are exempt from all state, county, district, municipal, and school taxes other than franchise taxes and taxes on 

real estate.’”54 In United Transp. Union v. Tracy,

55 a fraternal 

benefit society contended this statute exempted it from the 

Ohio use tax. The court disagreed. In its analysis, the court 

51 See, J.S. v. Grand Island, supra note 24; Stick v. City of Omaha, supra

note 28; Holdsworth v. Greenwood Farmers Co-op, supra note 28.

52 See Anthony, Inc. v. City of Omaha, supra note 22.

53 See, United Transp. Union v. Tracy, 82 Ohio St. 3d 333, 695 N.E.2d 

770 (1998); Dept. of Rev. v. Woodmen of the World, 919 P.2d 806 (Colo. 

1996); Supreme Council of the Royal Arcanum v. State Tax Commission, 

358 Mass. 111, 260 N.E.2d 822 (1970). But see The State of Texas v. The 

Praetorians, 143 Tex. 565, 186 S.W.2d 973 (1945).

54 United Transp. Union v. Tracy, supra note 53, 82 Ohio St. 3d at 334, 695 

N.E.2d at 771, quoting Ohio Rev. Code Ann. § 3921.24 (2002).

55 United Transp. Union v. Tracy, supra note 53.
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emphasized that statutes relating to tax exemptions had to be 

strictly construed. It concluded the plain language of the statute exempted only a society’s funds from taxation and did not 

exempt a society from transactions on which Ohio imposed a 

use tax. It emphasized that a use tax was issued “‘upon the 

various items of office materials that were needed and utilized by the society,’” not the society’s funds, and thus, the 

exemption on funds did not apply to the use tax.56

Nebraska’s sales and use tax is a transactional tax, imposed 

on purchases, not on funds. We therefore agree with the district court that § 44-1095 does not exempt Woodmen from 

Nebraska’s sales and use tax. For the same reason, we conclude the district court did not err in denying Woodmen’s 

refund claim.

3. No Due Process Viol

Woodmen claims it was denied due process before the 

Tax Commissioner. Specifically, Woodmen argues it was 

not provided adequate notice of the legal grounds on which 

NDOR would rely at the hearing, because NDOR initially 

denied Woodmen’s application for exemption on the basis 

that Woodmen was not a religious organization. The Tax 

Commissioner rejected this due process argument, as did the 

district court, finding the record showed that Woodmen had 

been provided ample notice of NDOR’s legal theories and 

reasoning well in advance of the hearing. We agree Woodmen 

has shown no due process violation.

[17,18] The first step in a due process analysis is to identify a property or liberty interest entitled to due process protections.57 If there is a protected interest at stake, the question then becomes what process is due.58 The fundamental 

56 Id. at 335, 695 N.W.2d at 772.

57 Marshall v. Wimes, 261 Neb. 846, 626 N.W.2d 229 (2001).

58 See id.
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requirement of due process is the opportunity to be heard at a 

meaningful time and in a meaningful manner.59

Woodmen’s right to apply for a tax exemption is a property interest entitled to due process. The question, then, is 

whether the process Woodmen received gave it an opportunity 

to be heard in a meaningful time and manner. Woodmen does 

not contest that the opportunity to be heard was timely—it 

suggests, however, that the opportunity was not meaningful, 

because Woodmen did not have adequate notice of the legal 

basis on which NDOR was relying to oppose the exemption. 

The record refutes this contention.

Although NDOR originally denied the application for 

exemption because Woodmen was not a religious organization, the record shows the parties were aware, well in advance 

of the hearing, of one another’s legal theories and reasoning 

regarding the interpretation of § 44-1095. Specifically, in a 

letter dated before the formal hearing was even requested, 

NDOR responded to Woodmen’s legal arguments and provided 

an explanation of its legal basis for concluding § 44-1095 did 

not provide Woodmen an exemption from sales and use tax. 

The record further reflects that before the hearing, the parties 

conducted discovery, exchanged witness and exhibit lists, and 

met to discuss their differing interpretations of § 44-1095. The 

record amply supports the conclusion that prior to the hearing, 

Woodmen was aware of the legal basis on which NDOR was 

opposing the sales and use tax exemption. The district court 

correctly found no due process violation, and Woodmen’s arguments to the contrary are meritless.

4. Exclusion of T

Professor’s Testim

Woodmen argues the hearing officer abused her discretion in excluding the expert testimony of the tax law professor retained by Woodmen. Woodmen argues the professor is 

59 See id.
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a “renowned expert in the tax laws of Nebraska” and “was 

willing to assist [the] Hearing Officer with his opinion.”60

Woodmen’s offer of proof indicates that, if permitted, the professor would have testified about “statutory construction” and 

“about the law in Nebraska and the plain language of the law 

in Nebraska and his research and study of that area, [and] how 

[§] 44-1095 suggests a broad meaning for funds.”61 The hearing officer allowed Woodmen to include the professor’s opinions as authorities in its posthearing briefing, but excluded the 

professor’s testimony. Woodmen contends this was an abuse 

of discretion and argues the district court erred in failing to 

recognize as much.

[19] Generally, a trial court’s ruling in receiving or excluding an expert’s testimony which is otherwise relevant will be 

reversed only when there has been an abuse of discretion.62

Here, the rules of evidence were not invoked at the hearing before the Tax Commissioner63; but under the Nebraska 

Administrative Code, the hearing officer could “exclude 

incompetent, irrelevant, immaterial, and unduly repetitious evidence.”64

[20,21] Expert testimony is relevant and admissible only 

if it tends to help the trier of fact understand the evidence or 

determine a fact issue, and expert testimony concerning a question of law does not tend to accomplish either of these goals.65

60 Brief for appellant at 28.

61 Id. at 31.

62 Prime Home Care v. Pathways to Compassion, 283 Neb. 77, 809 N.W.2d 

751 (2012); Richardson v. Children’s Hosp., 280 Neb. 396, 787 N.W.2d 

235 (2010).

63 See 316 Neb. Admin. Code, ch. 33, § 12.04A (request to be bound by rules 

of evidence must be served 3 days before hearing).

64 Id., § 12.04.

65 State v. Merchant, 285 Neb. 456, 827 N.W.2d 473 (2013), disagreed with 

on other grounds, State v. Merchant, 288 Neb. 440, 848 N.W.2d 630 

(2014); Sports Courts of Omaha v. Brower, 248 Neb. 272, 534 N.W.2d 317 

(1995).
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Consequently “‘expert testimony concerning a question of law 

is generally not admissible in evidence.’”66 In the past, this 

court has been critical of admitting expert testimony from legal 

scholars on the interpretation of statutes, reasoning that such 

evidence is irrelevant and “‘should not reach a judge’s attention by way of the witness stand.’”67

Here, the parties stipulated to the pertinent facts and there 

were no factual disputes presented at the hearing—only a 

question of law regarding statutory interpretation. Under these 

circumstances, the district court found the hearing officer did 

not abuse her discretion in excluding the tax law professor’s 

opinion testimony, particularly when Woodmen was permitted 

to present the professor’s opinions as authority and argument 

in its posthearing brief. The district court’s decision in this 

regard conformed to the law, was supported by the record, and 

was neither arbitrary, capricious, nor unreasonable. There is no 

merit to this assignment of error.

V. CONCLUSION

The Legislature did not include fraternal benefit societies among those entitled to be exempt from sales and use 

tax under § 77-2704.12(1), and the exemption from taxes on 

a fraternal benefit society’s “funds” in § 44-1095 does not 

encompass sales and use tax. We find no merit to the remaining assignments of error and therefore affirm the judgment of 

the district court.

Affirmed

Wright, J., not participating.

66 State v. Merchant, supra note 65, 285 Neb. at 465, 827 N.W.2d at 481, 

quoting Kaiser v. Western R/C Flyers, 239 Neb. 624, 477 N.W.2d 557 

(1991)).

67 Id., quoting Sasich v. City of Omaha, 216 Neb. 864, 347 N.W.2d 93 

(1984).