Opinion ID: 1876539
Heading Depth: 1
Heading Rank: 10

Heading: tax or privilege tax

Text: 5. A comparison of § 290.02 with the section with which we are here directly concerned, namely § 290.03, is enlightening in disclosing the true nature of the tax. [17] An examination of these sections discloses a clear distinction between the excise tax imposed on domestic and foreign corporations for the privilege of transacting business within the state and the income tax imposed under § 290.03. First, the arrangement of the statute is indicative of the legislature's intention to differentiate between these two types of taxes: § 290.02 imposes an excise tax, but § 290.03 imposes purely an income tax. That the annual tax imposed by § 290.03 upon the taxable net income is not an excise or privilege tax measured by net income, but purely a net-income tax wholly unrelated to the privilege of engaging in interstate commerce, becomes clear when we consider the character of the specifically designated types of taxpayers to which it equally and uniformly applies. Clearly, paragraphs (1), (2), (3), and (4) of § 290.03 must be construed together since they relate to the imposition of the same kind of tax on four different classes of taxpayers, namely, on domestic and foreign corporations engaged exclusively in foreign or interstate commerce under paragraph (1); on resident and nonresident individuals under paragraph (2); on estates of decedents dying domiciled within or without the state under paragraph (3); and on trusts created by resident or nonresident persons or by domestic or foreign corporations under paragraph (4). Since the annual net-income tax imposed on individuals under paragraph (2) cannot by any legal legerdemain be construed as an excise or privilege tax, the same yardstick of meaning must be applied to the tax imposed under paragraph (1) upon foreign corporations engaged exclusively in interstate commerce. A similar comparison of paragraphs (3) and (4) with paragraph (1) corroborates this conclusion. Secondly, the distinction in the nature of these taxes is further emphasized by the provisions of § 290.04, subd. 1, which establishes that liability for the excise tax  although measured by income  arises on the first day of the taxable year, while liability for the income tax arises concurrently with the receipt or accrual of income during the taxable year.