This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Karl G. Granse,



State of Minnesota,

Minnesota Department of Revenue, et al.,


Filed February 25, 1997


Lansing, Judge

Ramsey County District Court

File No. CX957733

Hubert H. Humphrey III, Attorney General, Thomas K. Overton, Assistant Attorney General, 10 River Park Plaza, Suite 836, St. Paul, MN 55146-0600 (for Respondents)

Karl G. Granse, 7611 Whitney Drive, Apple Valley, MN 55124 (Pro Se Appellant)

Considered and decided by Crippen, Presiding Judge, Lansing, Judge, and Peterson, Judge.



This appeal challenges the authority of the Commissioner of Revenue to impose income taxes on revenue earned by an independent contractor for work performed outside the state. Because the applicable statute authorizes tax on this income, we affirm.


Karl Granse failed to file Minnesota income tax returns for the years 1987 through 1993. During that period he was self-employed conducting "research, writing and lecturing on the law" and as a photographer. Nearly all of the revenue Granse received during that period was earned from work conducted outside Minnesota. Granse is a lifelong Minnesota resident.

In 1994 the Commissioner of Revenue prepared returns for the years Granse failed to pay taxes and calculated an assessment against him. The total taxes, penalty, and interest amounted to $70,488.59. At that time the Commission also informed Granse of his right to file his own returns or appeal the decision to the tax court. Rather than appealing the Commissioner's assessment, Granse filed suit in district court against the Department of Revenue alleging that he was not subject to tax, or, in the alternative, the taxing statutes were invalid. The district court granted summary judgment for the Department. Granse now appeals.


Granse presents this court with four questions on appeal: (1) Is Granse a "resident individual" subject to state income tax as authorized by Minn. Stat. § 290.03 (1) (1994)? (2) May the state tax a resident individual on proceeds received from work conducted outside the state? (3) Is Minn. Stat. § 290.03 (1994), authorizing an annual income tax on the taxable income of resident individuals, so uncertain as to be invalid? (4) Do the tax rates as applied to Granse violate equal protection?

Statutory and constitutional interpretation presents questions of law, and this court is not bound by the district court's conclusions. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).


Granse asserts that the Commissioner must show he has a place of business within the state or that he employed someone within the state before he can be taxed as a "resident individual." We disagree.

"An annual tax for each taxable year * * * is hereby imposed upon the taxable income for such year of * * * [r]esident and nonresident individuals." Minn. Stat. § 290.03 (1994). It is undisputed that Granse has lived his entire life in the state. "Resident" is defined by the statute as "any individual domiciled in Minnesota." Minn. Stat. § 290.01, subd. 7 (1994). Individual, although not defined in the statute, must be given its ordinary meaning. See Minn. Stat. § 645.08 (1) (1994); Arlandson v. Humphrey, 224 Minn. 49, 55, 27 N.W.2d 819, 823 (1947). An individual is "[a] single human being." American Heritage Dictionary 920 (3rd ed. 1992). Granse is, therefore, a "resident individual" subject to taxation as authorized in Minn. Stat. § 290.03.


Granse further asserts that the state lacks authority to collect tax on his income because it was earned from work outside Minnesota. But the state has the authority to tax its residents for income earned outside the state as long as such tax does not amount to "unreasonable discrimination." Bolier v. Commissioner of Taxation, 233 Minn. 72, 75 n.1, 45 N.W.2d 802, 804 n.1 (1951). "Income from labor or services performed out of state by a Minnesota resident is taxable in Minnesota." Hillstrom v. Commissioner of Revenue, 270 N.W.2d 265, 268 n.2 (Minn. 1978); see also New York ex rel. Cohn v. Graves, 300 U.S. 308, 57 S. Ct. 466 (1937); Lawrence v. State Tax Comm'n of Mississippi, 286 U.S. 276, 52 S. Ct. 556 (1932).


Granse asserts that Minn. Stat. § 290.03 is invalid because it does not set forth with certainty the "transaction, activity, or object to be taxed." Granse posits that the statute is "generic" or vague.

We agree that "a taxing statute must describe with some certainty the transaction, service, or object to be taxed, and in the typical situation it is construed against the Government." United States v. Community TV, Inc., 327 F.2d 797, 800 (10th Cir. 1964) (citation omitted). Minn. Stat. § 290.03 does describe with some certainty the transaction, service, or object to be taxed. The statute imposes a state income tax on "taxable income." Minn. Stat. § 290.03. "Taxable income" for individuals means the same as "taxable net income." Minn. Stat. § 290.01, subd. 29 (1994). "Taxable net income" for resident individuals means "net income." Minn. Stat. § 290.01, subd. 22 (1994). "Net income" is defined in the statute to mean "the federal taxable income, as defined in section 63 of the Internal Revenue Code." Minn. Stat. § 290.01, subd. 19 (1994). Included in this definition of income are "[c]ompensation for services, including fees, commissions, fringe benefits and similar items [and g]ross income derived from business." I.R.C. § 61 (a) (West 1988). The federal courts have dismissed challenges alleging that this definition is too vague. Ficalora v. Commissioner, 751 F.2d 85, 88 (2d Cir. 1984), cert. denied, 471 U.S. 1005 (1985); Charczuk v. Commissioner, 771 F.2d 471, 473 (10th Cir. 1985).


Finally, Granse suggests that the application of the Minnesota income tax to proceeds he received as an independent contractor violates the Equal Protection Clause by taxing him the same as "privileged employees." He asserts that as an independent contractor he does not enjoy the benefits of a "privileged employee" and that the tax rates discriminate against him.

This argument fails to state a claim of disparate treatment under equal protection doctrine. It is analogous to cases alleging disparate impact. But the federal constitution's Equal Protection Clause does not contemplate protection from disparate impact. Washington v. Davis, 426 U.S. 717, 96 S. Ct. 2040 (1976). And although laws that have a disparate impact on protected classes may offend the Minnesota Constitution, State v. Russell, 477 N.W.2d 886, 888 n.2 (Minn. 1991), Granse has failed to offer any reasons why independent contractors should be afforded protected class status, and we find no independent support for such an argument. The equal protection argument must fail.