Farmers Co-op v. State, 296 Neb. 347

Farmers Cooperative and Frontier Cooperative sought refunds of Nebraska sales/use taxes paid on repairs and parts for agricultural machinery under Neb. Rev. Stat. § 77-2708.01 (refund for “depreciable repairs or parts”).
The Department of Revenue’s Information Guide defined “depreciable repairs or parts” by reference to the IRS Farmer’s Tax Guide: items that appreciably prolong life, arrest deterioration, or increase value/usefulness and are capital expenditures depreciated for tax purposes.
The Department partially denied the Cooperatives’ refund claims for many line items (e.g., alternators, bolts, gaskets, sensors, hoses, Terragator air conditioner) as nondepreciable; the Cooperatives appealed to district court without requesting a departmental hearing or submitting personal property tax returns/depreciation schedules.
The district court found the statutory phrase ambiguous, accepted the Department’s IRS-based interpretation in the Information Guide, and affirmed the partial denials, finding the Cooperatives failed to prove the items were depreciated/personal-property-taxed.
The Cooperatives appealed to the Nebraska Supreme Court, which consolidated the appeals and affirmed the district court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper meaning of “depreciable repairs or parts” in § 77-2708.01	Term should be read consistently with § 77-119/§ 77-2704.36: any parts/repairs with a determinable life >1 year (depreciable tangible personal property)	Ambiguous term should be defined per Department’s Information Guide/IRS Farmer’s Tax Guide: items that appreciably prolong life, arrest deterioration, or increase value/usefulness and are capital expenditures depreciated for tax	Ambiguous; legislative history and purpose support Department’s IRS-based definition (capital expense/depreciable when it appreciably prolongs life, increases value/usefulness, or arrests deterioration)
Burden and proof for refund eligibility	Cooperatives: statute does not require production of personal property tax returns to claim refund	Department: claimant must prove personal property taxation/depreciation to avoid double taxation; documentation supports refund eligibility	Claimants bear burden to establish entitlement; Cooperatives failed to submit required evidence (property tax returns/depreciation schedules), so denials upheld

Stewart v. Nebraska Dept. of Rev., 294 Neb. 1010, 885 N.W.2d 723 (cites standard of review for administrative appeals)
Archer Daniels Midland Co. v. State, 290 Neb. 780, 861 N.W.2d 733 (statutory interpretation principles)
Project Extra Mile v. Nebraska Liquor Control Comm., 283 Neb. 379, 810 N.W.2d 149 (statutory ambiguity/interpretation)
Trumble v. Sarpy County Board, 283 Neb. 486, 810 N.W.2d 732 (when legislature provides a specific definition, it controls)
Dean v. State, 288 Neb. 530, 849 N.W.2d 138 (use of legislative history when statute ambiguous)
State v. Duncan, 294 Neb. 162, 882 N.W.2d 650 (statutory construction objectives)
Bridgeport Ethanol v. Nebraska Dept. of Rev., 284 Neb. 291, 818 N.W.2d 600 (tax exemptions construed narrowly)
Goodyear Tire & Rubber Co. v. State, 275 Neb. 594, 748 N.W.2d 42 (analogy: tax exemption and refund burdens)