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

Farmers Cooperative and Frontier Cooperative sought refunds of Nebraska sales and use taxes paid on repairs and parts for agricultural machinery under Neb. Rev. Stat. § 77-2708.01 (1993 amendment).
The Department of Revenue’s Information Guide defined "depreciable repairs or parts" as items that appreciably prolong life, arrest deterioration, or increase value/usefulness and are ordinarily capital expenditures deductible only through depreciation.
The Department denied portions of the Cooperatives’ refund claims for items it classified as nondepreciable (e.g., alternators, bolts, gaskets, sensors, hoses); Cooperatives did not supply personal property tax returns or depreciation schedules to prove those items were taxed as personal property.
Both Cooperatives appealed the Tax Commissioner’s partial denials to the district court (no administrative hearing requested); the district court upheld the Department’s interpretation and the partial denials.
On appeal to the Nebraska Supreme Court the sole legal question was the meaning of the statutory phrase "depreciable repairs or parts." The Court found the phrase ambiguous, examined legislative history, adopted the Department/IRS-guided definition, and affirmed the denials because claimants bore the burden to prove entitlement and failed to provide required evidence.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Meaning of "depreciable repairs or parts" in § 77-2708.01	Cooperatives: use § 77-119 definition (depreciable tangible personal property: determinable life >1 year) and treat "depreciable" consistently across tax statutes	Department: statute ambiguous; adopt definition from Department Information Guide/IRS Farmer's Tax Guide—capital-like repairs that appreciably prolong life, increase value/usefulness, or arrest deterioration	Court: phrase is ambiguous; legislative history supports IRS/Department definition: repairs/parts that appreciably prolong life, arrest deterioration, or increase value/usefulness and are ordinarily capital expenditures deductible only via depreciation
Burden to prove entitlement to refund	Cooperatives: statute does not require submitting personal property tax returns to claim refund	Department: claimants must prove personal property tax was paid on the items (refund system intended to avoid double taxation)	Court: claimants bear burden to show entitlement; failure to provide personal property tax returns/depreciation schedules or request hearing meant insufficient proof; denials affirmed

Stewart v. Nebraska Dept. of Rev., 294 Neb. 1010 (statutory interpretation and Administrative Procedure Act standards)
Archer Daniels Midland Co. v. State, 290 Neb. 780 (statutory construction principles)
Project Extra Mile v. Nebraska Liquor Control Comm., 283 Neb. 379 (ambiguity and in pari materia analysis)
Trumble v. Sarpy County Board, 283 Neb. 486 (definitions control when provided by statute)
Bridgeport Ethanol v. Nebraska Dept. of Rev., 284 Neb. 291 (strict construction of tax exemptions)
Dean v. State, 288 Neb. 530 (use of legislative history when statute ambiguous)
Goodyear Tire & Rubber Co. v. State, 275 Neb. 594 (tax exemption analogous to refund; claimant bears burden)