Kroll Ontrack, LLC v. Commissioner of Revenue, A18-1805 - a podcast by TCL Media

Minnesota provides an exemption from the state’s sales tax for “machinery and equipment used primarily to electronically transmit results retrieved by a customer of an online computerized data retrieval system.” Minn. Stat. § 297A.68, subd. 5(a) (2018). Relator Kroll On-Track purchased equipment and machinery for its system, which provides “e-discovery, information management, and data recovery products” that allow law firms, businesses, and government agencies to “assemble, maintain, sort, and search an electronic database of litigation documents.” Kroll then filed a refund claim with the Department of Revenue for the sales tax paid on the purchases. The Commissioner of Revenue denied the refund claim. Kroll appealed to the Minnesota Tax Court, which granted the Commissioner’s motion for summary judgment and denied Kroll’s summary judgment motion, concluding that Kroll’s equipment purchases do not qualify for the statutory exemption.

On appeal to the supreme court, the issue presented is whether Kroll Ontrack’s e-discovery system makes cumulated information equally available and accessible to all customers of the system and thus is an “online data retrieval system” eligible for the capital-equipment exemption from sales tax. (Minnesota Tax Court)

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