OFFICE OF THE ATTORNEY GENERAL

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STATE OF MINNESOTA OFFICE OF THE ATTORNEY GENERAL February 10, 2014 Lisa Pister Court Administrator Minnesota Tax Court 245 Minnesota Judicial Center
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STATE OF MINNESOTA OFFICE OF THE ATTORNEY GENERAL

February 10, 2014 Lisa Pister Court Administrator Minnesota Tax Court 245 Minnesota Judicial Center 25 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, MN 55155 Re:

Kimberly-Clark Corporation & Subsidiaries v. Commissioner of Revenue Tax Court File No. 8670-R

Dear Ms. Pister: Enclosed for filing with the Court are the original Return and Answer to the Notice of Appeal in the above matter, together with our Affidavit of Service. By copy of this letter, we have served copies of the Return and Answer on Appellant. Sincerely,

SARA L. BRUGGEMAN Assistant Attorney General (651) 757-1420 (Voice) (651) 297-8265 (Fax) Attorney for Commissioner of Revenue

Enclosures cc:

Walter Pickhardt Attorney at Law

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AFFIDAVIT OF SERVICE BY U.S. MAIL

Re:

Kimberly-Clark Corporation & Subsidiaries v. Commissioner of Revenue Tax Court File No. 8670-R

STATE OF MINNESOTA COUNTY OF RAMSEY

) ) ss. )

Lynne Zimmerman, being first duly sworn, deposes and says: That at the City of St. Paul, County of Ramsey and State of Minnesota, on February 10, 2014, she caused to be served the

RETURN AND ANSWER TO NOTICE OF APPEAL,

by depositing

true and correct copies in the United States mail at said City of St. Paul, properly enveloped, with postage prepaid: Walter A. Pickhardt Attorney at Law FAEGRE BAKER DANIELS

2200 Wells Fargo Center 90 S. Seventh Street Minneapolis, MN 55402-3901

Lynne Zimmerman

Subscribed and sworn to before me on this 10th day of February, 2014.

NOTARY PUBLIC

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STATE OF MINNESOTA

TAX COURT

COUNTY OF RAMSEY

REGULAR DIVISION

Kimberly-Clark Corporation & Subsidiaries,

Docket No. 8670-R

Appellants, RETURN v. Commissioner of Revenue, Appellee.

TO: THE HONORABLE TAX COURT OF THE STATE OF MINNESOTA. In compliance with Minn. Stat. §271.06, subd. 3 (2012), Appellee Commissioner of Revenue hereby makes, certifies, and files with this Honorable Court his Return and Answer to the Notice of Appeal in the above-entitled matter. The Return comprises copies of the following documents: 1.

Answer to Notice of Appeal.

2.

Notice of Appeal (dated October 28, 2013).

3.

Order of the Commissioner of Revenue Regarding Notice of Change in Tax (October 14,2013).

Dated: February 7, 2014 TERESE M. MITCHELL, Director Appeals and Legal Services Division Minnesota Department of Revenue

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CERTIFICATION I, TERESE M. MITCHELL, Director, Appeals and Legal Services Division, Minnesota Department of Revenue, do hereby certify that the Return is a true and complete Return of all material documents, reports, files, and other matter in said proceedings pursuant to Minn. Stat. §271.06, subd. 3(2012).

Dated: February 7 , 2014 TERESE M.

MITCHELL, Director

Appeals and Legal Services Division Minnesota Department of Revenue

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TAX COURT

STATE OF MINNESOTA

REGULAR DIVISION

COUNTY OF RAMSEY

Docket No. 8670-R

Kimberly-Clark Corporation & Subsidiaries, Appellants,

ANSWER TO NOTICE OF APPEAL v. Commissioner of Revenue, Appellee.

Appellee, Commissioner of Revenue, for his Answer to the Notice of Appeal herein, states and alleges as follows: 1.

Except as hereinafter admitted, qualified, or otherwise answered, Appellee denies

each and every allegation, fact, and matter in the Notice of Appeal or its attachments. 2.

Admits paragraph 1 of the Notice of Appeal.

3.

Admits, based on information and belief, paragraph 2 of the Notice of Appeal.

4.

Lacks knowledge regarding the allegations of paragraph 3 of the Notice of

Appeal, and therefore denies them. 5.

States that paragraph 4 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 6.

States that paragraph 5 of the Notice of Appeal contains a legal conclusion to

which no response is required, and to the extent a response is required, denies same. 7.

Admits, based on information and belief, paragraph 6 of the Notice of Appeal.

8.

Admits that Kimberly-Clark filed Refund Claims and Amended Franchise Tax

Returns with the Department of Revenue for the tax years ended December 31, 2007 and

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December 31, 2008 in the amounts set forth in paragraph 7 of the Notice of Appeal. Denies the remainder of paragraph 7 of the Notice of Appeal. 9.

Admits that Kimberly-Clark filed Refund Claims and Amended Franchise Tax

Returns with the Department of Revenue for the tax years ended December 31, 2009 and December 31, 2010 in the amounts set forth in paragraph 8 of the Notice of Appeal. Denies the remainder of paragraph 8 of the Notice of Appeal. 10.

With respect to paragraph 9 of the Notice of Appeal, admits the Commissioner

previously audited Appellant's Tax Years Ended December 31, 2007, December 31, 2008, and December 31, 2009, and assessed Appellant additional corporate franchise tax. Affirmatively states that Appellant paid the assessment and admits that this assessment is uncontested as part of this appeal. Admits that Appellant's refund claims at issue in this litigation are based on its use of an equal-weighted apportionment formula to calculate its Minnesota corporate franchise tax. 11.

Admits paragraph 10 of the Notice of Appeal.

12.

States that paragraph 11 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 13.

With respect to paragraph 12 of the Notice of Appeal, states that as of the date of

this Answer, the Commissioner had not allowed or denied Appellant's refund claim for the Tax Year Ended December 31, 2010. States that the remainder of paragraph 12 contains legal argument to which no response is required, and to the extent a response is required, denies same. 14.

As to paragraph 13, denies that Kimberly-Clark is entitled to refunds of corporate

franchise taxes paid for the Years at Issue. The remainder of paragraph 13 of the Notice of Appeal contains legal argument to which no response is required, and to the extent a response is required, denies same.

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15.

States that paragraph 14 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 16.

States that paragraph 15 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 17.

With respect to paragraph 16 of the Notice of Appeal, states that Minnesota was

considered a Compact Member of the Multistate Tax Compact from 1983 until 2013. States that paragraph 16 of the Notice of Appeal contains legal argument to which no response is required, and to the extent a response is required, denies same. 18.

States that paragraph 17 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 19.

With respect to paragraph 18 of the Notice of Appeal, states that while Minnesota

was considered a Compact Member, it paid dues to the Multistate Tax Commission. States that, on information and belief, two employees of the Minnesota Department of Revenue at some point held committee positions at the Multistate Tax Commission, and employees of the Department also attended meetings of the Commission from and after 1987. Lacks knowledge regarding the remaining allegations of paragraph 18 of the Notice of Appeal, and therefore denies them. 20.

Lacks knowledge regarding the factual allegations contained in paragraph 19 of

the Notice of Appeal, and therefore denies such allegations.

States that the remainder of

paragraph 19 of the Notice of Appeal contains legal argument to which no response is required, and to the extent a response is required, denies same. 21.

Lacks knowledge regarding the factual allegations contained in paragraph 20 of

the Notice of Appeal, and therefore denies such allegations.

States that the remainder of

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paragraph 20 of the Notice of Appeal contains legal argument to which no response is required, and to the extent a response is required, denies same. 22.

Lacks knowledge regarding the factual allegations contained in paragraph 21 of

the Notice of Appeal, and therefore denies such allegations.

States that the remainder of

paragraph 21 of the Notice of Appeal contains legal argument to which no response is required, and to the extent a response is required, denies same. 23.

States that paragraph 22 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 24.

States that paragraph 23 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 25.

States that paragraph 24 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 26.

States that paragraph 25 of the Notice of Appeal contains legal argument to which

no response is required, and to the extent a response is required, denies same. 27.

Denies the allegations in paragraph 26 of the Notice of Appeal.

28.

Denies the allegations in paragraph 27 of the Notice of Appeal.

29.

States that Paragraph 28 of the Notice of Appeal contains no allegations which

may be admitted or denied. 30.

States that paragraph 29 of the Notice of Appeal contains no allegations which

may be admitted or denied, 31.

States that paragraphs 1-4 of the Conclusion to the Notice of Appeal contain

requests for relief to which no response is required, and to the extent such response is required, denies same.

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32.

Alleges that the Commissioner's October 14, 2013 Order is entitled to a

presumption of correctness, and is correct and lawful in all respects. AFFIRMATIVE DEFENSES 1.

The Notice of Appeal fails to state a claim on which relief may be granted. There

is no valid election under Minnesota law to use equal-weighted, three-factor apportionment to compute the Minnesota Corporate Franchise Tax. 2.

The claims in the Notice of Appeal are barred by the common law doctrines of

waiver, estoppel, and/or laches. 3.

The claims in the Notice of Appeal are barred by the Minnesota Constitution,

including specifically Article X, Section 1 and other legal principles relating to the authority of the Minnesota legislature to modify, repeal, or amend its legislative enactments. 4.

The claims in the Notice of Appeal are barred by statutory waiver and/or the

statute of limitations. 5.

The claims in the Notice of Appeal are barred, in whole or in part, because

Appellant lacks standing to bring the claims set forth. 6.

The claims in the Notice of Appeal are barred by the doctrines of modification,

course of performance, course of dealing, and/or usage of trade. 7.

Appellee reserves the right to assert further affirmative defenses as those defenses

become known during the course of this litigation.

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WHEREFORE, Appellee prays that the Tax Court deny the relief requested by Appellant and render judgment for Appellee herein.

Dated: February 7, 2014

TERESE MITCHELL, Director Appeals and Legal Services Division Minnesota Department of Revenue

Dated:

OFFICE OF THE ATTORNEY GENERAL State of Minnesota

February

10,

2014

SARA L. BRUGGEMAN Assistant Attorney General Atty. Reg. No. 0386863 445 Minnesota Street, Suite 900 St. Paul, MN 55101-2127 (651) 757-1420 (Voice) (651) 296-1410 (TTY) ATTORNEY FOR APPELLEE COMMISSIONER OF REVENUE

MINN. STAT. § 549.211 ACKNOWLEDGMENT The party on whose behalf the attached document is served acknowledges through its undersigned counsel that sanctions, including reasonable attorney fees and other expenses, may be awarded to the opposite party or parties pursuant to Minn. Stat. § 549.211 (2012).

Dated:

February

10, 2014 SARA L. BRUGGEMAN

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