{ "id": 12422686, "name": "MIDREX TECHNOLOGIES, INC. v. N.C. DEPARTMENT OF REVENUE", "name_abbreviation": "Midrex Technologies, Inc. v. N.C. Department of Revenue", "decision_date": "2016-12-21", "docket_number": "No. 5A16", "first_page": "250", "last_page": "264", "citations": [ { "type": "official", "cite": "369 N.C. 250" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "675 S.E.2d 641", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2009, "pin_cites": [ { "page": "650", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "363 N.C. 189", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4150708 ], "year": 2009, "pin_cites": [ { "page": "202", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/363/0189-01" ] }, { "cite": "144 S.E.2d 821", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1965, "pin_cites": [ { "page": "824", "parenthetical": "finding that exemptions from taxation are \"to be strictly construed against the claim of such special or preferred treatment\"" } ], "opinion_index": 0 }, { "cite": "265 N.C. 653", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8576632 ], "year": 1965, "pin_cites": [ { "page": "656", "parenthetical": "finding that exemptions from taxation are \"to be strictly construed against the claim of such special or preferred treatment\"" } ], "opinion_index": 0, "case_paths": [ "/nc/265/0653-01" ] }, { "cite": "712 S.E.2d 868", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2011, "pin_cites": [ { "page": "871", "parenthetical": "stating \"courts consider, but are not bound by, the interpretations of administrative agencies and boards\"" } ], "opinion_index": 0 }, { "cite": "365 N.C. 152", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4153654 ], "year": 2011, "pin_cites": [ { "page": "156", "parenthetical": "stating \"courts consider, but are not bound by, the interpretations of administrative agencies and boards\"" } ], "opinion_index": 0, "case_paths": [ "/nc/365/0152-01" ] }, { "cite": "114 S.E.2d 702", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1960, "pin_cites": [ { "page": "705" } ], "opinion_index": 0 }, { "cite": "252 N.C. 738", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8625622 ], "year": 1960, "pin_cites": [ { "page": "742" } ], "opinion_index": 0, "case_paths": [ "/nc/252/0738-01" ] }, { "cite": "464 S.E.2d 268", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1995, "pin_cites": [ { "page": "271" }, { "page": "302" } ], "opinion_index": 0 }, { "cite": "342 N.C. 374", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 795981 ], "year": 1995, "pin_cites": [ { "page": "380" } ], "opinion_index": 0, "case_paths": [ "/nc/342/0374-01" ] }, { "cite": "403 S.E.2d 291", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1991, "pin_cites": [ { "page": "294", "parenthetical": "citations omitted" }, { "page": "294", "parenthetical": "\"In matters of statutory construction, our primary task is to ensure that the purpose of the legislature, the legislative intent is accomplished\"" } ], "opinion_index": 0 }, { "cite": "328 N.C. 651", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2538925 ], "weight": 2, "year": 1991, "pin_cites": [ { "page": "656", "parenthetical": "citations omitted" }, { "page": "656" } ], "opinion_index": 0, "case_paths": [ "/nc/328/0651-01" ] }, { "cite": "146 S.E.2d 410", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1966, "pin_cites": [ { "page": "416" } ], "opinion_index": 0 }, { "cite": "266 N.C. 430", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561069 ], "year": 1966, "pin_cites": [ { "page": "438" } ], "opinion_index": 0, "case_paths": [ "/nc/266/0430-01" ] }, { "cite": "388 S.E.2d 557", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "page": "568", "parenthetical": "quoting Jamestown Mut. Ins. Co. v. Nationwide Mut. Ins. Co., 266 N.C. 430, 438, 146 S.E.2d 410, 416 (1966)" } ], "opinion_index": 0 }, { "cite": "326 N.C. 133", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 5309422 ], "year": 1990, "pin_cites": [ { "page": "152", "parenthetical": "quoting Jamestown Mut. Ins. Co. v. Nationwide Mut. Ins. Co., 266 N.C. 430, 438, 146 S.E.2d 410, 416 (1966)" } ], "opinion_index": 0, "case_paths": [ "/nc/326/0133-01" ] }, { "cite": "526 U.S. 1098", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11178628, 11178790, 11178507, 11178542, 11178897, 11178867, 11178836, 11178709, 11178675, 11178586, 11178751 ], "year": 1999, "opinion_index": 0, "case_paths": [ "/us/526/1098-04", "/us/526/1098-08", "/us/526/1098-01", "/us/526/1098-02", "/us/526/1098-11", "/us/526/1098-10", "/us/526/1098-09", "/us/526/1098-06", "/us/526/1098-05", "/us/526/1098-03", "/us/526/1098-07" ] }, { "cite": "507 S.E.2d 284", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1998, "pin_cites": [ { "page": "290" } ], "opinion_index": 0 }, { "cite": "349 N.C. 290", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 571505 ], "year": 1998, "pin_cites": [ { "page": "297" } ], "opinion_index": 0, "case_paths": [ "/nc/349/0290-01" ] }, { "cite": "766 S.E.2d 297", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2014, "pin_cites": [ { "page": "301", "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "367 N.C. 618", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4316820 ], "year": 2014, "pin_cites": [ { "page": "623", "parenthetical": "citations omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/367/0618-01" ] }, { "cite": "347 S.E.2d 824", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "pin_cites": [ { "page": "828" } ], "opinion_index": 0 }, { "cite": "318 N.C. 76", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4737744 ], "year": 1986, "pin_cites": [ { "page": "81" } ], "opinion_index": 0, "case_paths": [ "/nc/318/0076-01" ] }, { "cite": "507 S.E.2d 894", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1998, "pin_cites": [ { "page": "895", "parenthetical": "quoting Shelton v. Morehead Mem'l Hosp., 318 N.C. 76, 81, 347 S.E.2d 824, 828 (1986)" } ], "opinion_index": 0 }, { "cite": "349 N.C. 520", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 571692 ], "year": 1998, "pin_cites": [ { "page": "522", "parenthetical": "quoting Shelton v. Morehead Mem'l Hosp., 318 N.C. 76, 81, 347 S.E.2d 824, 828 (1986)" } ], "opinion_index": 0, "case_paths": [ "/nc/349/0520-01" ] }, { "cite": "565 S.E.2d 9", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 2002, "pin_cites": [ { "page": "17", "parenthetical": "second, third, and fourth alterations in original" } ], "opinion_index": 0 }, { "cite": "356 N.C. 1", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 1511222 ], "year": 2002, "pin_cites": [ { "page": "13-14", "parenthetical": "second, third, and fourth alterations in original" } ], "opinion_index": 0, "case_paths": [ "/nc/356/0001-01" ] }, { "cite": "599 S.E.2d 888", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2004, "pin_cites": [ { "page": "895", "parenthetical": "quoting Mann Media, Inc. v. Randolph Cty. Planning Bd., 356 N.C. 1, 13-14, 565 S.E.2d 9, 17 (2002) (second, third, and fourth alterations in original)" } ], "opinion_index": 0 }, { "cite": "358 N.C. 649", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2987357 ], "year": 2004, "pin_cites": [ { "page": "660", "parenthetical": "quoting Mann Media, Inc. v. Randolph Cty. Planning Bd., 356 N.C. 1, 13-14, 565 S.E.2d 9, 17 (2002) (second, third, and fourth alterations in original)" } ], "opinion_index": 0, "case_paths": [ "/nc/358/0649-01" ] }, { "cite": "760 S.E.2d 263", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2014, "pin_cites": [ { "page": "266", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "367 N.C. 363", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4313262 ], "year": 2014, "pin_cites": [ { "page": "367", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/367/0363-01" ] }, { "cite": "579 S.E.2d 386", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2003, "opinion_index": 0 }, { "cite": "357 N.C. 62", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 491520, 491684, 491750, 491596, 491725, 491760, 491635, 491479 ], "year": 2003, "opinion_index": 0, "case_paths": [ "/nc/357/0062-01", "/nc/357/0062-03", "/nc/357/0062-04", "/nc/357/0062-08", "/nc/357/0062-06", "/nc/357/0062-02", "/nc/357/0062-07", "/nc/357/0062-05" ] }, { "cite": "573 S.E. 2d 572", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2002, "pin_cites": [ { "page": "579" } ], "opinion_index": 0 }, { "cite": "155 N.C. App. 225", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9249787 ], "year": 2002, "pin_cites": [ { "page": "233-34" } ], "opinion_index": 0, "case_paths": [ "/nc-app/155/0225-01" ] }, { "cite": "675 S.E.2d 88", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2009, "pin_cites": [ { "page": "95", "parenthetical": "quoting County of Wake v. N.C. Dep't of Env't & Nat. Res., 155 N.C. App. 225, 233-34, 573 S.E. 2d 572, 579 (2002), disc. rev. denied, 357 N.C. 62, 579 S.E.2d 386-87 (2003)" } ], "opinion_index": 0 }, { "cite": "196 N.C. App. 426", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 4166782 ], "year": 2009, "pin_cites": [ { "page": "434", "parenthetical": "quoting County of Wake v. N.C. Dep't of Env't & Nat. Res., 155 N.C. App. 225, 233-34, 573 S.E. 2d 572, 579 (2002), disc. rev. denied, 357 N.C. 62, 579 S.E.2d 386-87 (2003)" } ], "opinion_index": 0, "case_paths": [ "/nc-app/196/0426-01" ] }, { "cite": "548 S.E.2d, 513", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 2001, "pin_cites": [ { "page": "517" }, { "page": "517", "parenthetical": "citations omitted" }, { "page": "517" }, { "page": "517" } ], "opinion_index": 0 }, { "cite": "353 N.C. 659", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 135857 ], "weight": 4, "year": 2001, "pin_cites": [ { "page": "664" }, { "page": "664" }, { "page": "663" }, { "page": "664" } ], "opinion_index": 0, "case_paths": [ "/nc/353/0659-01" ] } ], "analysis": { "cardinality": 1266, "char_count": 38560, "ocr_confidence": 0.725, "pagerank": { "raw": 1.3122883813124094e-07, "percentile": 0.6247339130582517 }, "sha256": "7c6cdddadf16d087e3471731848e72f83c7fad44bc51649afdde2c9db2975cf5", "simhash": "1:38ada238cd5f6110", "word_count": 5992 }, "last_updated": "2023-07-14T22:48:28.411797+00:00", "provenance": { "date_added": "2018-10-24", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "MIDREX TECHNOLOGIES, INC. v. N.C. DEPARTMENT OF REVENUE" ], "opinions": [ { "text": "ERVIN, Justice.\nThe issue in this case is whether petitioner Midrex Technologies, Inc. (Midrex) is entitled to utilize the single-factor tax allocation formula authorized by N.C.G.S. \u00a7 105-130.4(r) and made available to exempt corporations \u201cengaged in business as a building or construction contractor\u201d by N.C.G.S. \u00a7 105-130.4(a)(4). For the reasons set forth below, we affirm the trial court\u2019s decision to uphold the administrative law judge\u2019s determination that Midrex was not an \u201cexcluded corporation\u201d for purposes of N.C.G.S. \u00a7 105-130.4(a)(4) during the relevant time period.\nMidrex, a Delaware corporation headquartered in Charlotte, was formed to develop and market the Midrex Direct Reduction Process. The Midrex Process, which has been patented by Midrex and is forty years old, is used in a facility known as a Midrex Plant to convert iron ore into direct reduced iron (DRI), a premium iron ore that is, in turn, used as an alternative feed in connection with the production of steel. Although Midrex engages in three primary business activities, Engineering Services and Procurement Services, Midrex Plant Sales, and After Market Sales, the ultimate focus of its business is the sale of Midrex Plants.\nEngineering and Procurement Services employees design Midrex Plants, with their work including, but not limited to:\n1. Designing refractory linings for gas based equipment, furnaces, ductwork, and heating exchange equipment;\n2. Designing gas based equipment, furnaces, ductwork, and heating exchange equipment; and\n3. Designing systems and equipment associated with the design and construction of DRI plants and new technology.\nEngineering and Procurement Services houses employees who work in various engineering disciplines, such as mechanical, civil, process, and electrical engineering. Engineering and Procurement Services also houses employees responsible for obtaining proprietary and non-proprietary equipment needed for a Midrex Plant. Finally, Engineering and Procurement Services houses a site manager and a construction manager, with the site manager being responsible for handling the relationship between Midrex and the purchaser of a Midrex Plant, including keeping the client apprised of any ongoing plant-related issues, helping coordinate activities at the plant site, recommending any necessary corrective measures, communicating with persons involved in the construction process, and providing advice and assistance relating to any issues that might arise dining the construction of a Midrex Plant and with the construction manager being responsible for all activities involved in the construction of both foreign and domestic plants.\nThe terms and conditions under which Midrex designs and sells a Midrex Plant are set out in certain contracts that are entered into between Midrex and the client. The plant sale contracts that Midrex enters into with its clients outline the relevant technical specifications, the terms under which the client makes payment to Midrex, and the nature and extent of the work to be performed by the client and by Midrex. The work that Midrex is required to perform under these plant sale contracts does not include the construction, erection, and installation of the systems and components utilized in a Midrex plant, with the client or some other entity being required to hire construction contractors and laborers in order to ensure the performance of those tasks. Consistent with this understanding of the contractual relationship between Midrex and its client, Midrex is required to provide engineering, equipment procurement, and advisory and field services needed in connection with the construction of a Midrex Plant, with these contractually required field services including:\n1. Interpreting and explaining of plans, materials, and other technical data;\n2. Advising the Client in developing and updating a construction schedule;\n3. Inspecting material, equipment, and workmanship;\n4. Providing advice related to the commissioning of a Midrex Plant.\nAlthough Midrex field service employees do, on occasion, provide hands-on assistance to clients, the performance of this work does not change the fact that, under Midrex\u2019s plant sales contracts, the client retains ultimate responsibility for directly supervising and obtaining the performance of all on-site construction work in accordance with the relevant plans and specifications.\nFinally, After Market Sales is responsible for addressing issues that arise following the construction of a Midrex Plant. For example, After Market Sales employees are involved in providing additional equipment and parts needed to permit the continued operation of an existing Midrex plant after construction has been completed.\nIn the years between 2005 and 2008, Midrex entered into contracts with various clients at different locations around the world for the sale of Midrex Plants. As a result, Midrex filed North Carolina C Corporation Tax Returns with the Department of Revenue that apportioned its income using the standard three-factor formula provided for in N.C.G.S. \u00a7 105-130.4(i). Subsequently, Midrex filed a set of amended returns for the relevant period in which it calculated its tax liability using the single-factor formula applicable to \u201cexcluded corporations\u201d authorized by N.C.G.S. \u00a7 150-130.4(r), with Midrex\u2019s claim to be an \u201cexcluded corporation\u201d resting on a contention that it was \u201cengaged in business as a building or construction contractor.\u201d N.C.G.S. \u00a7105-130.4(a)(4) (2016). In these amended returns, Midrex sought a $3,303,703 refund.\nMidrex admitted that, during the relevant period, its \u201cprimary business [wa]s selling . . . plants.\u201d In all of the tax returns that it filed relating to this period, Midrex assigned itself a North American Industry Classification System (NAICS) code of 541330 based upon a review of the business services that it provides, including the field services upon which its present refund request depends. NAICS code 541330 falls within the engineering, rather than the construction, sector.\nAfter the filing of Midrex\u2019s amended returns, respondent North Carolina Department of Revenue determined that Midrex should not be classified as an \u201cexcluded corporation\u201d on the grounds that it \u201cwas not engaged in business as a building or construction contractor.\u201d Referencing the Franchise Tax, Corporate Income Tax, Privilege Tax, Insurance Premium Tax [and] Excise Tax Rules and Bulletins for Taxable Years 2005 and 2006 and 2007 and 2008, the Department of Revenue determined that an entity should be treated as an \u201cexcluded corporation\u201d depending upon whether it was classified as a \u201cbuilding or construction contractor\u201d on the basis of the NAICS system, which focuses upon whether an entity\u2019s primary business activity involves erecting buildings and other structures. As a result of the fact that Midrex was not primarily engaged in the business of constructing buildings or other engineering projects and was, instead, \u201cprimarily a technology company that supplies technology relating to the production of DRI\u201d that \u201cis not responsible for the actual construction or installation of the purchased technology,\u201d the Department of Revenue determined that Midrex \u201cwas not engaged in business as a building or construction contractor\u201d and rejected Midrex\u2019s refund request.\nOn 25 October 2013, Midrex filed a Petition for a Contested Tax Case Hearing with the Office of Administrative Hearings in which it sought to have the denial of its refund request by the Department of Revenue overturned. On 12 June 2014 and 27 June 2014, respectively, Midrex and the Department of Revenue filed motions seeking entry of summary judgment in their favor. On 10 October 2014, the administrative law judge entered a Final Decision and Order Granting Respondent\u2019s Motion for Summary Judgment in which he determined that there was no genuine issue of material fact, that judgment should be entered in favor of the Department of Revenue, and that Midrex\u2019s refund request should be denied.\nOn 23 October 2014, Midrex filed a Petition for Judicial Review in the Superior Court, Wake County. After this case was designated a mandatory complex business case as defined by N.C.G.S. \u00a7 7A-45.4 and assigned to a trial judge for decision, the Department of Revenue filed a response to Midrex\u2019s petition. On 21 October 2015, the trial court entered an Opinion and Order on Petition for Judicial Review determining that \u201cMidrex was not an excluded corporation during the tax years at issue\u201d and affirming \u201cthe Final Decision entered in this matter on October 10, 2014,\u201d denying Midrex\u2019s summary judgment motion, and granting the Department of Revenue\u2019s summary judgment motion.\nAlthough Midrex acknowledged that no disputed issues of material fact existed in this case, it argued before the trial court that the administrative law judge had failed to properly apply the statutory provisions set out in N.C.G.S. \u00a7 105-130.4(a)(4) to the facts established by the present record. More specifically, Midrex asserted that the administrative law judge had erred by concluding that Midrex was not a \u201cbuilding or construction contractor\u201d or \u201cengaged in [the construction] business\u201d and by construing the relevant statutory language to require a showing that construction-related activities constituted Midrex\u2019s \u201cprimary\u201d business activity as a prerequisite for a finding that Midrex was an \u201cexcluded coloration.\u201d In reaching a contrary conclusion, the trial court began by attempting to determine the plain meaning of \u201cbuilding or construction contractor\u201d for purposes of N.C.G.S. \u00a7 105-130.4(a)(4) and reasoning that \u201conly if Midrex\u2019s work qualifies as building or construction contracting will [this] Court need to address the meaning of the statutory term \u2018engaged in business.\u2019 \u201d Midrex Techs., Inc. v. N.C. Dep\u2019t of Revenue, No. 14 CVS 13996, slip op. at 13 (N.C. Super. Ct. Wake County Oct. 21, 2015) (unpublished). Although Midrex asserted that the field service work that it performed under its Plant sale contracts constituted construction management and that it was involved in \u201cconstruction contracting\u201d for that reason, the Department of Revenue asserted that Midrex was \u201cnot a building or construction contractor\u201d because \u201cMidrex\u2019s contracts do not place responsibility on Midrex to build or erect the plant\u201d and because \u201cMidrex is not significantly involved in the physical labor of building the plant.\u201d Id.\nAfter concluding that a determination of the extent to which Midrex was properly classified as an \u201cexcluded corporation\u201d involved an issue of statutory construction requiring an analysis of the plain meaning of the relevant statutory language and, potentially, the utilization of various principles of statutory construction, Midrex, slip op. at 10-13 (citing inter alia, Lenox, Inc. v. Tolson, 353 N.C. 659, 664, 548 S.E.2d, 513, 517 (2001)), the trial court noted that \u201cMerriam-Webster defines \u2018building\u2019 as \u2018the art or business of assembling materials into a structure,\u2019 \u201d defines \u201c \u2018construction\u2019 as \u2018the process, art, or manner or constructing something,\u2019 \u201d and defines \u201ccontractor as \u2018one that contracts or is a party to a contract: as (a) one that contracts to perform work or provide supplies!) or] (b) one that contracts to erect buildings.\u2019 \u201d Id. at 15 (brackets in original). In addition, the trial court sought guidance from language appearing in other relevant statutory provisions, noting that the \u201cstatutory definition [of \u201cconstruction contractor\u201d contained in N.C.G.S. \u00a7 105-273(5a)] is consistent with the dictionary definitions and emphasizes the physical work of \u2018building\u2019 and \u2018installing\u2019 as the critical elements of construction contracting, and does not suggest that it excludes subcontractors or other contractors.\u201d Id. According to the trial court, the dictionary and statutory definitions of the relevant terms \u201caccurately reflect the common understanding [of the terms], as they include a broader range of activity.\u201d Id. at 16.\nAlthough Midrex argued that NAICS treats construction managers providing scheduling and oversight services as contractors, the trial court pointed out that \u201cNAICS recognizes that where an establishment\u2019s primary business is providing oversight and scheduling for construction projects it may properly be classified for purposes of the NAICS system as a \u2018general contractor-type establishment\u2019 \u201d and indicated that the quoted language \u201cdoes not suggest that any establishment which performs any amount of construction oversight and scheduling as some part of its services is a \u2018building or construction contractor.\u2019 \u201d Id. As a result, the trial court concluded that the term \u201cbuilding or construction contractor\u201d as used in N.C.G.S. \u00a7 105-130.4(a)(4) did not apply to the provision of \u201cconstruction management that involves only oversight or scheduling, but does not include responsibility for performance or direction of the actual building, erection, or assembly of a structure;\u201d therefore, Midrex construction management activities \u201cdo[ ] not fit within the plain meaning of the term \u2018building or construction contractor\u2019 as used in [N.C.] G.S. \u00a7 105-130.4(a)(4). \u201d Id. at 18.\nAlthough the agreements between Midrex and its clients obligated Midrex to provide technical advice, including \u201cinterpreting and explaining drawings and specifications,\u201d \u201cadvising the client in development of the construction sequence,\u201d and \u201cinspecting the material, equipment, and workmanship of the plant,\u201d and to \u201cdirect and supervise the commissioning (start-up) of the Midrex Plant once it was constructed,\u201d these contracts clearly made the client responsible for procuring the performance of the actual erection of the plant. Id. at 18-19. In light of these contractual provisions, the trial court determined that the fact that Midrex performed field advisory services for its clients did not render Midrex a \u201cbuilding or construction contractor\u201d for purposes of N.C.G.S. \u00a7 105-130.4(a)(4). Id. at 19. Having made that determination, the trial court deemed it \u201cunnecessary ... to address the parties\u2019 arguments regarding the meaning of the term \u2018engaged in business,\u2019 \u201d and affirmed the administrative law judge\u2019s order. Id. at 19-20. Midrex noted an appeal to this Court from the trial court\u2019s order.\nAs we have already noted, the issue before the trial court in this case was whether the administrative law judge properly granted summary judgment in favor of the Department of Revenue and against Midrex. Subsection 150B-51(d) of our General' Statutes provides that \u201c[i]n reviewing a final decision allowing judgment on the pleadings or summary judgment, the court may enter any order allowed by G.S. 1A-1, Rule 12(c) or Rule 56,\u201d with the reviewing court having the authority to \u201cremand the case to the administrative law judge for such further proceedings as are just\u201d in the event that \u201cthe order of the court does not fully adjudicate the case.\u201d N.C.G.S. \u00a7 150B-51(d) (2015). Similarly, in reviewing an order from a superior court acting in an appellate capacity, an appellate court must \u201cdetermine whether the trial court exercised the appropriate scope of review and, if appropriate [,]... decide whether the court did so properly.\u201d In re Denial of NC IDEA\u2019s Refund, 196 N.C. App. 426, 434, 675 S.E.2d 88, 95 (2009) (quoting County of Wake v. N.C. Dep\u2019t of Env\u2019t & Nat. Res., 155 N.C. App. 225, 233-34, 573 S.E. 2d 572, 579 (2002), disc. rev. denied, 357 N.C. 62, 579 S.E.2d 386-87 (2003)).\nAccording to well-established North Carolina law, summary judgment \u201cshall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.\u201d N.C.G.S. \u00a7 1A-1, Rule 56(c) (2015). Appeals arising from summary judgment orders are decided using a de novo standard of review. Dallaire v. Bank of Am., 367 N.C. 363, 367, 760 S.E.2d 263, 266 (2014) (citation omitted). \u201cUnder the de novo standard of review, the [Court] \u2018considers] the matter anew[ ] and freely substitute [es] its own judgment for\u2019 [that of the lower court].\u201d N.C. Dep\u2019t of Env\u2019t & Nat. Res. v. Carroll, 358 N.C. 649, 660, 599 S.E.2d 888, 895 (2004) (quoting Mann Media, Inc. v. Randolph Cty. Planning Bd., 356 N.C. 1, 13-14, 565 S.E.2d 9, 17 (2002) (second, third, and fourth alterations in original)). As a result, our task on appeal from the trial court\u2019s order is to make a de novo determination of whether the administrative law judge correctly granted summary judgment in favor of the Department of Revenue and against Midrex.\nC corporations like Midrex doing business within North Carolina are subject to various forms of taxation \u201cto raise and provide revenue\u201d for the State. See N.C.G.S. \u00a7 105-1 (2015). A corporation\u2019s franchise tax obligation is computed based upon the \u201ctotal amount of [the corporation\u2019s] issued and outstanding capital stock, surplus, and undivided profits,\u201d id. \u00a7 105-122(b) (2016), while a C corporation\u2019s income tax liability is imposed upon the corporation\u2019s \u201cnet income.\u201d Id. \u00a7 105-130.3 (2015). As a result of the fact that a corporation may earn income both inside and outside of North Carolina and the fact that there are limitations on the extent to which North Carolina has the constitutional authority to tax income earned outside North Carolina, a corporation that does business both inside and outside North Carolina must use the allocation and apportionment process delineated in N.C.G.S. \u00a7\u00a7 105-122(cl)(l) and 105-130.4 in order to determine its liability for the payment of North Carolina franchise and income taxes.\nAccording to the statutory provisions governing the allocation and apportionment process during the relevant time period, corporations other than those defined as \u201cexcluded corporations\u201d in N.C.G.S. \u00a7 105-130.4(a)(4) are required to utilize a three-factor apportionment formula that focuses upon property, payroll, and sales in order to determine their North Carolina franchise and income tax liability, id. \u00a7\u00a7 105-122(cl)(l), 130-4(i) (2015),while \u201cexcluded corporations\u201d are entitled to utilize a single-factor formula that focuses exclusively upon sales. Id. \u00a7 105-130.4(r) (2015). Thus, the extent to which Midrex is entitled to utilize the single-factor formula in lieu of the three-factor formula depends entirely upon whether it is properly categorized as an \u201cexcluded corporation.\u201d\nAn \u201cexcluded corporation\u201d is defined as \u201cany corporation engaged in business as a building or construction contractor, a securities dealer, or a loan company or a corporation that receives more than fifty percent (50%) of its ordinary gross income from intangible property.\u201d Id. \u00a7 105-130.4(a)(4) (emphasis added). In view of the fact that there is no definition of \u201cbuilding or construction contractor\u201d in the relevant statutory provisions, we are required, as a first step, to determine the meaning of that statutory phrase in order to ascertain whether Midrex should be deemed an \u201cexcluded corporation\u201d entitled to utilize the single-factor formula for the purpose of determining its franchise and income tax liability.\n\u201cLegislative intent controls the meaning of a statute.\u201d Brown v. Flowe, 349 N.C. 520, 522, 507 S.E.2d 894, 895 (1998) (quoting Shelton v. Morehead Mem\u2019l Hosp., 318 N.C. 76, 81, 347 S.E.2d 824, 828 (1986)).\nThe intent of the General Assembly may be found first from the plain language of the statute, then from the legislative history, \u2018the spirit of the act and what the act seeks to accomplish.\u2019 If the language of a statute is clear, the court must implement the statute according to the plain meaning of its terms so long as it is reasonable to do so.\nLenox, Inc. v. Tolson, 353 N.C. at 664, 548 S.E.2d at 517 (citations omitted). Courts should \u201cgive effect to the words actually used in a statute\u201d and should neither \u201cdelete words used\u201d nor \u201cinsert words not used\u201d in the relevant statutory language during the statutory construction process. Lunsford v. Mills, 367 N.C. 618, 623, 766 S.E.2d 297, 301 (2014) (citations omitted). \u201c[Ujndefined words are accorded their plain meaning so long as it is reasonable to do so.\u201d Polaroid Corp. v. Offerman, 349 N.C. 290, 297, 507 S.E.2d 284, 290 (1998), cert. denied, 526 U.S. 1098 (1999), disavowed in part by Lenox, 353 N.C. at 663, 548 S.E.2d at 517. In determining the plain meaning of undefined terms, \u201cthis Court has used \u2018standard, nonlegal dictionaries\u2019 as a guide.\u201d C.D. Spangler Constr. Co. v. Indus. Crankshift & Eng\u2019g Co., 326 N.C. 133, 152, 388 S.E.2d 557, 568 (1990) (quoting Jamestown Mut. Ins. Co. v. Nationwide Mut. Ins. Co., 266 N.C. 430, 438, 146 S.E.2d 410, 416 (1966)). Finally, statutes should be construed so that the resulting construction \u201charmonizes with the underlying reason and purpose of the statute.\u201d Elec. Supply Co. of Durham v. Swain Elec. Co., 328 N.C. 651, 656, 403 S.E.2d 291, 294 (1991) (citations omitted).\nAccording to the New Oxford American Dictionary, \u201cbuilding\u201d means \u201cthe process or business of constructing something,\u201d such as \u201cthe building of highways\u201d; \u201cconstruction\u201d means \u201cthe building of something, typically a large structure\u201d; and \u201ccontractor\u201d means \u201ca person or company that undertakes a contract to provide materials or labor to perform a service or do a job.\u201d New Oxford American Dictionary 228, 373, 377 (Angus Stevenson & Christine A. Lindberg eds. 3d ed. 2010). As the administrative law judge and the trial court reasoned, these definitions tend to focus upon the act of physically constructing or erecting a structure or improvement to real property. Thus, the validity of Midrex\u2019s claim to be a \u201cbuilding or construction contractor\u201d depends upon the extent to which the work performed by Midrex employees involves the act of building or constructing a physical asset, such as a Midrex Plant.\nAn examination of the relevant statutory language in wider context reinforces this conclusion. As the relevant statutory provisions clearly indicate, the single-factor formula and three-factor formula are utilized to determine the affected entity\u2019s entire North Carolina tax liability. In other words, an \u201cexcluded\u201d corporation is treated for tax allocation and apportionment purposes as if it was involved in nothing other than the activity that caused it to be classified as \u201cexcluded.\u201d In fight of that fact, we have difficulty in seeing why the General Assembly would have intended for N.C.G.S. \u00a7 105-130.4(a)(4) to have been construed in such a manner as to classify an entity engaged in only a relatively small amount of construction-related activity as if it was a \u201cbuilding or construction contractor.\u201d Instead, it is far more likely, given that a taxpayer is treated as \u201cexcluded\u201d or not \u201cexcluded\u201d on a whole entity basis, that N.C.G.S. \u00a7 105-130.4(a)(4) should be understood as describing the entire entity rather than a small portion of the entity\u2019s overall business.\nThe interpretation of the relevant statutory language that we believe to be appropriate is further buttressed by the fact that the Department of Revenue has traditionally read N.C.G.S. \u00a7 105-130.4(a)(4) in just this way. In an attempt to provide guidance to taxpayers and others attempting to ensure compliance with North Carolina\u2019s revenue laws, the Secretary of Revenue publishes Bulletins that set out his or her interpretation of various statutory provisions.\nIt is the duty of the Secretary [of Revenue] to interpret all laws administered by the Secretary. The Secretary\u2019s interpretation of these laws shall be consistent with the applicable rules. An interpretation by the Secretary is prima facie correct. When the Secretary interprets a law by adopting a rule or publishing a bulletin or directive on the law, the interpretation is a protection to the officers and taxpayers affected by the interpretation, and taxpayers are entitled to rely upon the interpretation.\nN.C.G.S. \u00a7 105-264(a) (2016). \u201cThe construction adopted by the administrators who execute and administer a law in question is one consideration where an issue of statutoiy construction arises,\u201d Polaroid, 349 N.C. at 301-02,507 S.E.2dat293 (quoting John R. Sexton & Co. v. Justus, 342 N.C. 374, 380, 464 S.E.2d 268, 271 (1995)), because such interpretation is \u201c \u2018strongly persuasive\u2019 \u201d and \u201centitled to due consideration,\u201d id. at 302, 507 S.E.2d at 293 (quoting and citing Shealy v. Associated Transp., Inc., 252 N.C. 738, 742, 114 S.E.2d 702, 705 (1960)). Contra Morris Commc\u2019ns Gorp. v. City of Bessemer City Zoning Bd. of Adjustment, 365 N.C. 152, 156, 712 S.E.2d 868, 871 (2011) (stating \u201ccourts consider, but are not bound by, the interpretations of administrative agencies and boards\u201d). Thus, the manner in which the Secretary of Revenue has interpreted the relevant statutory language is important and must be given \u201cdue consideration.\u201d\nThe relevant Bulletin language clearly states that a \u201cbuilding or construction contractor,\u201d as that term is used in N.C.G.S. 105-130.4(a)(4), \u201cis a business so classified in the [NAICS] published by the Federal Office of Management and Budget.\u201d Corp., Excise & Insur. Tax Div., N.C. Dep\u2019t of Revenue, Franchise Tax[,] Corporate Income Tax[,] Privilege Tax[,] Insurance Premium Tax[,] Excise Tax: Rules and Bulletins: Taxable Years 2005 & 2006, at 46; id., Years 2007 & 2008, at 54-55. NAICS classifies establishments as belonging to particular industries based on the nature of the entity\u2019s primary business activity. According to NAICS, the construction sector is comprised of establishments that are primarily engaged in the construction of buildings or engineering projects, including erecting buildings and other structures, heavy construction, alterations, reconstruction, and installation. Thus, under the interpretation of N.C.G.S. \u00a7 105430.4(a)(4) deemed appropriate by the Secretary of Revenue, an entity is not a \u201cbuilding or construction contractor\u201d unless that entity is primarily engaged in the actual construction or erection of physical assets.\nA careful review of the undisputed evidence contained the evi-dentiary record presented for the administrative law judge\u2019s consideration indicates that Midrex has only limited involvement in the actual, physical construction of a Midrex Plant. Instead, the undisputed record evidence tends to show that the client, rather than Midrex, has ultimate responsibility for obtaining the physical construction of a Midrex Plant, with Midrex being responsible for providing scheduling, oversight, and other sorts of technical assistance and advice. For that reason, we agree with the trial court and the administrative law judge that Midrex is not a \u201cbuilding or construction contractor\u201d for purposes of N.C.G.S. \u00a7 105-130.4(a)(4). Our determination to this effect is buttressed by the fact that the undisputed record evidence reflects that Midrex has classified itself as an engineering company rather than a building or construction company for purposes of the NAICS system. In view of the fact that an entity is not entitled to classify itself as a construction company utilizing NAICS unless it is primarily engaged in activities involved the building or erection of structures, the fact that Midrex concedes that it is not primarily engaged in such activities, and the fact that Midrex has assigned an engineering-related NAICS code rather than a construction-related NAICS code, it is clear that Midrex is not entitled to claim \u201cbuilding or construction contractor\u201d status for purposes of N.C.G.S. \u00a7 105-130.4(a)(4) utilizing the test for identifying \u201cexcluded corporations\u201d that the Department of Revenue has deemed appropriate either. As a result, when considering the record evidence concerning Midrex\u2019s role in the construction of a Midrex Plant on the basis of either the literal language of N.C.G.S. \u00a7 105-130.4(a)(4) or the method for identifying \u201cexcluded corporations\u201d deemed appropriate by the Secretary, we agree that the Department of Revenue correctly rejected Midrex\u2019s refund request.\nIn seeking to persuade us that it should be treated as a \u201cbuilding or construction contractor\u201d for purposes of N.C.G.S. \u00a7 105-130.4(a)(4), Midrex emphasizes that it provides construction management services and performs hands-on construction activities. Although the recqrd does contain evidence tending to show that Midrex employees engage in construction management activities and perform a limited amount of hands-on construction activity, this evidence is not enough to support a decision to classify Midrex as an \u201cexcluded corporation\u201d on the grounds that it is a \u201cbuilding or construction contractor.\u201d\nAs Midrex notes, construction management activities are included within the NAICS construction classification. In light of that fact, Midrex argues that it should be deemed a construction company for NAICS-related purposes given that it performs what amounts to construction management services for its clients and that it should be deemed to be a \u201cbuilding or construction contractor\u201d for that reason. Midrex\u2019s argument to this effect fails, however, because an NAICS classification determination is supposed to be premised upon the identification of an entity\u2019s primary business activity. Although the record does contain evidence tending to show that Midrex performs a certain amount of construction management work, the record does not provide any support for an assertion that the provision of such services constitutes Midrex\u2019s primary business activity. For that reason, Midrex could not properly be classified as a construction manager for purposes of the NAICS classification system given that construction management was not its primary line of business during the relevant time period. As a result, the fact that Midrex performs a certain amount of construction management work does not justify a decision in Midrex\u2019s favor in this case.\nSimilarly, while Midrex employees do, apparently, perform a very limited amount of hands-on construction, such work is not provided for in the Plant construction contracts, appears to involve an attempt on the part of Midrex\u2019s employees to demonstrate to the employees of other entities employed by the client for the purpose of physically constructing a Midrex Plant how certain jobs should be performed, and seems to represent a very small fraction of the work that Midrex performs for its clients in connection with the design, construction, and commissioning of a Midrex Plant. In other words, the hands-on construction work that is performed by Midrex\u2019s employees appears to be incidental to the obligations imposed upon it under the contracts that are intended to result in the construction of a Midrex Plant. Thus, Midrex cannot be treated as a \u201cbuilding or construction contractor\u201d for purposes of N.C.G.S. \u00a7 105-130.4(a)(4) based on its hands-on construction activities either.\nIn an attempt to persuade us of the correctness of its position, Midrex argues that, because N.C.G.S. \u00a7 105-130.4 is a tax statute, it should be construed in favor of Midrex as the taxpayer. See Lenox, 353 N.C. at 664, 548 S.E.2d at 517 (2001). However, as the Department of Revenue notes, this Court has held that tax statutes providing for exceptions to otherwise-applicable general rules, such as N.C.G.S. \u00a7\u00a7 105-130.4(a)(4) and 105-130.4(r), should be treated as statutes providing for an exemption from taxation that should be construed against the taxpayer. See Hatteras Yacht Co. v. High, 265 N.C. 653, 656, 144 S.E.2d 821, 824 (1965) (finding that exemptions from taxation are \u201cto be strictly construed against the claim of such special or preferred treatment\u201d). As the record clearly reflects, the vast majority of C Corporations subject to North Carolina taxation apportioned their income utilizing the three-factor formula specified in N.C.G.S. \u00a7 105-130.4(i) during the tax years at issue in this case. For that reason, any claim that a taxpayer has the right to utilize the single-factor formula set out in N.C.G.S. \u00a7 105-130.4(r) should be strictly construed against, rather than in favor of, the taxpayer\u2019s contention, a proposition that further reinforces our determination that Midrex is not entitled to be treated as an \u201cexcluded corporation\u201d as defined in N.C.G.S. \u00a7 105-130.4(a)(4).\nReduced to its essence, the argument that Midrex has advanced in support of its refund request rests on an assertion that entities seeking to be classified as \u201cexcluded corporations\u201d based on their status as a \u201cbuilding or construction contractor\u201d are entitled to be categorized in that manner as long so as they are engaged in any non-incidental amount of \u201cbuilding or construction\u201d work. In other words, acceptance of Midrex\u2019s argument hinges on the proposition that the company is not required to be primarily \u201cengaged in business as a building or construction contractor.\u201d Admittedly, as Midrex notes, the word \u201cprimarily\u201d does not appear in the relevant statutory language. See N.C.G.S. \u00a7 105-130.4(a) (4). The absence of the word \u201cprimarily\u201d from N.C.G.S. \u00a7 105-130.4(a)(4), while relevant, is not, however, dispositive in light of the rule of statutory construction to the effect that the fact \u201c[t]hat a legislature declined to enact a statute with specific language does not indicate the legislature intended the exact opposite.\u201d N.C. Dep\u2019t of Corr. v. N.C. Med. Bd., 363 N.C. 189, 202, 675 S.E.2d 641, 650 (2009) (citation omitted). Thus, the ultimate issue for our consideration remains what the relevant statutory language, when read in context and in its entirety, should be understood to mean.\nAs we have already demonstrated, the position espoused by the Department of Revenue and upheld by the administrative law judge and the trial court is fully consistent with both the literal language in which the relevant statutory provision is couched and long-standing administrative practice. Acceptance of the construction of the relevant statutory language contended for by Midrex would have the effect of allowing any corporation that performed some building or construction work to take advantage of the single-factor formula made available by N.C.G.S. \u00a7 105-130.4(r), despite the fact that the General Assembly clearly intended that the single-factor formula was only to be made available to a limited class of corporate taxpayers, with the remaining corporate taxpayers being required to use the three-factor formula. Any decision that would have the effect of vastly expanding the number of entities entitled to use the single-factor test would appear to conflict with the apparent legislative intent. See Elec. Supply Co., 328 N.C. at 656, 403 S.E.2d at 294 (\u201cIn matters of statutory construction, our primary task is to ensure that the purpose of the legislature, the legislative intent is accomplished\u201d). As a result, adoption of the construction of the relevant statutory language contended for by Midrex would appear to be inappropriate for this reason as well.\nThus, for the reasons set forth above, we conclude that the administrative law judge and the trial court properly determined that Midrex was not a \u201cbuilding or construction contractor\u201d for purposes of N.C.G.S. \u00a7 105-130.4(a)(4). In light of that fact, we need not determine whether Midrex satisfied the \u201cengaged in business\u201d criterion contained in N.C.G.S. \u00a7 105-130.4(a)(4) in order to properly resolve this case. Accordingly, we hold that the trial court did not err by concluding that Midrex is not entitled to a franchise and income tax refund based upon the argument that it has advanced before this Court and we thus affirm the trial court\u2019s decision.\nAFFIRMED.\n. At the time that this case was heard before the administrative law judge, Construction Manager was also its Site Manager.\n. Initially, Midrex filed tax returns for the 2005, 2006, and 2007 tax years that did not attempt to apportion revenue between North Carolina and other jurisdictions. In 2009 Midrex filed a return for the 2008 tax year utilizing the three-factor apportionment formula and filed amended returns seeking refunds for the 2005, 2006, and 2007 tax years. Subsequently, Midrex filed a second set of amended returns relating to the 2005, 2006, and 2007 tax years in which it sought a further refund based upon use of the single-factor formula. The present case arises from the Department\u2019s decision to reject the second set of refund requests relating to the 2005, 2006, and 2007 tax years.\n. Admittedly, the General Assembly has amended N.C.G.S. \u00a7 105-130.4 so as to allow all corporations to utilize the single-factor formula effective for tax years beginning with 1 January 2018. However, Midrex\u2019s liability for franchise and income taxation associated with the 2005, 2006, and 2007 tax years must, of course, be determined in light of the statutory provisions in effect as of that time.", "type": "majority", "author": "ERVIN, Justice." } ], "attorneys": [ "Robinson, Bradshaw & Hinson, P.A., by Thomas Holdemess, for petitioner-appellant.", "Roy Cooper, Attorney General, by Tenisha S. Jacobs, Special Deputy Attorney General, for respondent-appellee North Carolina Department of Revenue." ], "corrections": "", "head_matter": "MIDREX TECHNOLOGIES, INC. v. N.C. DEPARTMENT OF REVENUE\nNo. 5A16\nFiled 21 December 2016\nTaxation\u2014franchise and income tax\u2014excluded corporation\u2014 building or construction contractor\nThe trial court did not err by concluding that Midrex Technologies, Inc. was not entitled to a franchise and income tax refund where the issue in the case was whether the corporation was entitled to utilize the single-factor tax allocation formula authorized by N.C.G.S. \u00a7 105-130.4(r) and made available to exempt corporations engaged in business as a building or construction contractor. Although the record did contain evidence tending to show that Midrex employees engaged in construction management activities and performed a limited amount of hands-on construction activity, that evidence was not enough to support a decision to classify Midrex as an \u201cexcluded corporation\u201d on the grounds that it is a \u201cbuilding or construction contractor.\u201d\nAppeal pursuant to N.C.G.S. \u00a7\u00a7 7A-27(a) and 7A-45.4 from an Opinion and Order on Petition for Judicial Review entered on 21 October 2015 by Judge Gregory P. McGuire, Special Superior Court Judge for Complex Business Cases appointed by the Chief Justice pursuant to N.C.G.S. \u00a7 7A-45.4, in Superior Court, Wake County, upholding a Final Decision and Order Granting Respondent\u2019s Motion for Summary Judgment entered by Administrative Law Judge Craig Croom on 13 October 2014. Heard in the Supreme Court on 30 August 2016.\nRobinson, Bradshaw & Hinson, P.A., by Thomas Holdemess, for petitioner-appellant.\nRoy Cooper, Attorney General, by Tenisha S. Jacobs, Special Deputy Attorney General, for respondent-appellee North Carolina Department of Revenue." }, "file_name": "0250-01", "first_page_order": 326, "last_page_order": 340 }