LRB-4358/1
JK&RPN:kjf:rs
2005 - 2006 LEGISLATURE
February 2, 2006 - Introduced by Representatives Strachota, Gard, J. Fitzgerald,
Huebsch, Jensen, Wood, Hundertmark, Nischke, Mursau, Freese, Lothian,
Krawczyk, Montgomery, Lamb, Kreibich, Towns, Gunderson, Ballweg,
Loeffelholz, Vos, Albers, LeMahieu, Jeskewitz, F. Lasee, Pettis, McCormick

and Musser, cosponsored by Senators Kanavas, Darling, Stepp, Grothman,
Schultz, Brown, Olsen
and Roessler. Referred to Committee on Ways and
Means.
AB968,2,2 1An Act to repeal 77.59 (3m); to amend 71.82 (1) (a), 71.82 (1) (b), 71.82 (1) (c),
271.82 (2) (a), 71.82 (2) (b), 71.82 (2) (c), 71.82 (2) (d), 71.83 (1) (a) 2., 71.83 (1)
3(a) 3., 71.84 (1), 71.84 (2) (a), 71.84 (2) (c), 71.90 (1), 71.90 (2), 71.91 (6) (d) 1.,
471.91 (6) (e) 3., 71.91 (6) (f) 5., 71.91 (6) (g) 2., 73.01 (4) (e) 2., 73.03 (25), 77.59
5(4) (a), 77.59 (8m), 77.60 (1) (a), 77.60 (1) (b), 77.60 (2) (intro.), 77.60 (3), 77.60
6(4), 77.60 (5), 77.96 (5), 78.68 (1), 78.68 (2) (intro.), 78.68 (3), 227.12 (3), 227.41
7(1), 227.41 (3), 227.41 (4), 227.485 (2) (a), 227.485 (3), 227.485 (5), 227.485 (7),
8227.485 (10) (intro.) and 803.08; and to create 73.015 (3), 73.14, 227.12 (4),
9227.41 (5) and 227.485 (3m) of the statutes; relating to: various duties of the
10Department of Revenue, including issuing declaratory judgments, conducting
11audits and assessments, asserting liability, allowing claims for refunds,
12awarding the costs of litigation to a prevailing party, imposing penalties related

1to a taxpayer's negligence, calculating interest on unpaid amounts, and
2requiring the exercise of rule-making authority.
Analysis by the Legislative Reference Bureau
This bill requires the Department of Revenue (DOR) to take certain actions
related to administering taxes and fees. Under the bill, generally, with regard to any
audit, assessment, or claim for a refund, DOR may not take a position that is contrary
to any rule promulgated by DOR that was in effect during the period related to the
audit, assessment, or claim or that is contrary to any guidance published by DOR
prior to that period and not subsequently retracted, altered, or amended.
Under the bill, generally, a person who is subject to an assessment or audit
determination by DOR is not liable for any amount that DOR asserts that the person
owes if the liability asserted is the result of a condition that existed in a prior
assessment or audit, a DOR employee involved in the prior assessment or audit knew
or should have known that the condition existed, and DOR did not assert the liability
at the time of the prior assessment or audit. Furthermore, a person against whom
DOR asserts a liability may offset against the liability a refund of any tax or fee
administered by DOR that the person may claim regardless of whether the time for
claiming the refund has expired and regardless of whether the year and transaction
related to the liability is the same as that related to the refund.
Also, under the bill, no agreement or waiver of a taxpayer's right to appeal a
determination or to file a claim for a refund with respect to a particular audit or
assessment period is valid if the agreement or waiver was executed prior to DOR's
issuance of an appealable assessment or audit determination. In addition, the time
within which DOR may act on the issuance of any assessment or audit determination
may not be extended, except with regard to any action by DOR on a taxpayer's
petition for redetermination.
Under the bill, DOR may not impose a penalty on a taxpayer for negligence or
for otherwise filing an improper return unless the the taxpayer's action was clearly
contradicted by statute, rule, or DOR guidance and the statute, rule, or guidance was
enacted, promulgated, or published prior to the period for which the penalty is
imposed.
The bill requires that a buyer who paid an incorrect amount of sales tax on the
sale of an item at retail apply for a refund of the tax with DOR rather than with the
seller. The bill also prohibits class action lawsuits against the state or any other
party if the relief sought by the plaintiff includes the refund of any tax administered
by the state.
Under current law, DOR may choose not to appeal a ruling by the Tax Appeals
Commission and, instead, file a notice of nonacquiescence with the clerk of the
commission. The effect of filing the notice is that, although the commission's decision
is binding on the parties involved in the ruling, the commission's legal reasoning is
not binding on DOR with regard to future cases. Under the bill, although DOR may
file a notice of nonacquiescence and, therefore, not be required to follow the

commission's legal reasoning, the parties involved in the ruling are bound by the
commission's decision and the decision may be cited by the commission and the
courts in future cases.
Under current law, a person may file a petition with a state agency to issue a
declaratory ruling with respect to how a statute or rule applies to any person,
property, or set of facts. The agency must, within a reasonable time after receiving
the petition, either deny the petition for failure to complete a proper petition or
schedule a hearing for the matter described in the petition. Under the bill, if a person
files a petition with DOR to issue a declaratory ruling, DOR must either deny the
petition for failure to complete a proper petition or schedule a hearing for the matter
described in the petition no later than 30 days after receiving the petition. In
addition, if DOR does not deny the petition, DOR must hold a hearing and issue a
ruling no later than 90 days after receiving the petition, unless the time for holding
a hearing and issuing a ruling is extended by a written agreement with all parties
involved.
Under current law, generally, a taxpayer must pay interest on any amount owed
to DOR that is past due, but not delinquent, at the rate of 12 percent per year.
However, any amount that DOR owes a taxpayer is subject to interest at 9 percent
per year. Under the bill, amounts that taxpayers owe to DOR that are not delinquent
and amounts that DOR owe to taxpayers are subject to interest at an annual rate that
is equal to the two-year U.S. Department of the Treasury rate plus 4 percent.
Under current law, generally, a taxpayer must pay interest on any amount owed
to DOR that is delinquent at the rate of 18 percent per year, or 1.5 percent per month.
Under the bill, delinquent amounts that taxpayers owe to DOR are subject to interest
at a monthly rate that is equal to one-half of the two-year U.S. Department of the
Treasury Department rate plus 10 percent.
Under current law, if an individual, a small nonprofit corporation, or small
business is the prevailing party in any contested legal matter with a state agency and
the prevailing party submits a motion for costs, the hearing examiner must award
the prevailing party the costs incurred in the matter, unless the examiner finds that
the agency was substantially justified in taking its position related to the matter or
that special circumstances exist. However, an individual whose federal adjusted
gross income is $150,000 or more is not eligible to recover the costs incurred in any
contested legal matter with a state agency in which the individual is the prevailing
party.
Under this bill, in any proceeding before the Tax Appeals Commission
(commission) in which DOR is not the prevailing party and the prevailing party
submits a motion for costs, the commission must award the prevailing party the costs
incurred in connection with the proceeding unless the commission determines that
DOR was substantially justified in taking its position or that special circumstances
exist that would make the award unjust. With regard to proceedings before the
commission, an individual who is the prevailing party in a contested legal matter
with DOR may be awarded the costs incurred in the matter, regardless of the
individual's federal adjusted gross income.

Finally, under current law, certain persons may file a petition with a state
agency to have the agency promulgate the rule. Under this bill, if a petition filed with
DOR alleges that DOR has established a standard by which it construes a tax
statute, but has not promulgated a rule to adopt the standard, DOR must begin the
rule-making process no later than 90 days after receiving the petition and submit
a rule to the legislature no later than 180 days after receiving the petition. The rule
does not have to adhere to the standard established by DOR, but must address the
same circumstances as the standard addresses.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB968, s. 1 1Section 1. 71.82 (1) (a) of the statutes is amended to read:
AB968,4,52 71.82 (1) (a) In assessing taxes interest shall be added to such taxes at 12% the
3rate determined under s. 73.14 (7) (a)
per year from the date on which such taxes if
4originally assessed would have become delinquent if unpaid, to the date on which
5such taxes when subsequently assessed will become delinquent if unpaid.
AB968, s. 2 6Section 2. 71.82 (1) (b) of the statutes is amended to read:
AB968,5,37 71.82 (1) (b) Except as otherwise specifically provided, in crediting
8overpayments of income and surtaxes against underpayments or against taxes to be
9subsequently collected and in certifying refunds of such taxes interest shall be added
10at the rate of 9% determined under s. 73.14 (7) (a) per year from the date on which
11such taxes when assessed would have become delinquent if unpaid to the date on
12which such overpayment was certified for refund except that if any overpayment of
13tax is certified for refund within 90 days after the last date prescribed for filing the
14return of such tax or 90 days after the date of actual filing of the return of such tax,
15whichever occurs later, no interest shall be allowed on such overpayment. For
16purposes of this section the return of such tax shall not be deemed actually filed by
17an employee unless and until the employee has included the written statement

1required to be filed under s. 71.65 (1). However when any part of a tax paid on an
2estimate of income, whether paid in connection with a tentative return or not, is
3refunded or credited to a taxpayer, such refund or credit shall not draw interest.
AB968, s. 3 4Section 3. 71.82 (1) (c) of the statutes is amended to read:
AB968,5,85 71.82 (1) (c) Any assessment made as a result of the adjustment or disallowance
6of a claim for credit under s. 71.07, 71.28 or 71.47 or subch. VIII or IX, except as
7provided in sub. (2) (c), shall bear interest at 12% the rate determined under s. 73.14
8(7) (a)
per year from the due date of the claim.
AB968, s. 4 9Section 4. 71.82 (2) (a) of the statutes is amended to read:
AB968,5,1410 71.82 (2) (a) Income and franchise taxes. Income and franchise taxes shall
11become delinquent if not paid when due under ss. 71.03 (8), 71.24 (9) and 71.44 (4),
12and when delinquent shall be subject to interest at the rate of 1.5% a rate that is
13equal to one-twelfth of the rate determined under s. 73.14 (7) (b)
per month until
14paid.
AB968, s. 5 15Section 5. 71.82 (2) (b) of the statutes is amended to read:
AB968,5,1916 71.82 (2) (b) Department may reduce delinquent interest. The department shall
17provide by rule for reduction of interest under par. (a) to 12% the rate determined
18under s. 73.14 (7) (a)
per year in stated instances wherein the secretary of revenue
19determines that reduction is fair and equitable.
AB968, s. 6 20Section 6. 71.82 (2) (c) of the statutes is amended to read:
AB968,6,221 71.82 (2) (c) Adjustment to credits. Any assessment made as a result of the
22disallowance of a claim for credit made under s. 71.07, 71.28 or 71.47 or subch. VIII
23or IX with fraudulent intent, or of a portion of a claim made under said subchapters
24or sections that was excessive and was negligently prepared, shall bear interest from

1the due date of the claim, until refunded or paid, at one-twelfth of the rate of 1.5%
2determined under s. 73.14 (7) (b) per month.
AB968, s. 7 3Section 7. 71.82 (2) (d) of the statutes is amended to read:
AB968,6,224 71.82 (2) (d) Withholding tax. Of the amounts required to be withheld any
5amount not deposited or paid over to the department within the time required shall
6be deemed delinquent and deposit reports or withholding reports filed after the due
7date shall be deemed late. Delinquent deposits or payments shall bear interest at
8one-twelfth of the rate of 1.5% determined under s. 73.14 (7) (b) per month from the
9date deposits or payments are required under this section until deposited or paid
10over to the department. The department shall provide by rule for reduction of
11interest on delinquent deposits to 12% the rate determined under s. 73.14 (7) (a) per
12year in stated instances wherein the secretary of revenue determines reduction fair
13and equitable. In the case of a timely filed deposit or withholding report, withheld
14taxes shall become delinquent if not deposited or paid over on or before the due date
15of the report. In the case of no report filed or a report filed late, withheld taxes shall
16become delinquent if not deposited or paid over by the due date of the report. In the
17case of an assessment under s. 71.83 (1) (b) 2., the amount assessed shall become
18delinquent if not paid on or before the first day of the calendar month following the
19calendar month in which the assessment becomes final, but if the assessment is
20contested before the tax appeals commission or in the courts, it shall become
21delinquent on the 30th day following the date on which the order or judgment
22representing final determination becomes final.
AB968, s. 8 23Section 8. 71.83 (1) (a) 2. of the statutes is amended to read:
AB968,7,1024 71.83 (1) (a) 2. `Incomplete or incorrect return.' If Subject to s. 73.14 (6), if any
25person required under this chapter to file an income or franchise tax return files an

1incomplete or incorrect return, unless it is shown that such filing was due to good
2cause and not due to neglect, there shall be added to such person's tax for the taxable
3year 25% of the amount otherwise payable on any income subsequently discovered
4or reported. The amount so added shall be assessed, levied and collected in the same
5manner as additional normal income or franchise taxes, and shall be in addition to
6any other penalties imposed by this chapter. In this subdivision, "return" includes
7a separate return filed by a spouse with respect to a taxable year for which a joint
8return is filed under s. 71.03 (2) (g) to (L) after the filing of that separate return, and
9a joint return filed by the spouses with respect to a taxable year for which a separate
10return is filed under s. 71.03 (2) (m) after the filing of that joint return.
AB968, s. 9 11Section 9. 71.83 (1) (a) 3. of the statutes is amended to read:
AB968,7,2412 71.83 (1) (a) 3. `Incomplete or incorrect deposit or withholding report.' If
13Subject to s. 73.14 (6), if any person required under subch. X to file a deposit report
14or withholding report files an incomplete or incorrect report, or fails to properly
15withhold or fails to properly deposit or pay over withheld funds, unless it can be
16shown that the filing or failure was due to good cause and not due to neglect, there
17shall be added to the tax 25% of the amount not reported or not withheld, deposited
18or paid over. The amount so added shall be assessed, levied and collected in the same
19manner as additional income or franchise taxes, and shall be in addition to any other
20penalties imposed in this subchapter. "Person", in this subdivision, includes an
21officer or employee of a corporation or other responsible person or a member or
22employee of a partnership or limited liability company or other responsible person
23who, as such officer, employee, member or other responsible person, is under a duty
24to perform the act in respect to which the violation occurs.
AB968, s. 10 25Section 10. 71.84 (1) of the statutes is amended to read:
AB968,8,8
171.84 (1) Individuals and fiduciaries. Except as provided in s. 71.09 (11), in
2the case of any underpayment of estimated tax by an individual, estate or trust,
3except as provided under s. 71.09, there shall be added to the aggregate tax for the
4taxable year interest at the rate of 12% determined under s. 73.14 (7) (a) per year on
5the amount of the underpayment for the period of the underpayment. In this
6subsection, "the period of the underpayment" means the time period from the due
7date of the installment until either the 15th day of the 4th month beginning after the
8end of the taxable year or the date of payment, whichever is earlier.
AB968, s. 11 9Section 11. 71.84 (2) (a) of the statutes is amended to read:
AB968,8,2010 71.84 (2) (a) Except as provided in s. 71.29 (7), in the case of any underpayment
11of estimated tax under s. 71.29 or 71.48 there shall be added to the aggregate tax for
12the taxable year interest at the rate of 12% determined under s. 73.14 (7) (a) per year
13on the amount of the underpayment for the period of the underpayment. For
14corporations, except as provided in par. (b), "period of the underpayment" means the
15time period from the due date of the installment until either the 15th day of the 3rd
16month beginning after the end of the taxable year or the date of payment, whichever
17is earlier. If 90% of the tax shown on the return is not paid by the 15th day of the 3rd
18month following the close of the taxable year, the difference between that amount
19and the estimated taxes paid, along with any interest due, shall accrue delinquent
20interest under s. 71.91 (1) (a).
AB968, s. 12 21Section 12. 71.84 (2) (c) of the statutes is amended to read:
AB968,9,322 71.84 (2) (c) If a refund under s. 71.29 (3m) results in an income or franchise
23tax liability that is greater than the amount of estimated taxes paid in reduced by
24the amount of the refund, the taxpayer shall add to the aggregate tax for the taxable
25year interest at an annual rate of 12% determined under s. 73.14 (7) (a) on the

1amount of the unpaid tax liability for the period beginning on the date the refund is
2issued and ending on the 15th day of the 3rd month beginning after the end of the
3taxable year, or the date the tax liability is paid, whichever is earlier.
AB968, s. 13 4Section 13. 71.90 (1) of the statutes is amended to read:
AB968,9,205 71.90 (1) Deposit. The department shall notify any person who files a petition
6for redetermination that the person may deposit the amount of an additional
7assessment, including any interest or penalty, with the department, or with a person
8that the department prescribes, at any time before the department makes its
9redetermination. The department shall notify spouses jointly except that, if the
10spouses have different addresses and if either spouse notifies the department in
11writing of those addresses, the department shall serve a duplicate of the original
12notice on the spouse who has the address other than the address to which the original
13notice was sent. Amounts deposited under this subsection shall be subject to the
14interest provided by s. 71.82 only to the extent of the interest accrued prior to the first
15day of the month succeeding the date of deposit. Any deposited amount which is
16refunded shall bear interest at the rate of 9% determined under s. 73.14 (7) (a) per
17year during the time the funds were on deposit. A person may also pay any portion
18of an assessment which is admitted to be correct and the payment shall be considered
19an admission of the validity of that portion of the assessment and may not be
20recovered in an appeal or in any other action or proceeding.
AB968, s. 14 21Section 14. 71.90 (2) of the statutes is amended to read:
AB968,9,2522 71.90 (2) Deposit with the secretary of administration. At any time while the
23petition is pending before the tax appeals commission or an appeal in regard to that
24petition is pending in a court, the taxpayer may offer to deposit the entire amount
25of the additional taxes, together with interest, with the secretary of administration.

1If an offer to deposit is made, the department of revenue shall issue a certificate to
2the secretary of administration authorizing the secretary to accept payment of such
3taxes together with interest to the first day of the succeeding month and to give a
4receipt. A copy of the certificate shall be mailed to the taxpayer who shall pay the
5taxes and interest to the secretary of administration within 30 days. A copy of the
6receipt of the secretary of administration shall be filed with the department. The
7department shall, upon final determination of the appeal, certify to the secretary of
8administration the amount of the taxes as finally determined and direct the
9secretary of administration to refund to the appellant any portion of such payment
10which has been found to have been improperly assessed, including interest. The
11secretary of administration shall make the refunds directed by the certificate within
1230 days after receipt. Taxes paid to the secretary of administration under this
13subsection shall be subject to the interest provided by ss. 71.82 and 71.91 (1) (c) only
14to the extent of the interest accrued on the taxes prior to the first day of the month
15succeeding the application for hearing. Any portion of the amount deposited with the
16secretary of administration which is refunded to the taxpayer shall bear interest at
17the rate of 9% determined under s. 73.14 (7) (a) per year during the time that the
18funds are on deposit.
AB968, s. 15 19Section 15. 71.91 (6) (d) 1. of the statutes is amended to read:
AB968,11,420 71.91 (6) (d) 1. Any person, including an officer or employee, who fails to
21surrender property that is subject to levy upon demand of the department is liable
22to the department for a sum equal to the value of the property not surrendered, but
23not exceeding the amount of taxes for the collection of which that levy was made,
24together with costs and interest at the rate of 18% determined under s. 73.14 (7) (b)
25per year from the date of that levy. Any amount, other than costs, recovered under

1this paragraph shall be credited against the tax liability for the collection of which
2that levy was made. The liability under this paragraph may be assessed, levied and
3collected as are additional income or franchise taxes or may be recovered by the
4department in a civil action.
AB968, s. 16 5Section 16. 71.91 (6) (e) 3. of the statutes is amended to read:
AB968,11,116 71.91 (6) (e) 3. For purposes of an adjudication under this paragraph, the
7assessment of the tax upon which the interest or lien of the department is based is
8conclusively presumed to be valid. Interest shall be allowed for judgments under this
9paragraph at the rate of 12% determined under s. 73.14 (7) (a) per year from the date
10the department receives the money wrongfully levied upon to the date of payment
11of the judgment or from the date of sale to the date of payment.
AB968, s. 17 12Section 17. 71.91 (6) (f) 5. of the statutes is amended to read:
AB968,12,313 71.91 (6) (f) 5. Before the sale, the department shall determine a minimum
14price for which the property shall be sold. If no person offers for that property at the
15sale at least the amount of the minimum price, the state shall purchase the property
16for the minimum price; otherwise, the property shall be sold to the highest bidder.
17In determining the minimum price, the department shall take into account the
18expense of making the levy and sale in addition to the value of the property. If
19payment in full is required at the time of acceptance of a bid and is not paid then, the
20department shall sell the property in the manner provided under this paragraph.
21If the conditions of the sale permit part of the payment to be deferred and if that part
22is not paid within the prescribed period, the department may sue the purchaser in
23the circuit court for Dane County for the unpaid part of the purchase price and
24interest at the rate of 12% determined under s. 73.14 (7) (a) per year from the date
25of the sale or the department may declare the sale void and may sell the property

1again under this paragraph. If the property is sold again, the 2nd purchaser shall
2receive it free of any claim of the defaulting purchaser and the amount paid upon the
3bid price by the defaulting purchaser is forfeited.
AB968, s. 18 4Section 18. 71.91 (6) (g) 2. of the statutes is amended to read:
AB968,12,125 71.91 (6) (g) 2. The owners of any real property sold under par. (f), their heirs
6or personal representatives, or any person having an interest in or a lien on that
7property, or any person on behalf of a person specified in this subdivision may redeem
8the property sold, or any part of that property, within 120 days after the sale by
9payment to the purchaser or, if the purchaser cannot be found in the county in which
10the property to be redeemed is situated, then to the department, for the use of the
11purchaser or the purchaser's heirs or assigns, the amount paid by the purchaser and
12interest at the rate of 18% determined under s. 73.14 (7) (b) per year.
AB968, s. 19 13Section 19. 73.01 (4) (e) 2. of the statutes is amended to read:
AB968,12,2314 73.01 (4) (e) 2. Except for hearings on ss. 341.405 and 341.45, the department
15of revenue may choose not to appeal and to nonacquiesce in the decision or order by
16sending a notice of nonacquiescence to the clerk of the commission, to the revisor of
17statutes for publication in the Wisconsin administrative register and to the taxpayer
18or the taxpayer's representative before the time expires for seeking a review of the
19decision or order under s. 73.015. The effect of this action is that, although the
20decision or order is binding on the parties for the instant case and the decision or
21order may be cited by the commission and the courts
, the commission's conclusions
22of law, the rationale and construction of statutes in the instant case are not binding
23upon or required to be followed by the department of revenue in other cases.
AB968, s. 20 24Section 20. 73.015 (3) of the statutes is created to read:
AB968,13,5
173.015 (3) Except for decisions and orders in small claims matters, as defined
2in s. 73.01 (1) (b), a conclusion of law or other holding in any decision or order of the
3commission may be cited by the commission or the courts as authority unless that
4conclusion of law or holding has been reversed, modified, overruled, or vacated on the
5merits on appeal or by a subsequent decision or order of the commission.
AB968, s. 21 6Section 21. 73.03 (25) of the statutes is amended to read:
AB968,13,127 73.03 (25) To settle and dispose of tax cases or issues pending before the tax
8appeals commission when, in the judgment of the department of revenue, such action
9is warranted in the best interests of the state; and, with the approval of the attorney
10general, to settle and dispose of tax cases or issues pending in the courts. Settlements
11under this subsection may be made on the basis of a taxpayer's ability to pay the
12liability asserted by the department.
Loading...
Loading...