SB799: Bill Text

LRB-4162/1

KRP/JK/MES:emw&amn

2015 - 2016 LEGISLATURE

2015 Senate BILL 799

April 7, 2016 - Introduced by Senator Gudex. Referred to Committee on Revenue, Financial Institutions, and Rural Issues.

SB799,1,9 An Act to renumber and amend 177.01 (10) (b); to amend 73.01 (4) (a), 73.16 (3) (a) 2., 177.01 (5), 177.04 (2), 177.17 (4) (a) 1., 177.17 (4) (a) 2., 177.19 (2), 177.26, 177.29 (2) (a), 177.31 (1) and 177.34 (1); and to create 73.03 (73), 73.16 (6), 177.01 (10) (b) 2. to 8., 177.17 (2) (bm), 177.17 (4) (a) 3., 177.17 (6), 177.24 (5), 177.263, 177.30 (6), 177.315, 177.42 and 177.43 of the statutes; relating to: various changes to unclaimed property law; agreements by the Department of Revenue to allow third-party tax audits; burden of proof for tax assessments based on third-party audits; and requiring the exercise of rule-making authority.

Analysis by the Legislative Reference Bureau

Introduction

This bill makes various changes to 1) the Department of Revenue's authority related to third-party tax audits and 2) unclaimed property law.

Third-Party Tax Audits

This bill provides that DOR must bear the burden of proof by clear and convincing evidence of each element of any assessment issued by DOR that is based on information, documents, or audit determinations made by any person other than DOR. The bill also prohibits DOR from entering into an agreement to allow a person to engage in an audit of another person's documents or records in order to assess, enforce, or collect a tax or fee administered by DOR or to purchase taxpayer information arising from the audit of a taxpayer or any other person, except for information received by the federal government.

Unclaimed Property

Holder Rights and Obligations

This bill makes various changes to the rights and obligations of persons in possession of property belonging to others (holders) under this state's version of the Uniform Unclaimed Property Act (UUPA).

Under current law, a holder in possession of property that is presumed abandoned and subject to the custody of this state as unclaimed property under the UUPA must annually file a report with the secretary of revenue regarding the property. In addition to the other information a holder must report under current law, this bill requires a holder to also report the date of birth and social security number or other tax identification number of each person who appears to own the property if that information is known and readily available to the holder. This bill requires annual reports to be filed no later than November 1 of each year. Under current law, reports must be filed before November 1 of each year.

This bill also requires a holder to maintain a record of all information included in a report for three years after the property becomes reportable. Under current law, the holder is only required to maintain a record of the name and last-known address of any owner of abandoned property included in the report, and the information must be maintained for five years after the property is actually reported to the secretary.

Under current law, a holder must, concurrently with the filing of a report, pay or deliver to the secretary all abandoned property included in the report. This bill provides that, with respect to contents of safe deposit boxes, a holder must pay and deliver the contents no earlier than February 1 and no later than February 15 of the year following the year in which the holder was required to file a report with respect to the contents.

Under this bill, if a holder fails to timely pay or deliver abandoned property to the secretary, the holder must pay interest on the value of the property at the annual rate of 6 percent. Under current law, the annual interest rate is 18 percent.

The bill also provides that a holder may appeal any determination made by the secretary in the same manner as a person may appeal income and franchise tax assessment determinations made by DOR. The UUPA does not currently provide any express appeal rights to holders.

This bill provides that no person may commence a civil action with respect to any duty of a holder more than three years after that duty arose. Under current law, a civil action must be commenced within five years.

Claims for Return of Abandoned Property

Under current law, any person claiming an interest in property paid or delivered to the secretary under the UUPA may file a claim for return of the property. This bill provides that any information provided by a claimant is confidential, except that if more than one claimant files a claim for return of the same property, the secretary may divulge to each claimant certain details about the property and the other claimants.

This bill also provides that a claimant may appeal an adverse determination made by the secretary in the same manner as a person may appeal income and franchise tax assessment determinations made by DOR. Under current law, a claimant aggrieved by a decision of the secretary may appeal that decision in circuit court.

This bill also allows the secretary, if the secretary determines that a claim was paid in error, to undertake collection actions and commence suit to recover the incorrect payment.

Voluntary Compliance Program

This bill directs the secretary to create a voluntary compliance program to encourage persons who are not in compliance with their obligations under the UUPA to voluntarily report and pay or deliver abandoned property to the secretary. The secretary must promulgate rules to implement and administer the program. Among other things, the rules must allow a participant in the program to conduct his or her own audit to determine the participant's liability under the UUPA. A participant who successfully completes the program must report and pay or deliver all abandoned property for no more than the prior three fiscal years, and the participant will receive a reduction in or complete waiver of all interest and penalties that would have been imposed on the participant for noncompliance. The rules also must provide that if a participant in the program makes false or misleading statements in connection with the program, the secretary may revoke any benefits conferred on the participant under the program.

Business-to-Business Obligations

This bill amends the definition of intangible property to exclude certain obligations owed by one business to another business. Under this bill, those business-to-business obligations are not covered under the UUPA. As a result, those obligations will not be presumed abandoned and subject to the custody of this state under the UUPA, even if the obligations remain unclaimed by the owner, and the holders of those obligations will not be required to turn over those funds to the secretary.

Period of Time after which Money Orders are Presumed Abandoned

This bill reduces the period of time required for an unclaimed money order to be presumed abandoned under the UUPA. Under current law, a money order or other similar instrument, other than a third-party check, that has been outstanding for more than seven years after its issuance is presumed abandoned, unless the owner has communicated in writing with the issuer concerning the money order within that period of time. This bill reduces the applicable period of time from seven years to five years.

Prohibiting Third-Party Audits

This bill prohibits the administrator from entering into an agreement to allow a person to engage in an audit of another person's documents or records in order to administer the unclaimed property law or to purchase information arising from the audit, except for information received by the federal government.

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:

SB799,1 Section 1. 73.01 (4) (a) of the statutes, as affected by 2015 Wisconsin Act 216, is amended to read:

SB799,5,2 73.01 (4) (a) Subject to the provisions for judicial review contained in s. 73.015, the commission shall be the final authority for the hearing and determination of all questions of law and fact arising under sub. (5) and s. 72.86 (4), 1985 stats., and ss. 70.38 (4) (a), 70.397, 70.64, and 70.995 (8), s. 76.38 (12) (a), 1993 stats., ss. 76.39 (4) (c), 76.48 (6), 77.26 (3), 77.59 (5m) and (6) (b), 78.01, 78.22, 78.40, 78.555, 139.02, 139.03, 139.06, 139.31, 139.315, 139.33, 139.76, 139.78, 177.43, 341.405, and 341.45, subch. XIV of ch. 71, and subch. VII of ch. 77. Whenever with respect to a pending appeal there is filed with the commission a stipulation signed by the department of revenue and the adverse party, under s. 73.03 (25), or the department of transportation and the adverse party agreeing to an affirmance, modification, or reversal of the department of revenue's or department of transportation's position with respect to some or all of the issues raised in the appeal, the commission shall enter an order affirming or modifying in whole or in part, or canceling the assessment appealed from, or allowing in whole or in part or denying the petitioner's refund claim, as the case may be, pursuant to and in accordance with the stipulation filed. No responsibility shall devolve upon the commission, respecting the signing of an order of dismissal as to any pending appeal settled by the department of revenue or the department of transportation without the approval of the commission.

SB799,2 Section 2 . 73.03 (73) of the statutes is created to read:

SB799,5,7 73.03 (73) To bear the burden of proof by clear and convincing evidence of each element of any assessment issued by the department that is based in whole or in part on information, documents, or audit determinations made or provided by any person, other than the department.

SB799,3 Section 3 . 73.16 (3) (a) 2. of the statutes is amended to read:

SB799,5,17 73.16 (3) (a) 2. A department employee who was involved in the prior audit determination identified or reviewed the tax issue before completing the prior audit determination, as shown by any schedules, exhibits, audit reports, documents, or other written evidence pertaining to the audit determination, and the schedules, exhibits, reports, documents, and other written evidence show that the department did not adjust the person's treatment of the tax issue, except that the condition in this subdivision does not apply if the prior audit was based on information, documents, or audit determinations that were made or provided by any person other than the department.

SB799,4 Section 4 . 73.16 (6) of the statutes is created to read:

SB799,5,25 73.16 (6) Third-party audits. Except as provided in s. 73.03 (28d), the department may not enter into a contract or other agreement to permit any person to engage in an audit of another person's documents or records as part of an effort to assess, enforce, or collect a tax or fee administered by the department, or to purchase taxpayer information or documents arising from the audit of a taxpayer or any other person, except that this subsection does not apply to information received from the federal government.

SB799,5 Section 5. 177.01 (5) of the statutes is amended to read:

SB799,6,6 177.01 (5) "Business association" means a nonpublic corporation, joint stock company, investment company, business trust, partnership, limited liability company, sole proprietor, or association for business purposes, whether or not for profit, including a banking organization, financial organization, insurance company, or utility.

SB799,6 Section 6 . 177.01 (10) (b) of the statutes is renumbered 177.01 (10) (b) (intro.) and amended to read:

SB799,6,12 177.01 (10) (b) (intro.) "Intangible property" does not include a credit balance issued to a commercial customer account any of the following obligations that is owed by a business association in the ordinary course of business to another business association:

SB799,6,15 1. A credit balance issued to a commercial customer account, unless the credit balance is property described in s. 177.06 (1) or (2) held by a banking organization or financial organization.

SB799,7 Section 7 . 177.01 (10) (b) 2. to 8. of the statutes are created to read: