In this subsection, “employee" includes any subcontractor.
The department may give notice to any employer deriving income having a taxable situs in this state (regardless of whether any such income is exempt from taxation) to the effect that an employee of such employer is delinquent in a certain amount with respect to state taxes, including penalties, interest and costs. Such notice may be served by mail or by delivery by an employee of the department of revenue. Upon receipt of such notice of delinquency, the employer shall withhold from compensation due, or to become due to the employee, the total amount shown by the notice. The department may direct the employer to withhold part of the amount due the employee each pay period, until the total amount as shown by the notice, plus interest, has been withheld. The employer may not withhold more than 25 percent of the compensation due any employee for any one pay period, except that, if the employee leaves the employ of the employer or gives notice of his or her intention to do so, or is discharged for any reason, the employer shall withhold the entire amount otherwise payable to such employee, or so much thereof as may be necessary to equal the unwithheld balance of the amount shown in the notice of delinquency, plus delinquent interest. In crediting amounts withheld against delinquent taxes of an employee, the department shall apply amounts withheld in the following order: costs, penalties, delinquent interest, delinquent tax. The “compensation due" any employee for purposes of determining the 25 percent maximum withholding for any one pay period shall include all wages, salaries and fees constituting income, including wages, salaries, income advances or other consideration paid for future services, when paid to an employee, less amounts payable pursuant to a garnishment action with respect to which the employer was served prior to being served with the notice of delinquency and any amounts covered by any irrevocable and previously effective assignment of wages, of which amounts and the facts relating to such assignment the employer shall give notice to the department within 10 days after service of the notice of delinquency.
In any case in which the employee ceases to be employed by the employer before the full amount set forth in a notice of delinquency, plus delinquent interest, has been withheld by the employer, the employer shall immediately notify the department in writing of the termination date of the employee and the total amount withheld.
The employer shall, on or before the last day of the month after the month during which an amount was withheld, remit to the department or to the person that the department prescribes that amount. Any amount withheld from an employee by an employer shall immediately be a trust fund for this state. Should any employer, after notice, willfully fail to withhold in accordance with the notice and this subsection, or willfully fail to remit any amount withheld, as required by this subsection, such employer shall be liable for the total amount set forth in the notice together with delinquent interest as though the amount shown by the notice was due by such employer as a direct obligation to the state for delinquent taxes, and may be collected by any means provided by law including the means provided for the collection of delinquent income or franchise taxes. However, no amount required to be paid by an employer by reason of his or her failure to remit under this paragraph may be deducted from the gross income of such employer. Any amount collected from the employer for failure to withhold or for failure to remit under this subsection shall be credited as tax, costs, penalties and interest paid by the employee.
(e) Paragraphs (b)
shall apply in any case in which the employer is the United States or any instrumentality thereof or this state or any municipality or other subordinate unit thereof except those provisions imposing a liability on the employer for failure to withhold or remit. But an amount equal to any amount withheld by any municipality or other subordinate unit of this state under this subsection and not remitted to the department as required by this subsection shall be retained by the secretary of administration from funds otherwise payable to any such municipality or subordinate unit, and transmitted instead to the department, upon certification by the secretary of revenue.
The department shall refund to the employee excess amounts withheld from the employee under this subsection.
Employers required to withhold delinquent taxes, penalties, interest and costs under this subsection shall not be required to withhold amounts other than the total amounts certified to such employers by the department and shall not be required to compute interest, costs or other charges to be withheld.
The department may, by written notice served personally or by mail, require any employer, as defined in s. 71.63 (3)
, to withhold from the compensation due or to become due to any entertainer or entertainment corporation the amount of any delinquent state taxes, including costs, penalties and interest, shown by the notice. The employer shall send the money withheld to the department on or before the last day of the month after the month during which an amount was withheld.
(8) Financial record matching program. 71.91(8)(a)1.
“Account" means a demand deposit account, checking account, negotiable withdrawal order account, savings account, time deposit account, or money market mutual fund account.
“Person" includes any individual, firm, partnership, limited liability company, joint venture, joint stock company, association, public or private corporation, estate, trust, receiver, personal representative, and other fiduciary, and the owner of a single-owner entity that is disregarded as a separate entity under this chapter.
Matching program agreements.
The department shall promulgate rules specifying procedures under which the department shall enter into agreements with financial institutions doing business in this state to operate the financial record matching program under this subsection. The information shall be provided by electronic data exchange in the manner specified by the department by rule or by agreement between the department and the financial institution. If the financial institution requests reimbursement, the department shall reimburse a financial institution for costs associated with participating in the financial record matching program under this subsection in an amount not to exceed $125 for each calendar quarter that the institution participates in the program.
A financial institution participating in the financial institution matching program under this subsection and the employees, agents, officers, and directors of the financial institution, may use any information provided by the department only for the purpose of administering this subsection and shall be subject to the confidentiality provisions of ss. 71.78 (1)
and 77.61 (5) (a)
. Any person violating this paragraph may be fined not less than $25 nor more than $500, or imprisoned in the county jail for not less than 10 days nor more than one year or both.
Financial institution liability.
A financial institution is not liable to any person for disclosing information to the department under this subsection or for any other action that the financial institution takes in good faith to comply with this subsection.
A financial institution that fails to provide any information required within 120 days from either the date that the information is due or from the date that the department requests the information may be subject to a $100 penalty for each occurrence of the financial institution's failure to provide account information about an account holder. The department may commence civil proceedings to enforce this subsection if a financial institution fails to provide any information required after 120 days from either the date that the information is due or from the date that the department requests the information.
See also s. Tax 1.16
, Wis. adm. code.
Under sub. (4), a person's failure to pay income or franchise taxes creates a perfected lien in favor of the Department of Revenue (DOR) on all of a debtor's property. The perfected lien does not give the DOR priority over other lienholders and judgment creditors whose interests were recorded before the DOR's lien. By implication the DOR's perfected lien is superior to any interest recorded after the DOR's lien. Prince Corporation v. Vandenberg, 2015 WI App 55
, 364 Wis. 2d 457
, 868 N.W.2d 599
Any taxpayer who is unable to pay the full amount of his or her delinquent income or franchise taxes, costs, penalties and interest may apply to the department of revenue to pay such taxes, costs, penalties and interest in installments. Such application shall contain a statement of the reasons such taxes, costs, penalties and interest cannot be paid in full and shall set forth the plan of installment payments proposed by the taxpayer. Upon approval of such plan by the department and the payment of installments in accordance therewith collection proceedings with respect to such taxes, costs, penalties and interest shall be withheld; but on failure of the taxpayer to make any installment payment, the department shall proceed to collect the unpaid portion of such taxes, costs, penalties and interest in the manner provided by law. The department of revenue may require taxpayers who make installment payments under this subsection to do so by electronic funds transfer.
Any taxpayer may petition the department of revenue to compromise his or her delinquent income or franchise taxes including the costs, penalties and interest. The petition shall set forth a sworn statement of the taxpayer and shall be in a form that the department prescribes and the department may examine the petitioner under oath concerning the matter. If the department finds that the taxpayer is unable to pay the taxes, costs, penalties and interest in full it shall determine the amount the taxpayer is able to pay and shall enter an order reducing such taxes, costs, penalties and interest in accordance with the determination. The order shall provide that the compromise, if paid in a lump sum, is effective only if paid within 10 days or the order shall provide that the compromise is effective if paid according to a payment schedule that is set up by the department. The department or its collection agents upon receipt of the order shall accept payment in accordance with the order. Upon payment of the total amount due under the order, the department shall credit the unpaid portion of the principal amount of such taxes and make appropriate record of the unpaid amount of penalties, costs, and interest accrued to the date of the order. If within 3 years of the date of the compromise order or the date of a final payment under a payment schedule, whichever is later, the department ascertains that the taxpayer has an income or property sufficient to enable the taxpayer to pay the remainder of the tax including costs, penalty and interest the department shall reopen the matter and order the payment in full of such taxes, costs, penalties and interest. Before the entry of the order a notice shall be given to the taxpayer in writing advising of the intention of the department of revenue to reopen the matter and fixing a time and place for the appearance of the taxpayer if the taxpayer desires a hearing. Upon entry of the order the department of revenue shall make an appropriate record of the principal amount of the taxes, penalties, costs and interest ordered to be paid and such taxes shall be immediately due and payable and shall thereafter be subject to the interest provided by s. 71.82 (2)
, and the department shall immediately proceed to collect the same together with the unpaid portion of penalty, costs, and interest accrued to the date of the compromise order.
Delinquent income or franchise taxes, interest and penalties, resulting from assessments pursuant to s. 71.74 (3)
, 71.82 (2) (d)
or 71.83 (1) (a) 3.
or (b) 2.
or from assessments by virtue of disallowance of claimed deductions for failure to file information reports relating thereto, as required by this chapter, may be compromised by the department when such action is fair and equitable under the circumstances.
If any delinquent income or franchise tax has been referred by the department to the attorney general for collection and after having fully investigated the matter the attorney general determines that it would be in the best interest of the state to compromise the tax, a written recommendation shall be made to the department stating the terms upon which the tax should be compromised and the reasons therefor. The department shall approve or disapprove the recommendation and notify the department of justice. If approved the department of justice may enter into a stipulation with the taxpayer providing for the compromise of the tax on the terms set forth in the recommendation and upon compliance by the taxpayer the tax shall be fully discharged. The department of justice shall furnish the department with a copy of such stipulation, and the department or its agents charged with the collection of income or franchise taxes may accept payment of such tax in accordance with the terms of such stipulation and upon payment being made shall credit the unpaid portion of the tax. This subsection shall be in addition to all other powers of the department of justice and the department of revenue with respect to compromise or settlement of income or franchise taxes.
Setoffs for other state agencies. 71.93(1)
In this section:
An amount owed to a state agency, if the amount has been reduced to a judgment or if the state agency has provided the debtor reasonable notice and an opportunity to be heard with regard to the amount owed.
A delinquent child support or spousal support obligation that has been reduced to a judgment and has been submitted by an agency of another state to the department of children and families for certification under this section.
Any amount owed to a state agency and collected pursuant to a written agreement between the department of revenue and the state agency as provided under sub. (8) (b)
, if the debt has been reduced to a judgment or if the state agency or the department has provided the debtor reasonable notice and an opportunity to be heard with regard to the amount owed.
“Debtor" means any person owing a debt to a state agency and any person who owes a delinquent child support or spousal support obligation to an agency of another state.
“Department" means the department of revenue.
“Disbursement" means any payment to a person who provides goods and services to the state under subch. IV
or V of ch. 16
or under ch. 84
The excess amount by which any payments, refundable credits, or both exceed a debtor's Wisconsin tax liability or any other liability owed to the department.
The amount owed to a debtor under s. 177.24 (3)
for the return of abandoned property under s. 177.24
which exceeds a debtor's Wisconsin tax liability or any other liability owed to the department.
A state agency may certify to the department any properly identified debt exceeding $20 so that the department may set off the amount of the debt against a refund to the debtor or so that the department of administration may reduce a disbursement to the debtor by the amount of the debt. At least 30 days prior to certification each debtor shall be sent a notice by the state agency of its intent to certify the debt to the department for setoff or reduction and of the debtor's right of appeal. At the time of certification, the certifying state agency shall furnish the social security number of individual debtors and the federal employer identification number of other debtors.
The department of revenue shall setoff any debt or other amount owed to the department, regardless of the origin of the debt or of the amount, its nature or its date. The department's setoff shall include the use of unclaimed property owed to the debtor under s. 177.24
. If after the setoff there remains a refund in excess of $10, the department shall set off the remaining refund against certified debts of other entities in the following order:
State agency debt collected pursuant to an agreement under sub. (8)
and debt owed to the courts, the legislature, or an authority, as defined in s. 16.41 (4)
, collected pursuant to an agreement under sub. (8)
Debt owed to local units of government collected pursuant to an agreement under sub. (8)
Debt certified under sub. (2)
, other than child support debt certified by the department of children and families.
Child support or spousal support obligations submitted by an agency of another state.
Tax and nontax obligations of other states, and of the local governmental units within those states, collected pursuant to an agreement under s. 73.03 (52m)
If more than one certified debt exists for any debtor for the same type of debt specified under par. (a) 1.
, the refund shall be first set off against the earliest debt certified, except that no child support or spousal support obligation submitted by an agency of another state may be set off until all debts owed to and certified by state agencies of this state have been set off. When all debts have been satisfied, any remaining refund shall be refunded to the debtor by the department. Any legal action contesting a setoff under this paragraph shall be brought against the entity that certified the debt.
The department shall provide the information obtained under sub. (2)
to the department of administration. Before reducing any disbursement as provided under this paragraph, the department of administration shall contact the department to verify whether a certified debt that is the basis of the reduction has been collected by other means. If the certified debt remains uncollected, the department of administration shall reduce the disbursement by the amount of the debtor's certified debt under sub. (2)
, notify the department of such reduction and disbursement, and remit the amount of the reduction to the department in the manner prescribed by the department. If more than one certified debt exists for any debtor, the disbursement shall be reduced first by any debts certified under s. 73.12
then by the earliest debt certified. Any legal action contesting a reduction under this paragraph shall be brought against the state agency that certified the debt under sub. (2)
No person has any right to, or interest in, any overpayment, refundable credit, or refund, including any interest allowed, under this chapter until setoff under this section and ss. 49.855
has been completed.
Within 30 days after the close of each calendar quarter, the department shall settle with each state agency that has certified a debt. Each settlement shall note the opening balance of debts certified, any additions or deletions, reductions or amounts set off, and the ending balance at the close of the settlement period.
(5) Debtor charged for costs.
Each debtor shall be charged for administration expenses, and the amounts charged shall be credited to the department's appropriation under s. 20.566 (1) (h)
. The department may set off amounts charged to the debtor under this subsection against any refund owed to the debtor, in the manner provided in sub. (3)
. Annually on or before November 1, the department shall review its costs incurred during the previous fiscal year in administering state agency setoffs and reductions and shall adjust its subsequent charges to each debtor to reflect that experience.
(6) Written agreement and authority of department.
Any state agency wishing to certify debts to the department shall enter into a written agreement with the department prior to any certification of debt. Any certification of debts by a state agency or changes to certified debts shall be in a manner and form prescribed by the department. The secretary of revenue shall be the final authority in the resolution of any interagency disputes in regard to certification of debts. If a refund or disbursement is adjusted after a setoff or reduction, the department may readjust any erroneous settlement with a certifying state agency.
(7) Exchange of information.
Information relative to changes to any debt certified shall be exchanged promptly by each agency. Setoff of refunds and reduction of disbursements against debts certified by agencies, and any report of the setoff or reduction to state agencies, is not a violation of ss. 71.78
, 77.61 (5)
, 78.80 (3)
, and 139.38 (6)
(8) State agency debt agreements. 71.93(8)(a)(a)
Upon request by a state agency, the department of revenue may enter into an agreement with individuals who owe debts to the state agency. With the consent of the debtor, the department of revenue may arrange with the debtor's employer for the withholding from the debtor's pay of a specified amount to be applied against the debt.
Except as provided in subd. 2.
, a state agency and the department of revenue shall enter into a written agreement to have the department collect any amount owed to the state agency that is more than 90 days past due, unless negotiations between the agency and debtor are actively ongoing, the debt is the subject of legal action or administrative proceedings, or the agency determines that the debtor is adhering to an acceptable payment arrangement. At least 30 days before the department pursues the collection of any debt referred by a state agency, either the department or the agency shall provide the debtor with a written notice that the debt will be referred to the department for collection. The department may collect amounts owed, pursuant to the written agreement, from the debtor in addition to offsetting the amounts as provided under sub. (3)
. The department shall charge each debtor whose debt is subject to collection under this paragraph a collection fee and that amount shall be credited to the appropriation under s. 20.566 (1) (h)
The department may enter into agreements described under subd. 1.
with the courts, the legislature, authorities, as defined in s. 16.41 (4)
, and local units of government.
Agreements required under subd. 1.
shall be completed no later than July 1, 2010, except that an agreement may allow a delay or phase-in of referrals.
The secretary of revenue may waive the referral of certain types of debt. The department's determination that a debt is not collectable does not prevent the referring agency from taking additional collection actions.
The department may collect debts and assess interest on delinquent amounts under this paragraph in the same manner that it collects taxes and assesses interest under ss. 71.82 (2)
, and 73.03 (20)
. The department's use of tax returns and related information to collect debts under this paragraph is not a violation of s. 71.78
, 77.61 (5)
, 78.80 (3)
, or 139.38 (6)
If the debtor owes debt to the department and to other entities, payments shall first apply to debts owed to the department then to the other entities in the order determined under sub. (3) (a)
Setoffs for municipalities and counties. 71.935(1)(a)
“Debt" means a parking citation of at least $20 that is unpaid and for which there has been no court appearance by the date specified in the citation or, if no date is specified, that is unpaid for at least 28 days; an unpaid fine, fee, restitution or forfeiture of at least $20; and any other debt that is at least $20, including debt related to property taxes, if the debt has been reduced to a judgment or the municipality or county to which the debt is owed has provided the debtor reasonable notice and an opportunity to be heard with regard to the debt. For purposes of this subsection, a debt owed to an ambulance service provider operating pursuant to a contract with a municipality or county under s. 59.54 (1)
, or 62.133
, is considered a debt owed to the municipality or county, if the debt relates to providing ambulance services to individuals in that municipality or county as a result of responding to requests that originate from a government-operated 911 call center.
“Debt related to property taxes" means delinquent general property taxes, as defined in s. 74.01 (1)
, special assessments, as defined in s. 74.01 (3)
, special charges, as defined in s. 74.01 (4)
, and special taxes, as defined in s. 74.01 (5)
. The term “debt related to property taxes" includes any interest and penalty charged as a result of the delinquency.
“Debt related to victim restitution" means amount owed pursuant to an order under s. 973.20 (1r)
, if a clerk of court for a county has certified the amount under s. 973.20 (10) (b)
“Debtor" means a person who owes a debt related to victim restitution or who owes a debt to a municipality or county.
“Department" means the department of revenue.
“Disbursement" means any payment to a person who provides goods and services to the state under subch. IV
or V of ch. 16
or under ch. 84
“Municipality" means any city, village, or town, and includes any entity formed pursuant to an intergovernmental cooperation contract or agreement under s. 66.0301
to provide consolidated services directly to cities, villages, and towns.
A municipality or county may certify to the department any debt owed to it. Not later than 5 days after certification under this section or under s. 973.20 (10) (b)
, the municipality or county shall notify the debtor in writing of its certification of the debt to the department, of the basis of the certification and of the debtor's right to appeal and, in the case of parking citations, of the debtor's right to contest the citation. At the time of certification, the municipality or county shall furnish to the department the name and social security number or operator's license number of each individual debtor and the name and federal employer identification number of each other debtor.
If the debt remains uncollected and, in the case of a parking citation, if the debtor has not contested the citation within 20 days after the notice under sub. (2)
, the department shall set off the debt against any refund that is owed to the debtor after the setoff under s. 71.93
. Any legal action contesting a setoff shall be brought against the municipality or county that certified the debt under sub. (2)
The department shall provide the information obtained under sub. (2)
to the department of administration. Before reducing any disbursement as provided under this paragraph, the department of administration shall contact the department to verify whether a certified debt that is the basis of the reduction has been collected by other means and, in the case of a parking citation, whether the debtor has contested the citation within 20 days after the notice under sub. (2)
. If the certified debt remains uncollected and, in the case of a parking citation, the citation has not been contested within 20 days after the notice under sub. (2)
, the department of administration shall, after any reduction under s. 71.93
, reduce the disbursement by the amount of the debtor's certified debt under sub. (2)
, notify the department of such reduction and disbursement, and remit the amount of the reduction to the department in the manner prescribed by the department. If more than one debt certified under sub. (2)
exists for any debtor, the disbursement shall be reduced first by the earliest debt certified. Any legal action contesting a reduction under this paragraph shall be brought against the municipality or county that certified the debt under sub. (2)