LRB-4162/1
KRP/JK/MES:emw&amn
2015 - 2016 LEGISLATURE
April 7, 2016 - Introduced by Senator Gudex. Referred to Committee on Revenue,
Financial Institutions, and Rural Issues.
SB799,1,9
1An Act to renumber and amend 177.01 (10) (b);
to amend 73.01 (4) (a), 73.16
2(3) (a) 2., 177.01 (5), 177.04 (2), 177.17 (4) (a) 1., 177.17 (4) (a) 2., 177.19 (2),
3177.26, 177.29 (2) (a), 177.31 (1) and 177.34 (1); and
to create 73.03 (73), 73.16
4(6), 177.01 (10) (b) 2. to 8., 177.17 (2) (bm), 177.17 (4) (a) 3., 177.17 (6), 177.24
5(5), 177.263, 177.30 (6), 177.315, 177.42 and 177.43 of the statutes;
relating to:
6various changes to unclaimed property law; agreements by the Department of
7Revenue to allow third-party tax audits; burden of proof for tax assessments
8based on third-party audits; and requiring the exercise of rule-making
9authority.
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:
SB799,5,23
73.01
(4) (a) Subject to the provisions for judicial review contained in s. 73.015,
4the commission shall be the final authority for the hearing and determination of all
5questions of law and fact arising under sub. (5) and s. 72.86 (4), 1985 stats., and ss.
670.38 (4) (a), 70.397, 70.64, and 70.995 (8), s. 76.38 (12) (a), 1993 stats., ss. 76.39 (4)
7(c), 76.48 (6), 77.26 (3), 77.59 (5m) and (6) (b), 78.01, 78.22, 78.40, 78.555, 139.02,
8139.03, 139.06, 139.31, 139.315, 139.33, 139.76, 139.78,
177.43, 341.405, and 341.45,
9subch. XIV of ch. 71, and subch. VII of ch. 77. Whenever with respect to a pending
10appeal there is filed with the commission a stipulation signed by the department of
11revenue and the adverse party, under s. 73.03 (25), or the department of
12transportation and the adverse party agreeing to an affirmance, modification, or
13reversal of the department of revenue's or department of transportation's position
14with respect to some or all of the issues raised in the appeal, the commission shall
15enter an order affirming or modifying in whole or in part, or canceling the assessment
16appealed from, or allowing in whole or in part or denying the petitioner's refund
17claim, as the case may be, pursuant to and in accordance with the stipulation filed.
18No responsibility shall devolve upon the commission, respecting the signing of an
1order of dismissal as to any pending appeal settled by the department of revenue or
2the department of transportation without the approval of the commission.
SB799,2
3Section
2
. 73.03 (73) of the statutes is created to read:
SB799,5,74
73.03
(73) To bear the burden of proof by clear and convincing evidence of each
5element of any assessment issued by the department that is based in whole or in part
6on information, documents, or audit determinations made or provided by any person,
7other than the department.
SB799,3
8Section
3
. 73.16 (3) (a) 2. of the statutes is amended to read:
SB799,5,179
73.16
(3) (a) 2. A department employee who was involved in the prior audit
10determination identified or reviewed the tax issue before completing the prior audit
11determination, as shown by any schedules, exhibits, audit reports, documents, or
12other written evidence pertaining to the audit determination, and the schedules,
13exhibits, reports, documents
, and other written evidence show that the department
14did not adjust the person's treatment of the tax issue
, except that the condition in this
15subdivision does not apply if the prior audit was based on information, documents,
16or audit determinations that were made or provided by any person other than the
17department.
SB799,4
18Section
4
. 73.16 (6) of the statutes is created to read:
SB799,5,2519
73.16
(6) Third-party audits. Except as provided in s. 73.03 (28d), the
20department may not enter into a contract or other agreement to permit any person
21to engage in an audit of another person's documents or records as part of an effort
22to assess, enforce, or collect a tax or fee administered by the department, or to
23purchase taxpayer information or documents arising from the audit of a taxpayer or
24any other person, except that this subsection does not apply to information received
25from the federal government.
SB799,5
1Section
5. 177.01 (5) of the statutes is amended to read:
SB799,6,62
177.01
(5) "Business association" means a
nonpublic corporation, joint stock
3company, investment company, business trust, partnership, limited liability
4company
, sole proprietor, or association for business purposes, whether or not for
5profit, including a banking organization, financial organization, insurance company
, 6or utility.
SB799,6
7Section
6
. 177.01 (10) (b) of the statutes is renumbered 177.01 (10) (b) (intro.)
8and amended to read:
SB799,6,129
177.01
(10) (b) (intro.) "Intangible property" does not include
a credit balance
10issued to a commercial customer account any of the following obligations that is owed 11by a business association
in the ordinary course of business to another business
12association:
SB799,6,15
131. A credit balance issued to a commercial customer account, unless the credit
14balance is property described in s. 177.06 (1) or (2) held by a banking organization
15or financial organization.
SB799,7
16Section
7
. 177.01 (10) (b) 2. to 8. of the statutes are created to read:
SB799,6,1717
177.01
(10) (b) 2. A customer overpayment.
SB799,6,1818
3. A security deposit.
SB799,6,1919
4. A refund.
SB799,6,2020
5. A credit memorandum.
SB799,6,2121
6. An unused airline ticket.
SB799,6,2222
7. An unidentified remittance.
SB799,6,2323
8. An uncashed check, draft, or other similar instrument.