Amendment ASA1-AB968

LRBs0700/1

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2005 - 2006 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO 2005 ASSEMBLY BILL 968

April 18, 2006 - Offered by Representative Strachota.

AB968-ASA1,1,10 An Act to amend 71.83 (1) (a) 1., 71.83 (1) (a) 2., 71.83 (1) (a) 3., 71.83 (1) (a) 4., 73.01 (4) (e) 2., 77.59 (4) (a), 77.59 (8m), 77.60 (3), 77.60 (4), 77.61 (5) (a), 78.68 (3), 78.68 (4), 139.25 (3), 139.25 (4), 227.12 (3), 227.41 (1), 227.41 (3), 227.41 (4), 227.485 (2) (a), 227.485 (3), 227.485 (5), 227.485 (7), 227.485 (10) (intro.) and 803.08; and to create 73.015 (3), 73.14, 227.12 (4), 227.41 (5) and 227.485 (3m) of the statutes; relating to: various duties of the Department of Revenue, including issuing declaratory judgments, conducting audits and assessments, asserting liability, allowing claims for refunds, awarding the costs of litigation to a prevailing party, imposing penalties related to a taxpayer's negligence, and requiring the exercise of rule-making authority.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB968-ASA1, s. 1 Section 1. 71.83 (1) (a) 1. of the statutes is amended to read:

AB968-ASA1,2,12 71.83 (1) (a) 1. `Failure to file.' In case of failure to file any return required under s. 71.03, 71.24 or 71.44 on the due date prescribed therefor, including any extension of time for filing, unless it is shown that the failure is due to reasonable cause and not due to willful neglect and upon a showing by the department under s. 73.14 (5), there shall be added to the amount required to be shown as tax on the return 5% of the amount of the tax if the failure is for not more than one month, with an additional 5% for each additional month or fraction thereof during which the failure continues, not exceeding 25% in the aggregate. For purposes of this subdivision, the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the due date prescribed for payment and by the amount of any credit against the tax which may be claimed upon the return.

AB968-ASA1, s. 2 Section 2. 71.83 (1) (a) 2. of the statutes is amended to read:

AB968-ASA1,3,2 71.83 (1) (a) 2. `Incomplete or incorrect return.' If any person required under this chapter to file an income or franchise tax return files an incomplete or incorrect return, unless it is shown that such filing was due to good cause and not due to neglect and upon a showing by the department under s. 73.14 (5), there shall be added to such person's tax for the taxable year 25% of the amount otherwise payable on any income subsequently discovered or reported. The amount so added shall be assessed, levied and collected in the same manner as additional normal income or franchise taxes, and shall be in addition to any other penalties imposed by this chapter. In this subdivision, "return" includes a separate return filed by a spouse with respect to a taxable year for which a joint return is filed under s. 71.03 (2) (g) to (L) after the filing of that separate return, and a joint return filed by the spouses with respect to a taxable year for which a separate return is filed under s. 71.03 (2) (m) after the filing of that joint return.

AB968-ASA1, s. 3 Section 3. 71.83 (1) (a) 3. of the statutes is amended to read:

AB968-ASA1,3,16 71.83 (1) (a) 3. `Incomplete or incorrect deposit or withholding report.' If any person required under subch. X to file a deposit report or withholding report files an incomplete or incorrect report, or fails to properly withhold or fails to properly deposit or pay over withheld funds, unless it can be shown that the filing or failure was due to good cause and not due to neglect and upon a showing by the department under s. 73.14 (5), there shall be added to the tax 25% of the amount not reported or not withheld, deposited or paid over. The amount so added shall be assessed, levied and collected in the same manner as additional income or franchise taxes, and shall be in addition to any other penalties imposed in this subchapter. "Person", in this subdivision, includes an officer or employee of a corporation or other responsible person or a member or employee of a partnership or limited liability company or other responsible person who, as such officer, employee, member or other responsible person, is under a duty to perform the act in respect to which the violation occurs.

AB968-ASA1, s. 4 Section 4. 71.83 (1) (a) 4. of the statutes is amended to read:

AB968-ASA1,3,25 71.83 (1) (a) 4. `Late filing of withholding report.' In case of failure to file any withholding deposit or payment report required under s. 71.65 (3) on the due date prescribed therefor, unless it is shown that the failure is due to reasonable cause and not due to willful neglect upon a showing by the department under s. 73.14 (5), there shall be added to the amount required to be shown as withheld taxes on the report 5% of the amount if the failure is not for more than one month, with an additional 5% for each additional month or fraction thereof during which the failure continues, not exceeding 25% in the aggregate.

AB968-ASA1, s. 5 Section 5. 73.01 (4) (e) 2. of the statutes is amended to read:

AB968-ASA1,4,11 73.01 (4) (e) 2. Except for hearings on ss. 341.405 and 341.45, the department of revenue may choose not to appeal and to nonacquiesce in the decision or order by sending a notice of nonacquiescence to the clerk of the commission, to the revisor of statutes for publication in the Wisconsin administrative register and to the taxpayer or the taxpayer's representative before the time expires for seeking a review of the decision or order under s. 73.015. The effect of this action is that, although the decision or order is binding on the parties for the instant case and the decision or order may be cited by the commission and the courts, the commission's conclusions of law, the rationale and construction of statutes in the instant case are not binding upon or required to be followed by the department of revenue in other cases.

AB968-ASA1, s. 6 Section 6. 73.015 (3) of the statutes is created to read:

AB968-ASA1,4,17 73.015 (3) Except for decisions and orders in small claims matters, as defined in s. 73.01 (1) (b), a conclusion of law or other holding in any decision or order of the commission may be cited by the commission or the courts as authority unless that conclusion of law or holding has been reversed, modified, overruled, or vacated on the merits on appeal or by a subsequent decision or order of the commission.

AB968-ASA1, s. 7 Section 7. 73.14 of the statutes is created to read:

AB968-ASA1,4,19 73.14 General provision. (1) Definition. In this section:

AB968-ASA1,4,20 (a) "Department" means the department of revenue.

AB968-ASA1,4,22 (b) "Controlled group" has the meaning given under section 267 (f) (1) of the Internal Revenue Code.

AB968-ASA1,4,24 (c) "Stale refund" means a refund of any tax or fee administered by the department for which a claim has not been timely filed.

AB968-ASA1,5,8 (2) Relying on published guidance. (a) Except as provided in pars. (b) and (c), in the course of any determination, or in the course of any proceeding appealing any determination, the department shall not take a position that is contrary to any rule promulgated by the department that was in effect during the period related to the determination or that is contrary to any guidance published by the department prior to that period and not subsequently retracted, altered, or amended by the department or the legislature or by a final and conclusive decision of the tax appeals commission or courts.

AB968-ASA1,5,12 (am) Except as provided in pars. (b) and (c), in the course of any determination, or in the course of any proceeding appealing a determination, the department shall not take a position that is contrary to any written guidance that was provided to a person who is a party to the determination or the appeal of the determination.

AB968-ASA1,5,20 (b) With regard to any position taken by the department in any matter described under par. (a) or (am), if the department amends a rule for any purpose other than to implement a legislative act or final and conclusive decision of the tax appeals commission or courts, the department shall apply the amendment prospectively. A retroactive change in any rule that is related to implementing a legislative act or final and conclusive decision of the tax appeals commission or courts may take effect no earlier than the act's effective date or the date on which the decision became final and conclusive.

AB968-ASA1,6,6 (c) With regard to any position taken by the department in any matter described under par. (a) or (am), if the department retracts, alters, or amends previously published or previously issued guidance for any purpose other than to implement a legislative act or final and conclusive decision of the tax appeals commission or courts, the department shall apply the retraction, alteration, or amendment prospectively only, unless the change is to a taxpayer's benefit, in which case, the department shall apply the retraction, alteration, or amendment retroactively. A retroactive change in any previously published or previously issued guidance related to implementing a legislative act or final and conclusive decision of the tax appeals commission or courts may take effect no earlier than the act's effective date or the date on which the decision became final and conclusive.

AB968-ASA1,6,10 (3) Relying on past audits. (a) A person who is subject to a determination by the department, including all other members of that person's controlled group, shall not be liable for any amount that the department asserts that the person owes if all of the following conditions are satisfied:

AB968-ASA1,6,16 1. The liability asserted by the department is the result of a condition, activity, attribute, or transaction that was present during the period associated with a prior determination for which the person is subject to and the condition, activity, attribute, or transaction is materially the same as the condition, activity, attribute, or transaction that is present during the period associated with the current determination.

AB968-ASA1,6,20 2. A department employee who was involved in the prior determination identified or reviewed the condition, activity, attribute, or transaction before completing the prior determination, as shown by any schedules, exhibits, audit reports, documents, or other evidence pertaining to the determination.

AB968-ASA1,6,22 3. The liability asserted by the department as described under subd. 1. was not asserted in the prior determination.

AB968-ASA1,7,4 (b) This subsection does not apply to any period associated with a determination, if the period begins after the promulgation of a rule, dissemination of written guidance to the public or to the person who is subject to the determination, the effective date of a statute, or the date on which a tax appeals commission or court decision becomes final and conclusive and if the rule, guidance, statute, or decision unambiguously imposes the liability as result of the condition, activity, attribute, or transaction described in par. (a) 1.

AB968-ASA1,7,11 (4) Equitable recoupment. A person against whom the department asserts a liability may offset against the liability the amount of any stale refund that the person may claim regardless of whether the time for claiming the stale refund has expired and regardless of whether the year, transaction, tax, or fee related to the liability is the same as that related to the stale refund. This subsection does not apply to any stale refund that is associated with any period that is prior to the initial date of the period associated with the liability.

AB968-ASA1,7,18 (5) Negligence determinations. The department shall not impose a penalty on a taxpayer under ss. 71.83 (1) (a) 1. to 4., 77.60 (3) and (4), 78.68 (3) and (4), and 139.25 (3) and (4), unless the department shows that the taxpayer's action or inaction was caused by the taxpayer's failure to use ordinary care to comply with state tax laws as provided under the statutes, administrative rules, published department guidance or other written notice provided by the department, or a final and conclusive decision of the tax appeals commission or a court.

AB968-ASA1,7,20 (6) Applicability. Notwithstanding any other provision of law, this section applies to all taxes and fees administered by the department.

AB968-ASA1, s. 8 Section 8. 77.59 (4) (a) of the statutes is amended to read:

AB968-ASA1,8,18 77.59 (4) (a) Except as provided in sub. (3m), at any time within 4 years after the due date, or in the case of buyers the unextended due date, of a person's corresponding Wisconsin income or franchise tax return or, if exempt, within 4 years of the 15th day of the 4th month of the year following the close of the calendar or fiscal year for which that person files a claim, that person may, unless a determination by the department by office or field audit of a seller has been made and unless a determination by office audit of a buyer other than an audit in which the tax that is the subject of the refund claim was not adjusted has been made and unless a determination by field audit of the buyer has been made, file with the department a claim for refund of taxes paid to the department by that person. If the amount of the claim is at least $50 or if either the seller has ceased doing business, the buyer is being field audited or the seller may no longer file a claim, the The buyer may, within the time period under this subsection, file a claim with the department for a refund of the taxes paid to the seller. A claim is timely if it fulfills the requirements under s. 77.61 (14). A buyer may claim a refund under this paragraph only on a form prescribed by the department, only by signing that form and only if the seller signs the form unless the department waives that requirement. If both a buyer and a seller file a valid claim for the same refund, the department may pay either claim. The claim for refund shall be regarded as a request for determination. The determination thus requested shall be made by the department within one year after the claim for refund is received by it unless the taxpayer has consented in writing to an extension of the one-year time period prior to its expiration.

AB968-ASA1, s. 9 Section 9. 77.59 (8m) of the statutes is amended to read:

AB968-ASA1,8,24 77.59 (8m) Within the time period under sub. (4), the department of revenue may refund excess taxes paid to it under this chapter, even if the person applying for the refund has been field audited in respect to those taxes, if the applicant's customers have filed valid claims for refunds with provided written notice to the applicant requesting refunds and if the refund is passed along to those customers.

AB968-ASA1, s. 10 Section 10. 77.60 (3) of the statutes is amended to read:

AB968-ASA1,9,6 77.60 (3) If due to neglect an incorrect return is filed, and upon a showing by the department under s. 73.14 (5), the entire tax finally determined shall be subject to a penalty of 25%, or 50% in the case of returns under s. 77.61 (1) (c), of the tax exclusive of interest or other penalty. A person filing an incorrect return shall have the burden of proving that the error or errors were due to good cause and not due to neglect.

AB968-ASA1, s. 11 Section 11. 77.60 (4) of the statutes is amended to read:

AB968-ASA1,9,18 77.60 (4) In case of failure to file any return required under authority of s. 77.58 by the due date, determined with regard to any extension of time for filing, unless it is shown that such failure was due to reasonable cause and not due to neglect and upon a showing by the department under s. 73.14 (5), there shall be added to the amount required to be shown as tax on such return 5% of the amount of such tax if the failure is not for more than one month, with an additional 5% for each additional month or fraction thereof during which such failure continues, not exceeding 25% in the aggregate. For purposes of this subsection, the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the due date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed upon the return.

AB968-ASA1, s. 12 Section 12. 77.61 (5) (a) of the statutes is amended to read:

AB968-ASA1,9,25 77.61 (5) (a) It is unlawful for the department or any person having an administrative duty under this subchapter to make known in any manner whatever the business affairs, operations or information obtained by an investigation of records and equipment of any retailer or any other person visited or examined in the discharge of official duty, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any return, or to permit any return or copy thereof to be seen or examined by any person. This paragraph does not prohibit the department of revenue from publishing statistics classified so as not to disclose the identity of particular returns or reports and the items thereof. This paragraph does not prohibit employees or agents of the department of revenue from offering or submitting information obtained by investigation or any return or any schedule, exhibit or writing pertaining to a return or any copy of, or information derived from, any of those documents as evidence into the record of any contested matter involving the department in proceedings or litigation on state tax matters if that evidence has reasonable probative value. This paragraph does not prohibit employees or agents of the department of revenue from informing a buyer or seller who has filed a claim for a refund that a refund has been paid to a seller or buyer with respect to the same transaction.

AB968-ASA1, s. 13 Section 13. 78.68 (3) of the statutes is amended to read:

AB968-ASA1,10,18 78.68 (3) If due to neglect an incorrect return is filed, and upon a showing by the department under s. 73.14 (5), the entire tax finally determined is subject to a penalty of 25% of the tax exclusive of interest or other penalty. A person filing an incorrect return has the burden of proving that the error or errors were due to good cause and not due to neglect.

AB968-ASA1, s. 14 Section 14. 78.68 (4) of the statutes is amended to read:

AB968-ASA1,11,5 78.68 (4) In case of failure to file any return required under ss. 78.12, 78.49, and 78.58 by the due date, unless it is shown that that failure was due to reasonable cause and not due to neglect and upon a showing by the department under s. 73.14 (5), there shall be added to the amount required to be shown as tax on that return 5% of the amount of the tax if the failure is for not more than one month, and an additional 5% of the tax for each additional month or fraction thereof during which the failure continues, not exceeding 25% of the tax in the aggregate. For purposes of this subsection, the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the due date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed upon the return.

AB968-ASA1, s. 15 Section 15. 139.25 (3) of the statutes is amended to read: