SB285: Bill Text

Sales suppression devices and phantomware

Under the bill, any person who creates, designs, manufactures, sells, purchases, leases, installs, updates, repairs, services, transfers, uses, or possesses in this state phantomware or an automated sales suppression device, unless for a legitimate purpose, is guilty of a Class D felony. The bill also authorizes DOR to revoke any permit, license, or certificate issued by DOR for up to 10 years for violating this prohibition.

Under the bill, an “automated sales suppression device” is a software program that falsifies the electronic records of electronic cash registers and other point-of-sale systems. The bill defines “phantomware” as a programming option embedded in the operating system of an electronic cash register, or hardwired into an electronic cash register, that can be used to create a virtual second electronic cash register or eliminate or manipulate transaction records. Automated sales suppression devices and phantomware are typically used to evade the payment of taxes.

Because this bill creates a new crime or revises a penalty for an existing crime, the Joint Review Committee on Criminal Penalties may be requested to prepare a report.

For further information see the state and local 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:

SB285,1 Section 1. 71.78 (1) of the statutes is amended to read:

SB285,6,19 71.78 (1) Divulging information. Except as provided in subs. (1g), (4), (4m) and (10), no person may divulge or circulate or offer to obtain, divulge, or circulate any information derived from an income, franchise, withholding, fiduciary, partnership, or limited liability company tax return or tax credit claim, including information which may be furnished by the department as provided in this section. This subsection does not prohibit publication by any newspaper of information lawfully derived from such returns or claims for purposes of argument or prohibit any public speaker from referring to such information in any address. This subsection does not prohibit the department from publishing statistics classified so as not to disclose the identity of particular returns, or claims or reports and the items thereof. This subsection does not prohibit employees or agents of the department of revenue from offering or submitting any return, including joint returns of a spouse or former spouse, separate returns of a spouse, individual returns of a spouse or former spouse, and combined individual income tax returns, or from offering or submitting any claim, schedule, exhibit, writing, or audit report or a copy of, and any 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, in the department's judgment, that evidence has reasonable probative value.

SB285,2 Section 2. 71.78 (1g) of the statutes is created to read:

SB285,7,6 71.78 (1g) Permissible disclosure by department employees. An employee of the department may, in connection with the employee's official duties, disclose information derived from a return or claim specified in sub. (1) to the extent that the disclosure is necessary for the enforcement of the tax laws of this state. The disclosure shall be limited to the information relevant to a particular matter in connection with an audit, collection, inspection, or investigation.

SB285,3 Section 3. 71.78 (4) (b) of the statutes is amended to read:

SB285,7,13 71.78 (4) (b) The attorney general and department of justice employees. A department of justice employee may, in connection with the employee's official duties, disclose information derived under this paragraph to a law enforcement investigator participating in a department of justice investigation. The disclosure shall be limited to the information relevant to a particular matter in connection with the department of justice investigation.

SB285,4 Section 4. 71.78 (4) (v) of the statutes is created to read:

SB285,7,16 71.78 (4) (v) A federal grand jury or grand jury of this state, upon receipt by the department of a grand jury subpoena.

SB285,5 Section 5. 71.78 (5) of the statutes is amended to read:

SB285,7,22 71.78 (5) Agreement with department. Copies of returns and claims specified in sub. (1) and related schedules, exhibits, writings or audit reports shall not be furnished to the persons listed under sub. (4), except persons under sub. (4) (e), (k), (n), (o) and, (q), and (v) or under an agreement between the department of revenue and another agency of government.

SB285,6 Section 6. 71.78 (6) of the statutes is amended to read:

SB285,8,4 71.78 (6) Restriction on use of information. The use of information obtained under sub. (4) or (5) is restricted to the discharge of duties imposed upon the persons by law or by the duties of their office or by order of a court as provided under sub. (4) (f) or (v).

SB285,7 Section 7. 71.83 (6) of the statutes is created to read:

SB285,8,7 71.83 (6) Automated sales suppression devices and phantomware. (a) Definitions. In this subsection:

SB285,8,10 1. “Automated sales suppression device" means a software program that falsifies the electronic records, including transaction data and transaction reports, of electronic cash registers and other point-of-sale systems.

SB285,8,14 2. “Electronic cash register" means a device that keeps a register or supporting documents by means of an electronic device or computer system designed to record transaction data for the purpose of computing, compiling, or processing retail sales transaction data or transaction reports.

SB285,8,20 3. “Phantomware" means a programming option embedded in the operating system of an electronic cash register, or hardwired into an electronic cash register, that can be used to create a virtual second electronic cash register or eliminate or manipulate transaction records that may or may not be preserved in digital formats to represent the true or manipulated record of transactions in the electronic cash register.

SB285,9,2 4. “Transaction data" includes items purchased by a customer, the price for each item, a taxability determination for each item, a segregated tax amount for each of the taxed items, the amount of cash or credit tendered, the net amount returned to the customer in change, the date and time of the purchase, the name, address, and identification number of the vendor, and the receipt or invoice number of the transaction.

SB285,9,6 5. “Transaction report" means a report that includes the sales, taxes collected, media totals, and discount voids at an electronic cash register that is printed on cash register tape at the end of a day or shift or a report documenting every action at an electronic cash register that is stored electronically.

SB285,9,10 (b) Automated sales suppression devices and phantomware. Any person who creates, designs, manufactures, sells, purchases, leases, installs, updates, repairs, services, transfers, uses, or possesses in this state phantomware or an automated sales suppression device, unless for a legitimate purpose, is guilty of a Class D felony.

SB285,8 Section 8. 72.06 of the statutes is amended to read:

SB285,9,15 72.06 Sections 71.78 (1), (1g), (1m), and (4) to (9) and 71.83 (2) (a) 3. and 3m. apply to any information obtained from any person by the department on a death tax return, report, schedule, exhibit or other document or from an audit report pertaining to the tax return.

SB285,9 Section 9. 73.03 (51b) of the statutes is created to read:

SB285,9,18 73.03 (51b) To revoke all permits, licenses, and certificates that the department has issued to a person for up to 10 years for violating s. 71.83 (6) (b).

SB285,10 Section 10. 77.61 (5) (am) of the statutes is created to read:

SB285,9,25 77.61 (5) (am) Notwithstanding par. (a), an employee of the department may, in connection with the employee's official duties, disclose information derived from a return specified in par. (a) to the extent that the disclosure is necessary for the enforcement of the tax laws of this state. The disclosure shall be limited to the information relevant to a particular matter in connection with an audit, collection, inspection, or investigation.

SB285,11 Section 11. 77.61 (5) (b) 2. of the statutes is amended to read:

SB285,10,7 77.61 (5) (b) 2. The attorney general and department of justice employees. A department of justice employee may, in connection with the employee's official duties, disclose information derived under this subdivision to a law enforcement investigator participating in a department of justice investigation. The disclosure shall be limited to the information relevant to a particular matter in connection with the department of justice investigation.

SB285,12 Section 12. 77.61 (5) (b) 15. of the statutes is created to read:

SB285,10,10 77.61 (5) (b) 15. A federal grand jury or grand jury of this state, upon receipt by the department of a grand jury subpoena.

SB285,13 Section 13. 77.61 (5) (c) of the statutes is amended to read:

SB285,10,15 77.61 (5) (c) Copies of sales tax or use tax returns, schedules, exhibits, writings or audit reports shall not be furnished to the persons listed under par. (b), except persons under par. (b) 5. or 15. or under an agreement between the department and another agency of government.

SB285,14 Section 14. 77.61 (5) (d) of the statutes is amended to read:

SB285,10,19 77.61 (5) (d) The use of information obtained under par. (b) or (c) is restricted to the discharge of duties imposed upon the persons by law or by the duties of their office or by order of a court as specified under par. (b) 6. or 15.

SB285,15 Section 15. 78.80 (3) of the statutes is amended to read:

SB285,10,25 78.80 (3) Sections 71.78 (1), (1g), and (4) to (9) and 71.83 (2) (a) 3., relating to confidentiality of income and franchise tax returns, apply to any information obtained from any person on a motor vehicle fuel, general aviation fuel or alternate fuels tax return, report, schedule, exhibit, or other document or from an audit report pertaining to the same.

SB285,16 Section 16. 125.02 (1c) of the statutes is created to read:

SB285,11,4 125.02 (1c) “Alcohol vapor device" means any device that provides for the use of air or oxygen bubbled through an alcohol beverage to produce a vapor or mist that allows the user to inhale this alcoholic vapor through the mouth or nose.

SB285,17 Section 17. 125.04 (4) of the statutes is amended to read:

SB285,11,12 125.04 (4) List of licensees. By July 15 annually, the clerk of a municipality issuing licenses shall mail to the department a list containing the name, address, and trade name of each person holding a license issued by that municipality, other than a manager's or operator's license or a license issued under s. 125.26 (6), the type of license held, and, if the person holding the license is a corporation or limited liability company, the name of the agent appointed under sub. (6). The department shall annually publish this list on the department's Internet site.

SB285,18 Section 18. 125.04 (8m) of the statutes is created to read:

SB285,11,17 125.04 (8m) Payment of criminal history fees. Any fees incurred by the department under s. 165.82 (1) (am) for purposes of verifying a permit applicant's eligibility under sub. (5) (a) 1. and (b) shall be paid by the applicant to the department upon application for the permit.

SB285,19 Section 19. 125.09 (8) of the statutes is created to read:

SB285,11,20 125.09 (8) Alcohol vapor devices. No person may use or offer for use, possess, or sell or offer for sale in this state an alcohol vapor device.

SB285,20 Section 20. 125.09 (9) of the statutes is created to read:

SB285,12,2 125.09 (9) Possession of still. (a) Subject to par. (b), no person may possess any still, leach tub, or other apparatus for manufacturing, rectifying, distilling, refining, or purifying intoxicating liquor other than wine. The possession of any such still, leach tub, or other apparatus is prima facie evidence of possession for the purpose of manufacturing, rectifying, distilling, refining, or purifying of intoxicating liquor other than wine.

SB285,12,3 (b) Paragraph (a) does not apply to any of the following:

SB285,12,4 1. A person issued a manufacturer's or rectifier's permit under s. 125.52.

SB285,12,5 2. A person that has registered a distilled spirits plant under 26 USC 5171.

SB285,12,7 3. A person that has registered the still or distilling apparatus under 26 USC 5179.

SB285,12,9 (c) Any person who violates par. (a) shall be subject to the same penalty specified in s. 125.04 (13).

SB285,21 Section 21. 125.112 of the statutes is created to read:

SB285,12,13 125.112 Administrative forfeitures for violations. (1) (a) The department may directly assess against a person, for the person's violation as described in sub. (6), a forfeiture in the amount specified in sub. (6).

SB285,12,19 (b) The authority of the department to assess a forfeiture against a person under this section is in addition to the department's authority under s. 125.12 and any other authority or power of the department under this chapter or ch. 139 and in addition to any other penalty under this chapter, except that a person may not be both assessed a forfeiture under this section and subject to a court-imposed fine, forfeiture, or imprisonment under this chapter arising from the same violation.

SB285,12,25 (2) If the department determines that a forfeiture should be assessed for a violation identified in sub. (6), the department shall issue a notice of assessment to the person alleged to have committed the violation. The notice shall specify the amount of the forfeiture assessed and the alleged violation, including the statute alleged to have been violated, and shall inform the person of the right to hearing under sub. (3) (a).

SB285,13,13 (3) (a) A person upon whom a forfeiture is imposed may contest the assessment by sending, within 30 days after receipt of notice of the assessment, a written request for hearing under s. 227.44 to the division of hearings and appeals in the department of administration. The administrator of the division of hearings and appeals may designate a hearing examiner to preside over the case and recommend a decision to the administrator under s. 227.46. The decision of the administrator of the division of hearings and appeals shall be the final administrative decision. The division of hearings and appeals shall commence the hearing within 30 days of receipt of the request for hearing and shall issue a final decision within 15 days after the close of the hearing. Proceedings before the division of hearings and appeals are governed by ch. 227. In any petition for judicial review of a decision by the division of hearings and appeals, the party, other than the petitioner, who was in the proceeding before the division of hearings and appeals shall be the named respondent.

SB285,13,19 (b) In addition to or in lieu of requesting a hearing under par. (a), a person issued a notice of assessment under sub. (2) may settle the matter by agreeing to an offer in compromise with the department under which the person pays to the department a forfeiture of less than the amount stated in the notice of assessment but not less than the minimum applicable forfeiture amount specified in sub. (6) for the violation.

SB285,13,25 (4) All forfeitures shall be paid to the department within 60 days after receipt of the notice of assessment or according to a schedule agreed to by the department and the person issued the notice of assessment or, if the forfeiture is contested under sub. (3), within 10 days after receipt of the final decision after exhaustion of all administrative and judicial reviews. The department shall remit all forfeitures paid to the secretary of administration for deposit in the school fund.

SB285,14,4 (5) The attorney general may bring an action in the name of the state to collect any forfeiture imposed under this section if the forfeiture has not been paid following the exhaustion of all administrative and judicial reviews. The only issue to be contested in any such action is whether the forfeiture amount has been paid.

SB285,14,6 (6) (a) The department may assess forfeitures under this section for the following violations in the following amounts:

SB285,14,10 1. For a violation of s. 125.07 (2) (a) or (3) (a) or (b) or 125.65 or a rule promulgated under s. 125.03 (1) (a) or (2), not more than $100 for a first violation, not less than $100 nor more than $250 for a 2nd violation, and not less than $250 nor more than $500 for a 3rd or subsequent violation.

SB285,14,17 2. For a violation of s. 125.04 (3) (j) or (10), 125.06 (13) (a), 125.09 (3), (6), (7), or (8), 125.27 (2) (e), 125.272, 125.28 (1) (d), 125.32 (3), (5), (6), or (7), 125.33 (1), (5), (6), (7) (a), (7m), (8), (11) (a), (12), or (13), 125.34 (2), (3), (4), (5), or (6), 125.51 (4) (am), (5) (c) 4., (6), or (7), 125.535 (4), (5), or (6), 125.54 (3), (5), or (8), 125.68 (4), (10) (a), or (11) (b), or 125.69 (3), (4) (a), or (5), not more than $250 for a first violation, not less than $250 nor more than $500 for a 2nd violation, and not less than $500 nor more than $1,000 for a 3rd or subsequent violation.

SB285,14,22 3. For a violation of s. 125.04 (1), 125.09 (1) or (9), 125.105 (1), 125.28 (5), 125.315 (1), 125.32 (2), 125.33 (9), 125.54 (7) (a) or (b), 125.545 (4) or (7), 125.66 (1), 125.67, or 125.68 (2), not more than $1,000 for a first violation, not less than $1,000 nor more than $2,500 for a 2nd violation, and not less than $2,500 nor more than $10,000 for a 3rd or subsequent violation.

SB285,14,24 4. For a violation of s. 125.07 (1) (a), an amount consistent with the forfeitures or fines provided under s. 125.07 (1) (b).

SB285,15,2 5. For a violation of s. 125.07 (4) (a), an amount consistent with the forfeitures provided under s. 125.07 (4) (bs).

SB285,15,4 6. For a violation of s. 125.07 (4) (b), an amount consistent with the forfeitures provided under s. 125.07 (4) (c).

SB285,15,6 7. For a violation of s. 125.085 (3) (a) 1., an amount consistent with the fines provided under s. 125.085 (3) (a).

SB285,15,8 8. For a violation of s. 125.085 (3) (b), an amount consistent with the forfeitures provided under s. 125.085 (3) (bd).

SB285,15,10 9. For a violation of s. 125.09 (2), an amount consistent with the forfeitures provided under s. 125.09 (2) (d).

SB285,15,12 10. For a violation of s. 125.66 (4), an amount consistent with the fines provided under s. 125.66 (4).

SB285,15,14 11. For a violation of s. 125.68 (8), an amount consistent with the fines provided under s. 125.68 (8) (a).

SB285,15,16 12. For a violation of s. 125.68 (9), an amount consistent with the fines provided under s. 125.68 (9) (g).

SB285,15,18 13. For a violation of s. 125.68 (10) (b), an amount consistent with the forfeiture provided under s. 125.68 (10) (b).

SB285,15,20 14. For a violation of s. 125.69 (6), an amount consistent with the forfeitures or fines provided under s. 125.69 (6).

SB285,15,23 (b) For purposes of par. (a), a violation is considered to be a separate violation if the act or omission giving rise to it did not arise out of the same incident or occurrence.

SB285,22 Section 22. 125.12 (7) of the statutes is created to read:

SB285,16,5 125.12 (7) Reapplication for permit after revocation or refusal to issue or renew. If the department refuses to issue, refuses to renew, or revokes any permit issued under this chapter, the applicant or permit holder may not reapply for the permit for a period of 12 months after the date of the refusal to issue, refusal to renew, or revocation.

SB285,23 Section 23. 134.65 (1g) of the statutes is created to read:

SB285,16,9 134.65 (1g) (a) The department of revenue shall create an application form for licenses issued under sub. (1). The form shall require all of the following information from an applicant:

SB285,16,11 1. The applicant's history relevant to the applicant's fitness to hold a license under sub. (1).

SB285,16,12 2. The kind of license for which the applicant is applying.