Chapter 71

71.78(4)(h)2. 2. A member of the board of arbitration established under s. 71.10 (7e) or a consultant under joint contract with the states of Illinois and Wisconsin for the purpose of determining the reciprocity loss to which either state is entitled.

71.78(4)(j) (j) Employees of the legislative fiscal bureau to the extent that the department of revenue deems the examination necessary for those employees to perform their duties under contracts or agreements between the department and the bureau relating to the review and analysis of tax policy and the analysis of state revenue collections.

71.78(4)(k) (k) The spouse or former spouse of the person who filed the return or claim if the spouse or former spouse may be liable, or the property of the spouse or former spouse is subject to collection, for the delinquency, or the department has issued an assessment or denial of a claim to the spouse or former spouse regarding the return or claim.

71.78(4)(L) (L) The administrator of the lottery division in the department for the purpose of withholding lottery winnings under s. 565.30 (5).

71.78(4)(m) (m) The chief executive officer of the Wisconsin Economic Development Corporation and employees of the corporation to the extent necessary to administer the tax benefit programs under ch. 238, including review of tax benefit applications, compliance with tax benefit certifications, and confirming the amount of tax benefits used for purposes of revoking tax benefits.

71.78(4)(n) (n) The state public defender and the department of administration for the purpose of collecting payment ordered under s. 48.275 (2), 757.66, 973.06 (1) (e) or 977.076 (1).

71.78(4)(o) (o) A licensing department or the supreme court, if the supreme court agrees, for the purpose of denial, nonrenewal, discontinuation and revocation of a license based on tax delinquency under s. 73.0301.

71.78(4)(p) (p) The secretary of revenue and employees of that department for the purpose of calculating the penalty under s. 71.83 (1) (d).

71.78(4)(q) (q) Employees of the department of corrections involved in the administration of the sex offender registry under s. 301.45, for the purpose of verifying information provided by a person required to register as a sex offender.

71.78(4)(r) (r) The secretary of revenue and employees of that department for the purpose of preparing and maintaining the list of persons with unpaid tax obligations as described in s. 73.03 (62) so that the list of such persons is available for public inspection.

71.78(4)(s) (s) The state auditor and the employees of the legislative audit bureau to the extent necessary for the bureau to carry out its duties under s. 13.94.

71.78(4)(t) (t) For purposes of obtaining the outstanding liability secured by a tax warrant, any person, or authorized agent of any person, who provides satisfactory evidence to the department, as determined by the department, that the person has a material interest, or intends to obtain a material interest, in a property that is subject to a tax warrant filed by the department under s. 71.91 (5).

71.78(4)(u) (u) The department of safety and professional services for the purpose of reducing an initial credential fee under s. 440.052.

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

71.78(4m) (4m) Disclosure of certain dates to spouses and former spouses. The department may disclose to the spouse or former spouse of the person who filed a return or claim specified under sub. (1) whether an extension for filing the return or claim was obtained, the extended due date for filing the return or claim and the date on which the return or claim was filed with the department.

71.78(5) (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), (m), (n), (o), (q), and (v) or under an agreement between the department of revenue and another agency of government.

71.78(6) (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).

71.78(7) (7) Charge for costs. The department of revenue may charge for the reasonable cost of divulging information under this section.

71.78(8) (8) District attorneys. District attorneys may examine tax and claim information of persons on file with the department of revenue as follows:

71.78(8)(a) (a) Such information may be examined for use in preparation for any judicial proceeding or any investigation which may result in a judicial proceeding involving any of the taxes or tax credits specified in sub. (1) if:

71.78(8)(a)1. 1. The taxpayer is or may be a party to such proceeding;

71.78(8)(a)2. 2. The treatment of an item reflected in such information is or may be related to the resolution of an issue in the proceeding or investigation; or

71.78(8)(a)3. 3. The information relates or may relate to a transactional relationship between the taxpayer or credit claimant and a person who is or may be a party to the proceeding which affects or may affect the resolution of an issue in such proceeding or investigation.

71.78(8)(b) (b) When the department of revenue allows examination of information under par. (a):

71.78(8)(b)1. 1. If the department has referred the case to a district attorney, the department may make disclosure on its own motion.

71.78(8)(b)2. 2. If a district attorney requests examination of tax or tax credit information relating to a person, the request must be in writing, clearly identify the requester and the person to whom the information relates and explain the need for the information. The department may then allow the examination of information so requested and the information may be examined and used solely for the proceeding or investigation for which it was requested.

71.78(8)(c) (c) Such information may be examined for use in preparation for any administrative or judicial proceeding or an investigation which may result in such proceeding pertaining to the enforcement of a specifically designated state criminal statute not involving tax administration to which this state or a governmental subdivision thereof is a party. Such information may be used solely for the proceeding or investigation for which it is requested.

71.78(8)(d) (d) The department may allow an examination of information under par. (c) only if a district attorney petitions a court of record in this state for an order allowing the examination and the court issues an order after finding:

71.78(8)(d)1. 1. There is reasonable cause to believe, based on information believed to be reliable, that a specific criminal act has been committed;

71.78(8)(d)2. 2. There is reason to believe that such information is probative evidence of a matter in issue related to the commission of the criminal act; and

71.78(8)(d)3. 3. The information sought to be examined cannot reasonably be obtained from any other source, unless it is determined that, notwithstanding the reasonable availability of the information from another source, the information constitutes the most probative evidence of a matter in issue relating to the commission of such criminal act.

71.78(8)(e) (e) If the department determines that examination of information ordered under par. (d) would identify a confidential informant or seriously impair a civil or criminal tax investigation, the department may deny access and shall certify the reason therefor to the court.

71.78(9) (9) Disclosure of debtor address. The department may supply the address of a debtor to an agency certifying a debt of that debtor under s. 71.93 or to a municipality or county certifying a debt of a debtor under s. 71.935.

71.78(10) (10) Divulging information to requester. The department shall inform each requester of the total amount of taxes withheld under subch. X during any reporting period and reported on a return filed by any city, village, town, county, school district, special purpose district or technical college district; whether that amount was paid by the statutory due date; the amount of any tax, fees, penalties or interest assessed by the department; and the total amount due or assessed under subch. X but unpaid by the filer, except that the department may not divulge tax return information that in the department’s opinion violates the confidentiality of that information with respect to any person other than the units of government and districts specified in this subsection. The department shall provide to the requester a written explanation if it fails to divulge information on grounds of confidentiality. The department shall collect from the person requesting the information a fee of $4 for each return.

71.78(11) (11) Pass-through entity audits. If the department audits a pass-through entity for income or franchise taxes of its pass-through members, including when an election is made under s. 71.21 (6) (a) or 71.365 (4m) (a) to pay tax at the entity level, the department may disclose the following:

71.78(11)(a) (a) To a pass-through member that the pass-through entity is under audit or was audited, if the disclosure is necessary to explain any amounts assessed or refunded to the pass-through member or to obtain information necessary to determine the proper amount of adjustment to make at the pass-through entity level.

71.78(11)(b) (b) To a pass-through entity, the identities of one or more pass-through members who have failed to report pass-through items originating with the entity on their Wisconsin returns, if the disclosure is necessary to explain any amounts assessed or refunded to the pass-through member or to obtain information about a pass-through member’s return in order to determine the proper amount of adjustment to make at the pass-through entity level.

71.78 History History: 1987 a. 312; 1987 a. 411 ss. 99, 100, 188; 1991 a. 269, 301; 1993 a. 112, 399; 1995 a. 27 ss. 3420x to 3423g, 9116 (5); 1995 a. 233, 404; 1997 a. 27, 63, 237, 323; 1999 a. 32, 89; 2005 a. 25; 2007 a. 20; 2011 a. 32, 68; 2013 a. 8, 20, 36; 2015 a. 216; 2017 a. 319; 2021 a. 262; 2023 a. 19, 73.

71.78 Note NOTE: 1991 Wis. Act 301, which affected this section, contains extensive legislative council notes.

71.78 Cross-reference Cross-reference: See also ss. Tax 1.11 and 1.13, Wis. adm. code.

71.80 71.80 General administrative provisions.

71.80(1) (1) Department duties and powers.

71.80(1)(a) (a) The department shall assess incomes as provided in this chapter and in performance of such duty the department shall possess all powers now or hereafter granted by law to the department in the assessment of personal property and also the power to estimate incomes.

71.80(1)(b) (b) In any case of 2 or more organizations, trades or businesses (whether or not incorporated, whether or not organized in the United States, whether or not affiliated, and whether or not unitary) owned or controlled directly or indirectly by the same interests, the secretary or the secretary’s delegate may distribute, apportion or allocate gross income, deductions, credits or allowances between or among such organizations, trades or businesses, if the secretary determines that such distribution, apportionment or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades or businesses. The authority granted under this subsection is in addition to, and not a limitation of or dependent on, the provisions of sub. (23) and ss. 71.05 (6) (a) 24. and (b) 45., 71.26 (2) (a) 7. and 8., 71.34 (1k) (j) and (k), and 71.45 (2) (a) 16. and 17.

71.80(1)(c) (c) The department may make such regulations as it shall deem necessary in order to carry out this chapter.

71.80(1)(d) (d) The department may employ such clerks and specialists as are necessary to carry into effective operation this chapter. Salaries and compensations of such clerks and specialists shall be charged to the proper appropriation for the department.

71.80(1)(e) (e) Representatives of the department directed by it to accept payment of income or franchise taxes shall file bonds with the secretary of administration in such amount and with such sureties as the state treasurer shall direct and approve.

71.80(1m) (1m) Transactions without economic substance.

71.80(1m)(a) (a) If any person, directly or indirectly, engages in a transaction or series of transactions without economic substance to create a loss or to reduce taxable income or to increase credits allowed in determining Wisconsin tax, the department shall determine the amount of a taxpayer’s taxable income or tax so as to reflect what would have been the taxpayer’s taxable income or tax if not for the transaction or transactions without economic substance causing the reduction in taxable income or tax.

71.80(1m)(b) (b) A transaction has economic substance only if the transaction is treated as having economic substance as determined under section 7701 (o) of the Internal Revenue Code, except that the tax effect shall be determined using federal, state, local, or foreign taxes, rather than only the federal income tax effect.

71.80(1m)(c) (c) With respect to a transaction between members of a controlled group, as defined in section 267 (f) (1) of the Internal Revenue Code, the transaction shall be presumed to lack economic substance, and the taxpayer shall bear the burden of establishing by clear and satisfactory evidence that the transaction or the series of transactions between the taxpayer and one or more members of the controlled group has economic substance.

71.80(2) (2) Notice to taxpayer by department. The department shall notify each taxpayer of the amount of income or franchise taxes assessed against the taxpayer and of the date when the taxes become delinquent.

71.80(3) (3) Crediting of overpayments on individual or separate returns. In the case of any overpayment, refundable credit, or refund on an individual or separate return, the department, within the applicable period of limitations, may credit the amount of overpayment, refundable credit, or refund, including any interest allowed, against any liability in respect to any tax collected by the department, a debt under s. 71.93 or 71.935 or a certification under s. 49.855 on the part of the person who made the overpayment or received the refundable credit or the refund and shall refund any balance to the person. 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 ss. 49.855, 71.93, and 71.935 has been completed. The department shall presume that the overpayment, refundable credit or refund is nonmarital property of the filer. Within 2 years after the crediting, the spouse or former spouse of the person filing the return may file a claim for a refund of amounts credited by the department if the spouse or former spouse shows by clear and convincing evidence that all or part of the state tax overpayment, refundable credit or refund was nonmarital property of the nonobligated spouse.

71.80(3m) (3m) Crediting of overpayments on joint returns. For married persons, unless within 20 days after the date of the notice under par. (c) the nonobligated spouse shows by clear and convincing evidence that the overpayment, refundable credit or refund is the nonmarital property of the nonobligated spouse, notwithstanding s. 766.55 (2) (d), the department may credit overpayments, refundable credits and refunds, including any interest allowed, resulting from joint returns under this chapter as follows, except that 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 ss. 49.855, 71.93, and 71.935 has been completed:

71.80(3m)(a) (a) Against any liability of either spouse or both spouses in respect to an amount owed the department, a certification under s. 49.855 that is subject to s. 766.55 (2) (b) or a debt under s. 71.93 or 71.935 that is subject to s. 766.55 (2) (b) and that was incurred during marriage by a spouse after December 31, 1985, or after both spouses are domiciled in this state, whichever is later, except as provided in s. 71.10 (6) (a) and (b) and (6m).

71.80(3m)(b) (b) Against the liability of a spouse in the proportion that the Wisconsin adjusted gross income which would have been the property of the spouse but for the marriage has to the adjusted gross income of both spouses as follows:

71.80(3m)(b)1. 1. In respect to an amount owed the department that was incurred before January 1, 1986, or before marriage, whichever is later.

71.80(3m)(b)2. 2. In respect to a debt under s. 71.93 or 71.935 or a certification under s. 49.855 if that debt or certification is not subject to s. 766.55 (2) (b).

71.80(3m)(b)3. 3. In respect to an amount subject to s. 71.10 (6) (a) and (b) and (6m) (a).

71.80(3m)(c) (c) If the department determines that a spouse is otherwise entitled to a state tax refund or homestead or farmland credit, it shall notify the spouses under s. 71.74 (11) that the state intends to reduce any state tax refund or a refundable credit due the spouses by the amount credited against any liability under par. (a) or (b) or both.

71.80(3m)(d) (d) If a spouse does not receive notice under par. (c) and if the department incorrectly credits the state tax overpayment, refund or a refundable credit of a spouse or spouses against a liability under par. (a) or (b) or both, a claim for refund of the incorrectly credited amount may be filed under s. 71.75 (5) within 2 years after the date of the offset that was the subject of the notice under par. (c).

71.80(4) (4) Penalties. Unless specifically provided in this subchapter, the penalties under subch. XIII apply for failure to comply with this subchapter unless the context requires otherwise.

71.80(5) (5) Penalties not deductible. No penalty imposed by this chapter, or by subch. III of ch. 77 may be deducted from gross income in arriving at net income taxable under this chapter.

71.80(6) (6) Prosecutions by attorney general. The attorney general is authorized, upon the request of the secretary of revenue, to represent the state or to assist the district attorney in the prosecution of any case arising under s. 71.83 (2) (a) 1. and (b) 1. and 2.

71.80(6m) (6m) Venue. A proceeding for a criminal violation under this chapter may be brought in the circuit court for Dane County or for the county in which the defendant resides or is located when charged with the violation.

71.80(7) (7) Publication of notices in administrative register. The department shall annually publish notice of the standard deduction amounts and the brackets for the individual income tax in the administrative register.

71.80(8) (8) Receipt for payment of taxes. The department shall accept payments of income or franchise taxes in accordance with this chapter, and upon request shall give a printed or written receipt therefor.

71.80(9) (9) Records may be required of taxpayer. Whenever the department deems it necessary that a person subject to an income or franchise tax should keep records to show whether or not the person is liable to tax, the department may serve notice upon the person and require such records to be kept as will include the entire net income of the person and will enable the department to compute the taxable income. The department may require any person who keeps records in machine-readable form for federal income tax purposes to keep those records in the same form for purposes of the taxes under this chapter.

71.80(9m) (9m) Failure to produce records.

71.80(9m)(a) (a) A person who fails to produce records or documents, as provided under s. 71.74 (2), that support amounts or other information required to be shown on any return required under this chapter and fails to comply in good faith with a summons issued pursuant to s. 73.03 (9) seeking those records and documents may be subject to any of the following penalties, as determined by the department, except that the department may not impose a penalty under this subsection if the person shows that under all facts and circumstances the person’s response, or failure to respond, to the department’s request was reasonable or justified by factors beyond the person’s control:

71.80(9m)(a)1. 1. The disallowance of deductions, credits, exemptions, or income inclusions to which the requested records relate.

71.80(9m)(a)2. 2. In addition to any penalty imposed under sub. (4), a penalty for each violation of this subsection that is equal to the greater of $500 or 25 percent of the amount of the additional tax on any adjustment made by the department that results from the person’s failure to produce the records.

71.80(9m)(c) (c) The department shall promulgate rules to administer this subsection and the rules shall include a standard response time, a standard for noncompliance, and penalty waiver provisions.

71.80 Cross-reference Cross-reference: See also s. Tax 2.85, Wis. adm. code.

71.80(10) (10) Refusal to file; court order.

71.80(10)(a) (a) If any person, including an officer of a corporation, required by law to file a return fails to file the return within 60 days after the time required and refuses to file the return within 30 days after a request by the department to do so, the circuit court, upon petition by the department, shall issue a court order requiring that person to file a return. Any person upon whom a court order has been served shall file a return within 20 days after the service of the court order. The petition shall be heard and determined on the return day or on a later date that the court fixes, having regard for the speediest possible determination of the case consistent with the rights of the parties.

71.80(10)(b) (b) The department shall file a petition for a court order in a circuit court for the county in which the respondent in the action resides.

71.80(10)(c) (c) Filing a return after the time prescribed by law shall not relieve any person, including an officer of a corporation, from any penalties whether or not the department filed a petition for a court order under this subsection.

71.80(11) (11) Return presumed correct. The department shall presume the incomes reported on the current return to be correct for the purpose of preparing initial assessments.

71.80(12) (12) Department considered lawful attorney for nonresident.

71.80(12)(a) (a) The transaction of business or the performance of personal services in this state or the derivation of income from property the income from which has a taxable situs in this state by any nonresident person, except where the nonresident is a foreign corporation that has been licensed under ch. 180, shall be all of the following:

71.80(12)(a)1. 1. Considered an irrevocable appointment by the nonresident, binding upon the nonresident or the nonresident’s personal representative, of the department of financial institutions to be the nonresident’s lawful attorney upon whom may be served any notice, order, pleading, or process, including any notice of assessment, denial of application for abatement, or denial of claim for refund, by any administrative agency or in any proceeding by or before any administrative agency, or in any proceeding or action in any court, to enforce or effect full compliance with or involving the provisions of this chapter.

71.80(12)(a)2. 2. A signification of the nonresident’s agreement that any notice, order, pleading, or process described in subd. 1. that is so served is of the same legal force and validity as if served on the nonresident or on the nonresident’s personal representative.

71.80(12)(b) (b) The transaction of business in this state or the derivation of income that has a situs in this state under the provisions of this chapter by any person while a resident of this state shall be all of the following:

71.80(12)(b)1. 1. Considered an irrevocable appointment by that person, binding upon that person or that person’s personal representative, effective upon that person becoming a nonresident of this state, of the department of financial institutions to be that person’s true and lawful attorney upon whom may be served any notice, order, pleading, or process, including any notice of assessment, denial of application for abatement, or denial of claim for refund, by any administrative agency or in any proceeding by or before an administrative agency, or in any proceeding or action in any court, to enforce or effect full compliance with or involving the provisions of this chapter.

71.80(12)(b)2. 2. A signification of the person’s agreement that any notice, order, pleading, or process described in subd. 1. that is so served is of the same legal force and validity as if served on the person or on the person’s personal representative.

71.80(12)(c) (c)

71.80(12)(c)1. 1. Service under par. (a) 1. or (b) 1. shall be made by serving a copy of the notice, order, pleading, or process upon the department of financial institutions or by filing a copy of the notice, order, pleading, or process with the department of financial institutions.

71.80(12)(c)2. 2. Service under subd. 1. upon a person, or that person’s personal representative, shall be sufficient if all of the following conditions are met: