ORDER OF THE DEPARTMENT OF REVENUE REPEALING, RENUMBERING, RENUMBERING AND AMENDING, AMENDING, REPEALING AND RECREATING, AND CREATING RULES
The Wisconsin Department of Revenue proposes an order to: amend Tax 2.85 (3), (3) (c) (Examples), and (4) (b) (Examples) and 11.90 (3), (3) (c) (Examples), and (4) (b) (Examples); and create Tax 2.85 (2) (cm), (3) (c), and 11.90 (3) (c); relating to penalty for failure to produce records.
The scope statement for this rule, SS 084-16, was approved by the Governor on September 13, 2016, published in Register No. 729B on September 26, 2016, and approved by the Secretary of Revenue on October 14, 2016. Analysis by the Department of Revenue
Explanation of agency authority: Sections 71.80 (9m) (c) and 77.61 (19) (c), Stats., provides "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." Section 227.11 (2) (a), Stats., provides “[e]ach agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute...” Related statute or rule: There are no other applicable statutes or rules.
Plain language analysis: The object of the rule is to revise ss. Tax 2.85 and 11.90 relating to procedures on imposing a penalty for failure to produce records, as provided by 2015 Wis. Act 218. Summary of, and comparison with, existing or proposed federal regulation:
There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
Comparison with rules in adjacent states: The department is not aware of a similar rule in an adjacent state.
Summary of factual data and analytical methodologies: 2015 Wisconsin Act 218 made a change to Wisconsin's penalty for failure to produce records. The department has created this proposed rule order to reflect this statutory change. No other data was used in the preparation of this proposed rule order or this analysis. Analysis and supporting documents used to determine effect on small business: This rule order makes changes to reflect current law and current department policy. It makes no policy or other changes having an effect on small business.
Anticipated costs incurred by private sector: This proposed rule does not have a fiscal effect on the private sector.
Effect on small business: This proposed rule does not affect small business.
Agency contact person: Please contact Jen Chadwick at (608) 266-8253 or jennifer.chadwick@wisconsin.gov, if you have any questions regarding this proposed rule. Place where comments are to be submitted and deadline for submission: Comments may be submitted to the contact person shown below no later than Tuesday, April 25, 2017 . Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.
Jen Chadwick
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
.
SECTION 1. Tax 2.85 (2) (cm) is created to read:
Tax 2.85 (2) (cm) "Summons request" means a request for records issued by the department pursuant to s. 73.03 (9), Stats. SECTION 2. Tax 2.85 (3) is amended to read:
Tax 2.85 (3) Procedures. The penalties in this section may be imposed if the records requested were not provided and the department provided the notifications in pars. (a), and (b), and (c) regarding the records requested. The number of days established by the department for the person to respond to the record requests should be reasonable based on the facts of each situation.
SECTION 3. Tax 2.85 (3) (c) is created to read:
Tax 2.85 (3) (c) After the time period to respond to the second written request has expired as provided in par. (b), a summons request for records where the department allowed the person a minimum of 30 days from the date of receipt of the request for the records to be provided. This summons request shall be prepared on a form prescribed by the department and shall be served:
1. By certified mail, evidenced by a return receipt signed by the taxpayer or an authorized representative.
2. By personal service pursuant to sec. 801.11, Stats., if unable to obtain a signature as provided in subd. 1.
SECTION 4. Tax 2.85 (3) (c) (Examples) and (4) (b) (Examples) are amended to read:
Tax 2.85 (3) (c) Examples: 1) The department issues a first written request for records to Corporation A on September 1, 20092016, allowing Corporation A until October 6, 20092016, to provide the records requested. Corporation A does not provide the requested records to the department by October 6, 20092016. The department issues a second written request for records to Corporation A on October 21, 20092016, allowing Corporation A until November 30, 20092016, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s. 71.80 (9m), Stats. Corporation A does not provide the requested records by November 30, 20092016. The department mails a summons request for records to Corporation A which is received on December 20, 2016, allowing Corporation A until January 31, 2017, to provide the records requested. Corporation A does not provide the requested records by January 31, 2017. Therefore, the department may disallow the deductions, credits, or exemptions or include in Wisconsin income the additional income to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Corporation A not providing the records requested. 2) The department issues a first written request for records to Corporation B on December 21, 20092016, allowing Corporation B until January 20, 20102017, to provide the records requested. Corporation B does not provide the requested records to the department by January 20, 20102017. The department issues a second written request for records to Corporation B on February 8, 20102017, allowing Corporation B until March 10, 20102017, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s. 71.80 (9m), Stats. Corporation B does not provide the requested records to the department by March 10, 2017. The department personally serves a summons request for records on Corporation B on March 28, 2017, allowing Corporation B until May 10, 2017, to provide the records requested. Corporation B provides records to the department by March 10, 2010May 10, 2017, but the department determines that the taxpayer did not provide some of the records requested by March 10, 2010May 10, 2017. Therefore, since the taxpayer did not provide all of the records requested by March 10, 2010May 10, 2017, the department may disallow the deductions, credits, or exemptions or include in Wisconsin income the additional income to which the requested records that were not provided relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from the requested records that were not provided.
