STATE OF WISCONSIN
TAX APPEALS COMMISSION
18375 Taywood Circle, #101
Brookfield, WI 53045,
WISCONSIN DEPARTMENT OF REVENUE
P.O. Box 8993
Madison, WI 53708-8933,
DECISION AND ORDER
DON M. MILLIS, COMMISSIONER:
This matter came before the Commission for trial on December 14, 1999, in Waukesha. Petitioner has been represented in this matter by John C. Noggle, CPA. However, neither petitioner nor his representative appeared at trial. Respondent was represented at trial by Attorney Michael J. Buchanan.
Based on the evidence received at trial, the stipulation of the parties, and the record in this matter, the Commission hereby finds, concludes, and orders as follows:
FINDINGS OF FACT
1. Under the date of March 25, 1994, respondent issued a withholding tax assessment against petitioner as a person responsible for the withholding tax liability of Alexis Investment Co., Inc. ("Alexis"), in the principal amount of $98,782.47, plus interest ($8,533.46) and penalties ($20,729.07).
2. The assessment covered portions of 1992 and 1993, including an estimate of taxes due because Alexis failed to file a return for September of 1993.
3. Petitioner filed a petition for redetermination with respondent. In May of 1994, Alexis filed a withholding tax return for September of 1993.
4. Under the date of August 19, 1996, respondent granted in part and denied in part the petition for redetermination. The petition was granted in part to reflect the withholding tax liability as reported on the return filed in May of 1994 by Alexis. The amount due after respondent acted on the petition for redetermination was $19,962.96, plus interest ($3,377.64) and penalty ($1,024.19).
5. Petitioner filed a timely petition for review with the Commission on October 17, 1996.
6. In May of 1997, petitioner stipulated to the following facts:
A. That he was the owner, president, and sole signatory on the business checking account of Alexis;
B. That he was a person with the authority and duty to withhold, account for, and pay over the withholding taxes of employees of Alexis;
C. That he failed to cause Alexis to pay withholding taxes to respondent even though sufficient funds existed in Alexis' business checking account;
D. That he paid other creditors of Alexis, knowing that the withholding taxes at issue were not paid; and
E. That he intentionally failed to pay the withholding tax liability of Alexis.
The only issue that remained after the May 1997 stipulation was the amount of petitioner's tax liability.
7. This matter was held in abeyance for more than two years to allow Alexis to collect its accounts receivable and apply the proceeds to Alexis' withholding tax liability. During a June 1999 status conference, petitioner's representative stated that Alexis had exhausted all collection efforts.
8. If any funds were collected, they were not paid to respondent.
9. During that same June 1999 status conference, petitioner's representative conceded that there was no issue as to the amount of petitioner's liability. Petitioner's representative conceded that petitioner was liable for the amounts as determined in respondent's action on the petition for redetermination and agreed to execute a settlement stipulation to that effect.
10. In July of 1999, respondent sent a proposed settlement stipulation to petitioner's representative. When there was no response to this proposed settlement stipulation, respondent followed up with a letter in August of 1999. Again, there was no response.
11. The Commission then convened a status conference in late September 1999 to ascertain the reasons for the delay in resolving this matter despite the lack of any disagreement. Petitioner's representative reiterated that there was no issue as to petitioner's liability, including the amount of petitioner's liability. The representative stated, however, that he had mailed the stipulation to petitioner who, for unknown reasons, did not return the stipulation. In an effort to bring this matter to a close, the Commission established the December 14, 1999, trial date.
12. On November 22, 1999, respondent moved the Commission for an order adding $1,000 to the assessment pursuant to section 73.01(4)(am) of the Statutes, on the grounds that these proceedings were maintained primarily for delay and/or that the taxpayer's position in these proceedings is frivolous or groundless.
13. Neither petitioner nor his representative appeared at trial or responded to respondent's motion.
CONCLUSIONS OF LAW
1. Petitioner is liable for the withholding tax liability of Alexis because he had the authority and duty to direct payment of Alexis' taxes, and he intentionally breached this duty.
2. Petitioner is liable under section 73.01(4)(am) for an additional $750 because he maintained this proceeding primarily for delay.
APPLICABLE WISCONSIN STATUTE
73.01 Tax appeals commission.
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(4) POWERS AND DUTIES DEFINED.
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(am) Whenever it appears to the commission or, in respect to hearings conducted by one commissioner, to that commissioner that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in those proceedings is frivolous or groundless, the commission or commissioner may assess the taxpayer an amount not to exceed $1,000 at the same time that the deficiency is assessed. Those damages shall be paid upon notice from the department of revenue and shall be collected as a part of the tax.
There is no dispute about petitioner's liability for the withholding taxes owed by Alexis. Petitioner conceded his liability on numerous occasions. The only issue is whether the Commission should grant respondent's motion to add $1,000 to the assessment because of petitioner's conduct in maintaining the proceeding.
Both respondent and the Commission indulged petitioner's apparent efforts to collect amounts owing to Alexis in an effort to reduce the amounts owed to respondent. By the time petitioner was willing to concede that all collection efforts were exhausted, petitioner's own representative conceded there were no issues to litigate. Petitioner could have withdrawn his petition for review or executed a settlement stipulation. He did neither. Petitioner also failed to appear at trial or challenge respondent's motion.
In retrospect, it appears that petitioner's sole purpose in maintaining this proceeding has been to delay the inevitable conclusion. In doing so, petitioner forced the presiding Commissioner, respondent's counsel, and another employee of respondent to travel to Waukesha for trial. Therefore, we conclude that $750 should be added to the assessment to sanction petitioner for maintaining this proceeding primarily for delay.
1. Respondent's action on the petition for redetermination is affirmed;
2. Respondent's motion for sanctions is granted in part; and
3. $750 shall be added to the assessment in this matter as a sanction pursuant to section 73.01(4)(am) of the Statutes.
Dated at Madison, Wisconsin this 17th day of May, 2000.
WISCONSIN TAX APPEALS COMMISSION
Mark E. Musolf, Chairperson
Don M. Millis, Commissioner
Thomas M. Boykoff, Commissioner
ATTACHMENT: "NOTICE OF APPEAL INFORMATION"