STATE OF WISCONSIN
TAX APPEALS COMMISSION
ALLEN G. BEDYNEK
P.O. Box 44771
Madison, WI 53744,
WISCONSIN DEPARTMENT OF REVENUE
P.O. Box 8907
Madison, WI 53708-8907,
|DOCKET NO. 01-I-218
DECISION AND ORDER
DON M. MILLIS, COMMISSION CHAIRPERSON:
This matter came before the Commission for trial on July 2, 2002. Both parties have filed post-hearing submissions. Petitioner represents himself. Respondent appears by Attorney Kenneth J. Artis.
Based upon the evidence received at trial, the submissions of the parties, and the entire record in this matter, the Commission finds, concludes, and orders as follows:
FINDINGS OF FACT
1. On petitioner's 1995 Wisconsin income tax return, petitioner reported total income of $8,040. All of this income was reported on Line 5 of Form 1A, which consists of IRA distributions, pensions and annuities, and social security benefits.
2. Based on his 1995 return, petitioner paid no Wisconsin income tax. Moreover, petitioner claimed and received a Homestead tax credit in the amount of $1,160.
3. On petitioner's 1996 Wisconsin income tax return, petitioner reported total income of $4,143. All of this income was reported on Line 5 of Form 1A, which consists of IRA distributions, pensions and annuities, and social security benefits.
4. Based on his 1996 return, petitioner paid no Wisconsin income tax. Moreover, petitioner claimed and received a Homestead tax credit in the amount of $1,160.
5. In December of 2000, petitioner asked for a "tax clearance certificate" or other written documentation that he had a zero balance owing to respondent. Under the date of January 4, 2001, respondent issued an "Occupation License Delinquent Tax Release" that provided, in part:
This is to certify that an examination of the delinquent tax roll of the Department of Revenue has been made and as of this date, the person named above is not liable for delinquent taxes.
Attached to the document was a "Statement of Delinquent Tax Account" that showed petitioner had a zero balance.
6. Respondent received documentation from the Internal Revenue Service indicating that in 1995 and 1996, petitioner received substantially more income than he reported. Based on these documents, respondent determined that petitioner received $24,175 in taxable income in 1995 (as opposed to $8,040 reported) and $24,634 in taxable income in 1996 (as opposed to $4,143 reported).
7. Under the date of February 28, 2001, petitioner filed Homestead tax credit claims for 1998 and 1999, claiming a credit of $1,160 in each year.
8. Under the date of April 9, 2001, respondent issued an income tax assessment against petitioner for 1995, 1996, 1998, and 1999. Based on the documentation of unreported income received by petitioner, respondent determined that petitioner owed $991 in additional income tax in 1995 and $993 in additional tax in 1996, and that petitioner was not entitled to the Homestead tax credits that he received in 1995 and 1996.
9. Respondent's assessment also determined that petitioner was properly entitled to the Homestead tax credits claimed for 1998 and 1999; however, respondent withheld the amount of these credits to be offset against the amounts assessed for 1995 and 1996. After applying the offset, the amount of the assessment as of April 9, 2001, was $1,984 of tax, a negligence penalty of $1,076, and interest of $1,291.35.
10. Petitioner filed a timely petition for redetermination with respondent objecting to the assessment.
11. Under the date of October 15, 2001, respondent issued a notice of action letter denying the petition for redetermination.
12. Petitioner filed a timely petition for review with the Commission.
71.55 General provisions.
(1) APPLICATION OF CREDIT AGAINST ANY LIABILITY. The amount of any claim otherwise payable under this subchapter may be applied by the department of revenue against any amount certified to the department under s. 71.93 or 71.935 or may be credited under s. 71.80(3) or (3m).
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71.80 General administrative provisions.
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(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. . . .
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71.89 Appeal procedures.
(1) If the taxpayer requests a hearing, the additional tax or over-payment shall not become due and payable until after hearing and determination of the tax by the tax appeals commission or disposition of the appeal pursuant to stipulation and order under ss. 73.01(4)(a) and 73.03(25).
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(3) As soon as the appellant shall have filed a petition with the tax appeals commission, all collection proceedings, except proceedings under s. 71.74(14), shall be stayed until final determination of the appeal and any review thereof.
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CONCLUSIONS OF LAW
1. Petitioner has failed to offer any credible or substantial evidence showing that the assessment issued by respondent is incorrect.
2. Prohibitions on collection activity during the pendency of an appeal before the Commission do not apply to offsets withheld by respondent as part of an income tax assessment prior to appealing respondent's action to the Commission.
3. The assessment with respect to petitioner's 1995 and 1996 income tax returns was timely because the assessment was issued within 6 years of the filing of each return and petitioner reported less than 75% of the amount of income properly assessable.
4. The issuance, 95 days prior to the assessment, of a "clearance letter" by respondent stating that the balance of petitioner's delinquent tax account was zero, did not preclude respondent from issuing the income tax assessment against petitioner.
Petitioner raises multiple arguments, most of which lack merit on their face. We will address those that have at least some merit.
Adequacy of Respondent's Documentation
Petitioner claims that respondent has failed to demonstrate that the documentation from the Internal Revenue Service justifies the assessment. The Commission informed petitioner during a pre-trial scheduling conference and at the commencement of the hearing that respondent's assessment is presumed correct and that petitioner bears the burden of showing that the assessment is incorrect. See, Woller v. Dep't of Taxation, 35 Wis. 2d. 227, 232 (1967).
Petitioner presented absolutely no evidence that the documentation relied upon by respondent is less than reliable. Petitioner has not even directly denied receiving the additional income. All petitioner has done is to assert, without evidence or authority,
that the documents are unreliable, erroneous or incorrect.(1)
Respondent provided to petitioner copies of the documents obtained from the Internal Revenue Service. These documents identified the sources of the additional retirement income that was the basis of the assessment. Petitioner had ample opportunity to contact these sources, both of which are located in Wisconsin and one of which is located in Madison, to establish that there was an error and that the amounts were never paid to petitioner. Petitioner admitted that he made no such effort.
Petitioner complains that respondent improperly withheld the Homestead tax credit payments for which he was eligible in 1998 and 1999. He points to sections 71.89(1) and (3) of the statutes, which stay most of respondent's collection efforts once a hearing has been requested or an appeal has been filed with the Commission. However, the collection activities in this case occurred prior to the filing of the appeal. Moreover, sections 71.55(1) and 71.80(3) clearly provide that respondent may offset the amount of an otherwise proper Homestead tax credit claim against a liability owing to respondent.
Prior Circuit Court Action
On December 16, 1997, the Commission dismissed petitioner's petition for review in Docket No. 97-I-318-SC, a small claims case involving tax year 1992. Petitioner filed a petition for rehearing with the Commission which was denied on January 7, 1998. Petitioner then appealed the Commission's decision to the Dane County Circuit Court.
During the pendency of the appeal before either the Commission or the Circuit Court, respondent commenced collection activity against petitioner. Apparently, some official with respondent believed that the assessment that was the subject of the appeal before the Commission had become final and conclusive. At some point, respondent withheld a refund owing to petitioner in the amount of $753.96. On February 26, 1998, petitioner moved the Circuit Court for an injunction seeking the return of the amount withheld plus other remedies and sanctions. Respondent soon realized it had acted in error, and, on March 3, 1998, respondent issued a check to petitioner in the amount of the refund that had been withheld.
Petitioner argues that the episode in 1998 is binding on respondent. However, the two situations are entirely different. Both sections 71.89(1) and (3) hinge upon the taxpayer either requesting a hearing or filing a petition for review. In 1997, petitioner had filed a petition for review with the Commission. The collection action taken in the present case occurred prior to either the filing of a petition for review or the request for a hearing.
Statute of Limitations
Petitioner complains that the assessment in this case was issued more than 4 years after the tax returns for 1995 and 1996 were filed. Ordinarily, the statute of limitations for income tax assessments is 4 years following the date the return was filed. Wis. Stat. § 71.77(2). However, if the taxpayer reported less than 75% of the income properly assessable, then the statute of limitations is 6 years following the date the return was filed. Wis. Stat. § 71.77(7)(a).
The assessment was issued on April 9, 2001. Petitioner's 1995 income tax return was dated January 1, 1996 (the record does not indicate the date thereafter on which it was filed), and petitioner's 1996 income tax return was filed on April 4, 1997. Both returns were filed less than 6 years prior to the assessment. With respect to 1995, respondent determined petitioner's taxable income was $24,175, but petitioner had reported only $8,040, or 33%, of the assessed amount. As for 1996, respondent determined petitioner's taxable income was $24,634, but petitioner had reported only $4,143, or 17%, of the assessed amount. Thus, respondent has satisfied the criteria to apply the 6-year statute of limitations.
Petitioner argues that because respondent issued the tax clearance letter and the Statement of Delinquent Tax Account in January 2001, respondent was precluded from issuing the assessment in this case. These documents pertained only to delinquencies on record at that time with respondent. These documents cannot be read to mean that petitioner had no potential liability that would not emerge if he were assessed.
Respondent's Treatment of Petitioner
Petitioner has gone on at length, both at the hearing and in post-hearing briefs, to complain about the tactics of respondent's counsel and its resolution officer as intimidating and verbally abusive. The Commission saw no evidence of any malice or inappropriate behavior by respondent's personnel. Even so, the Commission's role is not to regulate respondent's treatment of taxpayers, except to the extent it directly affects the litigation of appeals before the Commission. The Commission's role is to determine whether an assessment or refund claim was correct or incorrect de novo, not to sit in judgment of respondent's manners vis-à-vis taxpayers.
Bias of the Commission
Petitioner makes a number of unsupported claims to support his assertion that the Commission is biased in favor of respondent.(2) One of these claims is that respondent received a free copy of the hearing transcript. This is false. Respondent pays for hearing transcripts. In this case, respondent paid $162 for its copy of the hearing transcript. It was petitioner who received a free transcript, based on his claim of poverty. It should be noted that the Commission rarely provides transcripts free of charge to taxpayers. Petitioner cites no credible evidence of bias in favor of respondent.
After wading through petitioner's myriad of arguments and complaints, this case boils down to a simple holding. Petitioner has simply not offered any credible or substantial evidence showing that the assessment was incorrect. Therefore, the assessment must be sustained.
Respondent's action on the petition for redetermination s affirmed.
Dated at Madison, Wisconsin, this 11th day of June, 2003.
WISCONSIN TAX APPEALS COMMISSION
Don M. Millis, Commission Chairperson
Thomas M. Boykoff, Commissioner
ATTACHMENT: "NOTICE OF APPEAL INFORMATION"
July 10, 2003 Appealed to Dane County Circuit Court(03CV2041)
July 28, 2003 Petition for rehearing denied pursuant to s 227.49(3)
1 The closest petitioner came to rebutting respondent's assessment was to testify, without documentation, that "those moneys were not received." However, based on petitioner's constant evasions and sly use of language, the Commission can only interpret this statement as meaning those precise amounts were not received. It could be that slightly more or slightly less was received.