STATE OF
WISCONSIN
TAX APPEALS COMMISSION
WISCONSIN ASSOCIATION OF DOCKET
NO. 17-J-060
CAMPGROUND OWNERS, INCORPORATED,
Petitioner,
vs.
WISCONSIN DEPARTMENT OF REVENUE,
Respondent.
RULING & ORDER
Per Curiam.
This case comes before the Commission for decision on
motions for summary judgment. The
Petitioner, the Wisconsin Association of Campground Owners, Incorporated
("WACO"), of Ettrick, Wisconsin, is represented in this
matter by Attorney Don M. Millis of Reinhart Boerner Van Deuren,
s.c. The
Respondent, the Wisconsin Department of Revenue (“the Department”), is
represented by Attorney Kelly A. Altschul.
We conclude that we lack subject matter jurisdiction and, therefore, we
dismiss the Petition for Review.
FACTS
The
Department submitted Proposed Findings of Fact, dated August 31, 2017, which
were taken largely from the Petitioner’s Petition for Review. In its initial
brief filed with the Commission on December 20, 2017, the Petitioner stated
that it had no objection to the Department’s Proposed Findings of Fact. The Commission adopts those portions of the
Proposed Findings of Fact it considers relevant as the facts in this case.
1.
WACO is a
Wisconsin non-stock corporation whose members own recreational mobile
homes. (Proposed Findings of Fact
(“PFF”) ¶ 1.)
2.
The Department is
charged with, among other things, administering and enforcing Chapter 70 of the
Wisconsin Statutes and, as part of its responsibility to administer and enforce
Chapter 70, has provided guidance to assessors and taxpayers regarding the
elements of the exemption for recreational mobile homes found in Wis. Stat. §
70.111(19). (PFF ¶ 2.)
3.
On September 22,
2016, WACO submitted to the Department a Petition for Declaratory Ruling
Regarding the Applicability of Wis. Stat. § 70.111(19). (PFF ¶ 13.)
4.
The Department
issued a Declaratory Ruling on January 13, 2017. (PFF ¶ 15.)
5.
The Department's
Declaratory Ruling takes the position that property
meeting the definition of a recreational mobile home, as defined by Wis. Stat.
§ 66.0435(1)(hm), must be classified as personal property
in order to qualify for the property tax exemption under Wis. Stat. §
77.111(19). (PFF ¶ 16.)
6.
WACO filed a
timely Petition for Review of Declaratory Ruling, dated March 10, 2017, which
was received by the Wisconsin Tax Appeals Commission on that date. (PFF ¶ 17, Commission
file.)
7.
The parties filed cross-motions for summary
judgment in this matter, along with supporting briefs. After reviewing the parties’ briefs, the
Commission scheduled a telephone conference with the parties to discuss the
Commission’s concerns that it may not have subject-matter jurisdiction. (Commission file.)
8.
During that
telephone conference, the Commission spoke with the parties about its jurisdictional
concerns, and the parties expressed their view that the Commission did have
statutory jurisdiction over the matter.
The parties agreed that they would file a joint brief on the issue of
jurisdiction. (Commission file.)
9.
On September 24,
2018, WACO filed a brief supporting its contention that the Commission had subject-matter
jurisdiction over the controversy raised by its Petition for Review. (Commission file.)
10.
By email message
sent by Attorney Altschul to the Commission on September 28, 2018, the
Department informed the Commission that it agreed with the position taken by
the Petitioner in its brief and had nothing more to add. (Commission file.)
APPLICABLE LAW
Wis. Stat. § 73.01(4)(a)
(4)
Powers and duties defined.
(a)
Subject to the provisions for judicial review contained in s. 73.015, the
commission shall be the
final authority for the hearing and determination of all questions of law and
fact arising under sub. (5) and s. 72.86 (4), 1985 stats., and ss. 70.38 (4)
(a), 70.397, 70.64, and 70.995 (8), s. 76.38 (12) (a), 1993 stats., ss. 76.39
(4) (c), 76.48 (6), 77.26 (3), 77.59 (5m) and (6) (b), 78.01, 78.22, 78.40,
78.555, 139.02, 139.03, 139.06, 139.31, 139.315, 139.33, 139.76, 139.78,
341.405, and 341.45, subch. XIV of ch. 71, and subch. VII of ch. 77.
Wis. Stat. § 73.01(5)(a)
(5) Appeals to commission.
(a) Any person who is aggrieved by a determination of the state board of
assessors under s. 70.995 (8) or who has
filed a petition for redetermination with the department of revenue and who is
aggrieved by the redetermination of the department of revenue may, within 60
days of the determination of the state board of assessors or of the department
of revenue or, in all other cases, within 60 days after the redetermination but
not thereafter, file with the clerk of the commission a petition for review of
the action of the department of revenue and the number of copies of the
petition required by rule adopted by the commission.
Wis. Stats. §§ 74.35(2) and (2m)
(2) Claim against taxation district.
(a) A person aggrieved by the levy and collection of an unlawful tax assessed
against his or her property may file a claim to recover the unlawful tax
against the taxation district which collected the tax.
(b) A claim filed under this section shall meet all of the following
conditions:
1. Be in writing.
2. State the alleged circumstances giving rise to the claim, including the
basis for the claim as specified in s. 74.33 (1) (a) to (e).
3. State as accurately as possible the amount of the claim.
4. Be signed by the claimant or his or her agent.
5. Be served on the clerk of the taxation district in the manner prescribed
in s. 801.11 (4).
(2m) Exclusive procedure. A claim that property is exempt, other than a claim
that property is exempt under s. 70.11 (21) or (27), may be made only in an
action under this section. Such a claim may not be made by means of an action
under s. 74.33 or an action for a declaratory judgment under s. 806.04.
Wis. Stat. § 227.41(1)
Declaratory rulings.
(1) Except as provided in sub. (5), any agency may, on petition by any
interested person, issue a declaratory ruling with respect to the applicability
to any person, property or state of facts of any rule or statute enforced by
it. Full opportunity for hearing shall be afforded to interested parties. A
declaratory ruling shall bind the agency and all parties to the proceedings on
the statement of facts alleged, unless it is altered or set aside by a court. A
ruling shall be subject to review in the circuit court in the manner provided
for the review of administrative decisions.
Wis. Stat. § 227.41(5)(a)
(a) The department of revenue shall, on petition by any interested person, or
any group or association of interested persons, issue a declaratory ruling with
respect to the applicability to any person, property, or state of facts of any
rule or statute enforced by it. The department of revenue may issue a
declaratory ruling on the facts contained in the petition. If the department of
revenue does not deny the petition or issue a declaratory ruling on the facts
contained in the petition, the department of revenue shall hold a hearing, as
provided under s. 227.44, and shall afford all interested parties an
opportunity to participate in the hearing. A declaratory ruling shall bind the
department and all parties to the proceedings on the statement of facts
contained in the ruling, unless it is altered or set aside by the tax appeals
commission or a court or the applicable rule or statute is repealed or
materially amended. A ruling, including the denial of the petition, shall be
subject to review by the tax appeals commission as provided in ch. 73.
ANALYSIS
The
Petitioner is seeking the Commission’s review of the Department’s declaratory
ruling that property meeting the definition of “recreational mobile home,” as
defined by Wis. Stat. § 66.0435(1)(hm), must be classified as personal
property under Wis. Stat. §
70.043 to qualify for the property tax exemption under Wis. Stat. § 70.111(19). After the Commission had received and
reviewed the parties’ briefs on the underlying issues, the Commission
questioned whether it had subject matter jurisdiction over the case. Both the Petitioner and the Department
believe the Commission does indeed have jurisdiction and the Petitioner filed a
brief arguing its point. The Department
stated that it agreed with the arguments made in the Petitioner’s brief, and
that it had nothing to add. For the
reasons stated below, we determine that the Commission lacks jurisdiction over
the subject matter of the Petitioner’s appeal.
Section
227.41(5) of the Wisconsin Statutes governs the issuance of declaratory rulings
by the Department. It was enacted as part of 2011 Wis. Act 68, which made
a number of changes related to “various duties of the department of revenue,”
and became effective on March 1, 2012.[1]
This case is the first appeal brought to the Commission under the statute.
Prior to the enactment of Wis. Stat. § 227.41(5), Wis. Stat. § 227.41, generally, provided for the issuance of
declaratory rulings by administrative agencies. Section 227.41(1) stated
that “Any agency may,
on petition by any interested person, issue a declaratory ruling with respect
to the applicability to any person, property or state of facts of any rule or
statute enforced by it. … A ruling shall be
subject to review in the circuit court in the manner provided for the review of
administrative decisions.” Section 227.41(1) now
starts with the words “Except as provided in sub. (5)…” Section
227.41(5)(a) provides, in part, “The department of revenue shall, on
petition by any interested person, or any group or association of interested
persons, issue a declaratory ruling with respect to the applicability to any
person, property, or state of facts of any rule or statute enforced by it. … A
ruling, including the denial of the petition, shall be subject to review by the
tax appeals commission as provided in ch. 73.”
The Commission is an administrative agency whose powers
and jurisdiction are defined and limited by Chapter 73 of the Wisconsin Statutes. Wisconsin Statute Section 73.01(4)(a) states, “Subject to the provisions for
judicial review contained in s. 73.015, the commission shall be the final
authority for the hearing and determination of all questions of law and fact
arising under [specifically enumerated provisions of the Wisconsin
statutes].” While, under Wis. Stat. § 73.01(4)(a), the Commission has broad
jurisdiction over Wisconsin income, franchise, sales, use, and excise taxes,
the Commission has very limited jurisdiction over property taxes. In general, the Commission has jurisdiction
only over appeals related to the valuation or exemption of manufacturing
property. Wis. Stat. § 70.995. Appeals of other personal or real property
tax matters generally go to local boards of review and then on to circuit
court. Wis. Stat. § 70.47. The tax and exemption issues which are the
subject of the Department’s declaratory ruling the Petitioner is appealing are
not ones over which the Commission has jurisdiction under Wis.
Stat. § 73.01(4)(a). Nevertheless,
both the Petitioner and the Department claim the Commission has jurisdiction to
review the Department’s declaratory ruling because Wis.
Stat. § 227.41(5), in their view, grants the Commission the power to review
all declaratory rulings issued by the Department under the statute, regardless
of whether the Commission would otherwise have jurisdiction over the subject
matter of the ruling.
In contrast to the Commission’s limited jurisdiction,
the Department’s powers and responsibilities are broad and varied. In addition to administering (or, in the case
of many property tax matters, participating with municipalities in
administering) nearly every Wisconsin tax,[2]
the Department is also tasked with the administration of the Wisconsin lottery[3]
and the Wisconsin unclaimed property act.[4] The question ultimately is, given the broad
authority of the Department and the relatively limited jurisdiction of the
Commission, is the Commission truly tasked by the legislature with reviewing
declaratory rulings issued by the Department on topics outside the Commission’s
statutory jurisdiction, such as the lottery, residential property tax, or
unclaimed property issues?
For example, should the Commission be deciding whether
the Department properly ruled on whether an expunged felony conviction in
another state should preclude someone from being allowed to sell lottery
tickets in Wisconsin? Or whether a room without a closet can ever be
considered a bedroom? Or, for unclaimed property purposes, whether a
felon can reclaim his own firearm? These are all questions upon which the
Department could issue declaratory rulings. By providing in Wis. Stat. §
227.41(5) that declaratory rulings of the Department would be reviewed by the
Commission “as provided in ch. 73,” did the
legislature really intend that the Commission would or should review a ruling
on an issue that would never come before it absent a declaratory ruling and, in
many instances, over which it has no particular expertise or experience? We think not.
In DOR v. Hogan, 198 Wis. 2d 792, 543 N.W.2d 825
(Ct. App. 1995), the Wisconsin court of appeals held that the Commission did
not have the authority to entertain a class action proceeding seeking refunds
of state income taxes collected on federal pensions. The Hogan court stated,
Few principles of law are as well established as the
proposition that administrative agencies, … have only such powers as are
expressly granted to them by the legislature, or as may be necessarily implied
from the applicable statutes.... In determining the nature and scope of an
agency's powers, its enabling statutes are to be “strictly construed to
preclude the exercise of a power not expressly granted,” and “any reasonable
doubt as to the existence of an implied power should be resolved against the
agency.”
Id., at 816.
We do not believe
that in drafting Wis. Stat. § 227.41(5) the Wisconsin legislature intended to
grant the Commission power and authority over matters not otherwise within the
power and authority granted under Chapter 73.
There were no amendments made by 2011 Wis. Act 68 to Wis. Stat. §
73.01(4) describing the powers and duties of the Commission, for example,
adding language like “review declaratory rulings of the department of
revenue.” Further, Wis. Stat. §
73.01(5)(a) provides, “Any person who is aggrieved by a determination of the
state board of assessors under s. 70.995 (8) or who has filed a petition for
redetermination with the department of revenue and who is aggrieved by the
redetermination of the department of revenue may, within 60 days of the
determination of the state board of assessors or of the department of revenue
or, in all other cases, within 60 days after the redetermination but not
thereafter, file with the clerk of the commission a petition for review of the
action of the department of revenue….” There is no mention of
declaratory rulings, especially on issues outside of the Commission’s
jurisdiction under Section 73.01(4)(a). There were no amendments made by
2011 Wis. Act 68 to 73.01(5) describing who can appeal to the Commission, for
example, adding language like “any person aggrieved by a declaratory ruling of
the department of revenue.” We are not comfortable making a power grab
that is not more clearly justified by the express language of the statutes.
The parties offer three principal arguments to support
their view that Wis. Stat. § 227.41(5) confers on the Commission exclusive
jurisdiction to review all
declaratory rulings of the Department.
First, the parties state that the express language confers that
exclusive jurisdiction. This conclusion,
however, simply ignores the implications of the specific reference to Chapter
73 of the statutes which, as we have noted, outlines the limited power and
jurisdiction of the Commission.
Next, the parties argue that, if the Commission does not
accept jurisdiction over this matter, the Petitioner has no ability to obtain a
review of the Department’s declaratory ruling.
This is, they say, an absurd result and the statute should be construed
to avoid it. This argument is a non sequitur. It assumes the Commission has exclusive
jurisdiction over the review of all Department declaratory rulings in order to
conclude the Commission has such jurisdiction.
However, Wis. Stat. § 227.41(1) begins with the phrase “Except as
provided in sub. (5)” and goes on to provide that “any agency may … issue a
declaratory ruling,” and that “A ruling shall be subject to review in the circuit
court ….” Subsection (5) provides for
the issuance of declaratory rulings by the Department and states that a ruling
by the Department “shall be subject to review by the tax appeals commission as
provided in ch. 73.”
As we read Wis. Stat. §
227.41(1), “Except as provided in sub. (5)” applies to both the issuance and
review of declaratory rulings.
Consequently, if the Commission does not have statutory jurisdiction
over the subject matter of the ruling, the circuit court has jurisdiction to
review it. This construction of the
statute avoids both the absurd result of the ruling being unreviewable, as well
as the absurd result of the Commission exercising jurisdiction over subject
matter for which it has no jurisdiction under Chapter 73.
Finally, the parties assert that the jurisdiction of the
Commission to review the Department’s declaratory rulings is not limited by
Chapter 73, because, as stated in the Petitioner’s brief, “It is clear that the
reference to ‘ch. 73’ in the last sentence of Wis. Stat. § 227.41(5)(a) refers to the procedural
provisions of chapter 73.” What they
claim, however, is far from clear. There
is nothing in the reference to Chapter 73 that would exclude application of the
jurisdictional provisions of the Chapter.
Moreover, there is hardly a concept more fundamental to procedure than
jurisdiction. While jurisdictional
provisions are spread through the Wisconsin Statutes, Chapter 801, the very
first chapter in Wisconsin’s civil procedure law, contains numerous sections
related to the jurisdiction of various courts and agencies, referring to the
term “jurisdiction” no fewer than 129 times.
The notion that the reference to Chapter 73 in Wis. Stat. § 227.41(5)(a)
is intended to exclude the extensive jurisdictional provisions of the Chapter
and grant the Commission powers not otherwise granted by the Chapter is
unsupported by either the language of the statute or reason.
There is another potential jurisdictional issue raised
by the language of Wis. Stat. § 74.35(2), which provides a procedure for
challenging the imposition of tax, and Wis. Stat. § 74.35(2m) which states: “A
claim that property is exempt … may be made only in an action under this
section. Such a claim may not be made by
means of an action under s. 74.33 or an action for a declaratory judgment under
s. 806.04.” These statutes create some doubt as to whether a claim that
real property, which otherwise meets the definition of a recreational mobile
home, is exempt under Wis. Stat. § 70.111(19), can be pursued through a declaratory
ruling under Wis. Stat. § 227.41(5). Because we conclude that the circuit court,
not the Commission, has jurisdiction over this matter, we leave this issue to
the court.
CONCLUSIONS OF LAW
1.
The Commission’s power to
review declaratory rulings issued by the Department under Wis. Stat. §
227.41(5) is limited to matters within the Commission’s jurisdiction under
Chapter 73.
3.
The Commission
lacks subject matter jurisdiction over the Petitioner’s appeal.
ORDER
The Petitioner’s Petition for
Review is hereby dismissed.
Dated at Madison, Wisconsin,
this 14th day of March, 2019.
WISCONSIN TAX APPEALS COMMISSION
(DID NOT PARTICIPATE)
Elizabeth Kessler, Chair
Lorna Hemp Boll, Commissioner
David L.
Coon, Commissioner
ATTACHMENT: NOTICE OF APPEAL INFORMATION