State Bar of Wisconsin Return to Wisconsin Tax Appeals Commission





1912 N. Summit

Appleton, WI 54914




P. O. Box 8933

Madison, WI 53708-8933,


DOCKET NO. 99-D-119



This matter comes before the Commission on respondent's motion to dismiss the petition for review. Both parties have filed submissions with regard to the motion. Petitioner is represented by Hammett, Bellin & Oswald L.L.C., by Attorney Jeffrey T. Oswald. Respondent is represented by Attorney Veronica Folstad.

Based upon the submissions of the parties and the record in this matter, the Commission hereby finds, concludes, and orders as follows:


1. On March 21, 1991, respondent issued a notice of a controlled substance tax assessment in the amount of $144,420.50, plus interest ($4,332.61) and penalty ($144,420.50), against petitioner and Sherrie L. Craven.(1) The assessment was made pursuant to section 139.93(1) of the Statutes.

2. Petitioner did not contest or appeal the assessment, and the assessment became final and conclusive.

3. Respondent collected some funds from petitioner based on the assessment. The record does not indicate the amount of the funds actually collected by respondent.

4. On January 24, 1997, the Wisconsin Supreme Court held that the controlled substances tax (Wis. Stat. §§ 139.87-.96) violates the constitutionally guaranteed privilege against self-incrimination. State v. Hall, 207 Wis. 2d 54, 90 (1997).

5. On or about September 10, 1997, petitioner filed a claim for refund with respondent, seeking a refund of the amounts that had been collected on the assessment and requesting the "remaining amount due be wiped out."

6. On August 12, 1998, respondent sent a letter to petitioner denying his claim for refund.

7. On October 8, 1998, petitioner filed with respondent a petition for redetermination objecting to the denial of petitioner's claim for refund.

8. On April 8, 1999, respondent issued its notice of action letter denying the petition for redetermination.

9. On June 8, 1999, petitioner filed a petition for review with the Commission.


71.75 Claims for refund. (1) Except as provided in ss. 49.855, 71.77(5) and (7)(b) and 71.935, the provisions for refunds and credits provided in this section shall be the only method for the filing and review of claims for refund of income and surtaxes, and no person may bring any action or proceeding for the recovery of such taxes other than as provided in this section.

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(5) A claim for refund may be made within 2 years after the assessment of a tax including penalties and interest, under this chapter, assessed by office audit or field audit and paid if the assessment was not protested by the filing of a petition for redetermination.

71.88 Time for filing an appeal.

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(2) Appeal to the Wisconsin tax appeals commission.

(a) Appeal of the department's redetermination of assessments and claims for refund. A person feeling aggrieved by the department's redetermination may appeal to the tax appeals commission by filing a petition with the clerk of the commission as provided by law and the rules of practice promulgated by the commission. [E]xcept as provided in s. 71.75(5), if no petition for redetermination is made within the time provided the assessment, refund, or denial of refund shall be final and conclusive.

139.93 Appeals, presumption, administration.

(1) The taxes, penalties and interest under this subchapter shall be assessed, collected and reviewed as are income taxes under ch. 71.


The Commission lacks subject matter jurisdiction over the petition for review because petitioner filed his claim for refund more than two years following the assessment.


This matter presents a single issue: Does the Commission lack subject matter jurisdiction over the petition for review because petitioner filed his claim for refund more than two years following the assessment?

Petitioner argues that when a statute is declared unconstitutional, it is void from beginning to end. A number of Wisconsin cases have held that when an assessment is void ab initio, any statute of limitations that would preclude review of the assessment is inapplicable because there was nothing for the statute of limitations to act upon. See, e.g., Family Hosp. Nursing Home, Inc. v. Milwaukee, 78 Wis. 2d 312, 325 (1977); Wisconsin Real Estate Co. v. Milwaukee, 151 Wis. 198, 206 (1912); Chicago & N.W. Ry. Co. v. Arnold, 114 Wis. 434, 436 (1902); Smith vs. Sherry, 54 Wis. 114, 123 (1882).

In each of these cases, the statute of limitations at issue purported to operate as a bar to a lawsuit filed in a court. In contrast, the instant matter involves a proceeding before a state agency that is part of the executive branch of government, i.e., the Commission. As a state agency, the Commission's powers are strictly construed:

Few principles of law are as well established as the proposition that administrative agencies, as entities created by the legislature as part of the executive branch of government, 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 "[a]ny reasonable doubt as to the existence of an implied power should be resolved against [the agency]."

Department of Revenue v. Hogan, 198 Wis. 2d 792, 816 (Ct. App. 1995) (citations omitted).

The Hogan case involved claims for refund filed with respondent as a result of the U.S. Supreme Court's decision in Davis v. Michigan Dep't of Treasury, 489 U.S. 803 (1989). The Davis decision held that discriminatory taxation of federal retirement income violated federal law and the principles of intergovernmental tax immunity. Id. at 817. In Hogan, the Court of Appeals held that the Commission could not certify a class for purposes of pursuing claims for refund under the Davis decision. 198 Wis. 2d at 817-18. In an unusual concurring opinion, the three judges on the panel expressed concern that their decision would mean that many members of the class certified by the Commission would not be able to pursue claims because, among other things, they would be time-barred. Id. at 819. The judges urged the legislature to extend the time for filing claims. Id.

The passage excerpted above and the concurring opinion in Hogan make it clear that the Commission's powers are limited to those set forth in the statutes. Were it otherwise, the Commission could have entertained more than 30 years' worth of claims for refunds since the statute at issue in Hogan was enacted in 1965. Therefore, we conclude that the Commission may consider the petition for review only if it has explicit statutory authority to do so.

Petitioner does not argue that the statute of limitations set forth in section 71.75(5) is inapplicable.(2) Rather, petitioner argues that the statute of limitations in this section did not begin to run until the Supreme Court issued its decision in State v. Hall.

This argument ignores the plain language of the statute requiring claims for refund to be filed "within 2 years after the assessment of a tax." Petitioner's argument would rewrite the statute to require claims to be filed within 2 years after a taxpayer knew or should have known there were grounds to appeal an assessment. Were this the standard, the taxpayers in Hogan would not have faced a statute of limitations problem and could have received refunds on their pension income all the way back to 1965, when the discriminatory tax law at issue there was enacted. Since the plain language of section 71.75(5) provides that the time for filing a claim for refund runs from the date of the assessment, we disagree with petitioner's assertion that the statute of limitations did not run until the issuance of State v. Hall.

Even if, however, petitioner's view of section 71.75(5) were correct, he would not prevail. Well before the Supreme Court's decision in State v. Hall, petitioner should have known that the controlled substances tax might be susceptible to a constitutional challenge. The legislative history of the tax indicates that the legislators involved in drafting the tax were well aware of the constitutional problems posed by the tax. Hall, 207 Wis. 2d at 97-105 (Wilcox, J., dissenting). Moreover, prior to the expiration of the statute of limitations in this case, courts in other jurisdictions issued decisions based on constitutional challenges to similar tax stamp statutes. See, e.g., Nebraska v. Garza, 496 N.W.2d 448 (Neb. 1993); Zissi v. Utah Tax Comm'n, 842 P.2d 848 (Utah 1992); Minnesota v. Godbersen, 493 N.W.2d 852 (Iowa 1992); Briney v. Ala. Dep't of Revenue, 594 So. 2d 120 (Ala. Civ. App. 1991); Kansas v. Durant, 769 P.2d 1174 (Kan. 1989); Sisson v. Triplett, 428 N.W.2d 565 (Minn. 1988).

In another appeal currently pending before the Commission in which the constitutionality of the controlled substances tax is at issue, the assessment was issued on October 22, 1990; a petition for redetermination was filed November 2, 1990; the petition for redetermination was denied on May 2, 1991; and a petition for review was filed with the Commission on June 27, 1991. Dougard v. Dep't of Revenue, Docket No. 91-D-241. All of these events occurred prior to or within three months after the assessment in this case. If the petitioner in Dougard was able to challenge a controlled substances tax assessment in a timely fashion, there is no reason the present petitioner could not have done likewise. Petitioner had two opportunities to challenge the assessment. Petitioner could have objected to the assessment when it was first issued pursuant to section 71.88. Petitioner also had two years to file a claim for refund under section 71.75. Petitioner waited more than six years following the assessment to file his claim for refund.

Because the claim for refund was not made within two years following the assessment, the Commission lacks subject matter jurisdiction over the petition for review.


Respondent's motion to dismiss is granted, and the petition for review is dismissed.

Dated at Madison, Wisconsin, this 10th day of March, 2000.


Mark E. Musolf, Chairperson

Don M. Millis, Commissioner

Thomas M. Boykoff, Commissioner

ATTACHMENT: "NOTICE OF APPEAL INFORMATION" April 10, 2000 Appealed to Outagamie County Cirsuit Court (00CV296)

1 The record does not indicate whether Sherrie L. Craven appealed the March 21, 1991 assessment or subsequently claimed a refund of any amounts collected from her on that assessment. In any case, Ms. Craven is not a party to this proceeding.

2 To argue otherwise would be counterproductive. The Commission's authority is purely based in statutes. Without explicit statutory authority, such as that in section 71.75, the Commission would certainly have no subject matter jurisdiction.