(1) DEPARTMENT DUTIES AND POWERS.
(a) The department shall assess incomes as provided in this chapter and in performance of such duty the department shall possess all powers now or hereafter granted by law to the department in the assessment of personal property and also the power to estimate incomes.
(b) In any case of 2 or more organizations, trades or businesses (whether or not incorporated, whether or not organized in the United States, whether or not affiliated, and whether or not unitary) owned or controlled directly or indirectly by the same interests, the secretary or the secretary’s delegate may distribute, apportion or allocate gross income, deductions, credits or allowances between or among such organizations, trades or businesses, if the secretary determines that such distribution, apportionment or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades or businesses. The authority granted under this subsection is in addition to, and not a limitation of or dependent on, the provisions of sub.
(23) and ss. 71.05 (6)
(a) 24. and (b) 45., 71.26 (2)
(a) 7. and 8., 71.34 (1k)
(j) and (k), and 71.45 (2)
(a) 16. and 17.
(c) The department may make such regulations as it shall deem necessary in order to carry out this chapter.
(d) The department may employ such clerks and specialists as are necessary to carry into effective operation this chapter. Salaries and compensations of such clerks and specialists shall be charged to the proper appropriation for the department.
(e) Representatives of the department directed by it to accept payment of income or franchise taxes shall file bonds with the secretary of administration in such amount and with such sureties as the state treasurer shall direct and approve.
(1m) TRANSACTIONS WITHOUT ECONOMIC SUBSTANCE.
(a) If any person, directly or indirectly, engages in a transaction or series of transactions without economic substance to create a loss or to reduce taxable income or to increase credits allowed in determining Wisconsin tax, the department shall determine the amount of a taxpayer’s taxable income or tax so as to reflect what would have been the taxpayer’s taxable income or tax if not for the transaction or transactions without economic substance causing the reduction in taxable income or tax.
(b) A transaction has economic substance only if the transaction is treated as having economic substance as determined under section 7701 (o) of the Internal Revenue Code, except that the tax effect shall be determined using federal, state, local, or foreign taxes, rather than only the federal income tax effect.
(c) With respect to a transaction between members of a controlled group, as defined in section 267 (f)
(1) of the Internal Revenue Code, the transaction shall be presumed to lack economic substance, and the taxpayer shall bear the burden of establishing by clear and satisfactory evidence that the transaction or the series of transactions between the taxpayer and one or more members of the controlled group has economic substance.
(2) NOTICE TO TAXPAYER BY DEPARTMENT. The department shall notify each taxpayer of the amount of income or franchise taxes assessed against the taxpayer and of the date when the taxes become delinquent.
(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. No person has any right INCOME AND FRANCHISE TAXES 71.80175 to, or interest in, any overpayment, refundable credit, or refund, including any interest allowed, under this chapter until setoff under ss. 49.855, 71.93, and 71.935 has been completed. The department shall presume that the overpayment, refundable credit or refund is nonmarital property of the filer. Within 2 years after the crediting, the spouse or former spouse of the person filing the return may file a claim for a refund of amounts credited by the department if the spouse or former spouse shows by clear and convincing evidence that all or part of the state tax overpayment, refundable credit or refund was nonmarital property of the nonobligated spouse.
(3m) CREDITING OF OVERPAYMENTS ON JOINT RETURNS. For married persons, unless within 20 days after the date of the notice under par.
(c) the nonobligated spouse shows by clear and convincing evidence that the overpayment, refundable credit or refund is the nonmarital property of the nonobligated spouse, notwithstanding s. 766.55 (2) (d), the department may credit overpayments, refundable credits and refunds, including any interest allowed, resulting from joint returns under this chapter as follows, except that no person has any right to, or interest in, any overpayment, refundable credit, or refund, including any interest allowed, under this chapter until setoff under ss. 49.855, 71.93, and 71.935 has been completed:
(a) Against any liability of either spouse or both spouses in respect to an amount owed the department, a certification under s. 49.855 that is subject to s. 766.55 (2)
(b) or a debt under s. 71.93 or 71.935 that is subject to s. 766.55 (2)
(b) and that was incurred during marriage by a spouse after December 31, 1985, or after both spouses are domiciled in this state, whichever is later, except as provided in s. 71.10 (6)
(a) and (b) and (6m).
(b) Against the liability of a spouse in the proportion that the Wisconsin adjusted gross income which would have been the property of the spouse but for the marriage has to the adjusted gross income of both spouses as follows: 1. In respect to an amount owed the department that was incurred before January 1, 1986, or before marriage, whichever is later. 2. In respect to a debt under s. 71.93 or 71.935 or a certification under s. 49.855 if that debt or certification is not subject to s. 766.55 (2) (b). 3. In respect to an amount subject to s. 71.10 (6)
(a) and (b) and (6m) (a).
(c) If the department determines that a spouse is otherwise entitled to a state tax refund or homestead or farmland credit, it shall notify the spouses under s. 71.74 (11) that the state intends to reduce any state tax refund or a refundable credit due the spouses by the amount credited against any liability under par.
(a) or (b) or both.
(d) If a spouse does not receive notice under par.
(c) and if the department incorrectly credits the state tax overpayment, refund or a refundable credit of a spouse or spouses against a liability under par.
(a) or (b) or both, a claim for refund of the incorrectly credited amount may be filed under s. 71.75 (5) within 2 years after the date of the offset that was the subject of the notice under par. (c).
(4) PENALTIES. Unless specifically provided in this subchapter, the penalties under subch. XIII apply for failure to comply with this subchapter unless the context requires otherwise.
(5) PENALTIES NOT DEDUCTIBLE. No penalty imposed by this chapter, or by subch. III of ch. 77 may be deducted from gross income in arriving at net income taxable under this chapter.
(6) PROSECUTIONS BY ATTORNEY GENERAL. The attorney general is authorized, upon the request of the secretary of revenue, to represent the state or to assist the district attorney in the prosecution of any case arising under s. 71.83 (2)
(a) 1. and (b) 1. and 2.
(6m) VENUE. A proceeding for a criminal violation under this chapter may be brought in the circuit court for Dane County or for the county in which the defendant resides or is located when charged with the violation.
(7) PUBLICATION OF NOTICES IN ADMINISTRATIVE REGISTER. The department shall annually publish notice of the standard deduction amounts and the brackets for the individual income tax in the administrative register.
(8) RECEIPT FOR PAYMENT OF TAXES. The department shall accept payments of income or franchise taxes in accordance with this chapter, and upon request shall give a printed or written receipt therefor.
(9) RECORDS MAY BE REQUIRED OF TAXPAYER. Whenever the department deems it necessary that a person subject to an income or franchise tax should keep records to show whether or not the person is liable to tax, the department may serve notice upon the person and require such records to be kept as will include the entire net income of the person and will enable the department to compute the taxable income. The department may require any person who keeps records in machine-readable form for federal income tax purposes to keep those records in the same form for purposes of the taxes under this chapter.
(9m) FAILURE TO PRODUCE RECORDS.
(a) A person who fails to produce records or documents, as provided under s. 71.74 (2), that support amounts or other information required to be shown on any return required under this chapter and fails to comply in good faith with a summons issued pursuant to s. 73.03 (9) seeking those records and documents may be subject to any of the following penalties, as determined by the department, except that the department may not impose a penalty under this subsection if the person shows that under all facts and circumstances the person’s response, or failure to respond, to the department’s request was reasonable or justified by factors beyond the person’s control: 1. The disallowance of deductions, credits, exemptions, or income inclusions to which the requested records relate. 2. In addition to any penalty imposed under sub. (4), a penalty for each violation of this subsection that is equal to the greater of $500 or 25 percent of the amount of the additional tax on any adjustment made by the department that results from the person’s failure to produce the records.
(c) 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.