There is no question that the current state of the economy is financially difficult on individuals and businesses. The same is true for the State of Wisconsin. A bad economy means that people are spending less. When people spend less, the government collects less in sales tax. Everyone is looking for more revenue and looking to spend less. As a result, there is an up tick in the amount of cases that are being challenged by taxpayers in the Wisconsin Tax Appeals Commission.
Jane Pribek of the Wisconsin Law Journal recently reported that the Tax Appeals Commission expects the number of cases continue to grow through 2010 (Tax appeals expected to increase, Dec. 7, 2009). Ms. Pribek also notes that the complexity of these cases continues to increase.
The increase in cases tells me that the Wisconsin Department of Revenue is looking to increase revenues by broadening the interpretation of the tax statutes. It also tells me that people are more likely to fight to hang onto their money as their audits move through the system.
The Wisconsin tax system works like this:
(1) a taxpayer is audited,
(2) if the taxpayer is dissatisfied with the result of the audit, he/she can appeal to the Resolution Unit of the Department of Revenue,
(3) if dissatisfied with the result of the appeal, the case can be challenged in the Tax Appeals Commission,
(4) after the Tax Appeals Commission a case can be further contested in the local circuit court, and
(5) after the circuit court, a case can go to the Wisconsin Court of Appeals and then potentially the Wisconsin Supreme Court.
Going through this whole procedure takes years. As a result, I expect that the next thing we’ll is going to be an increase in the number of tax cases jamming up an already crowded circuit court system. Over the next few years we’ll see cases moving through the appellate courts too. Because these cases are more complex, perhaps we can expect to see more and more significant tax caselaw development over the next 5 years.
Why? Because of the bad economy today.