Current through August 26, 2024
(1) GENERAL.
(a) Under s.
77.61(2) (a), Stats., the department may require a
person liable for sales and use taxes to make a security deposit before or
after a seller's permit is issued. The amount of the security deposit
determined by the department may not exceed $15,000. If a person fails or
refuses to make a security deposit as requested, the department may refuse to
issue a permit or revoke the permit.
(b) As provided in s.
77.61(2) (b), Stats., a certified service provider who
has contracted with a seller and filed an application to collect and remit
sales and use taxes on behalf of the seller shall submit a surety bond within
60 days after the department notifies the certified service provider that the
certified service provider is registered to collect Wisconsin sales and use
taxes, to guarantee the payment of such sales and use taxes. However, the
secretary of revenue or the secretary's designee may waive this requirement or
release the liability with respect to any certified service provider.
(2) FACTORS FOR DEPARTMENT'S
CONSIDERATION.
(a) In determining whether or
not security will be required and the amount of security to be required, the
department may consider all relevant factors including the person's:
1. Evidence of adequate financial
responsibility. Evidence may include a person's assets and liabilities,
liquidity of assets, estimated expenditures, and potential sales tax
liability.
2. Prior record of
filing tax returns and paying taxes of any kind with the department.
3. Type of business.
Example: A temporary or seasonal business having no fixed
location which is frequently moved from city to city may be a greater security
risk than one operating continually at a fixed location.
4. Type of entity.
(b) Although the individual factors listed in
par. (a) may be considered in determining security requirements, each case
shall be determined on its merits as evaluated by the department. Protection of
the sales and use tax revenues shall be the major consideration in determining
security requirements. However, due consideration shall be given to reasonable
evidence that security is not necessary.
(c) In instances in which the department
determines that a security deposit in excess of $50.00 is required,
notification of this requirement shall include a written statement clearly
describing the reasons for the requirement and a description or calculation
showing how the amount of the security requirement was
determined.
(3) TYPES OF
SECURITY. Acceptable types of security include, but are not limited to:
(a)
Non interest-bearing.
1. Cash, certified check, or money
order.
2. Surety bonds issued by
authorized underwriters.
(b)
Interest-bearing.
1. Time certificates of deposit issued by
financial institutions and made payable to the department. Interest earned on
those certificates shall be paid to the depositor.
2. Fully paid investment certificates issued
by savings and loan associations made payable to the depositor. A security
assignment, form S-127, shall be completed if this type of security is
selected.
Note: Form S-127 may be obtained from the
department's website at www.revenue.wi.gov, any Department of Revenue
office, or by writing, emailing, or calling: Wisconsin Department of Revenue,
P.O. Box 8901, Madison, WI 53708-8901, DORSpecialProcedures@wisconsin.gov,
(608) 266-0833.
3. Bearer
bonds issued by the U.S. government, any unit of Wisconsin municipal government
or by Wisconsin schools. The depositor should clip 2 full years' coupons before
depositing this type of security.
(4) DETERMINATION OF AMOUNT.
(a) If a security deposit is required, the
amount generally shall be equal to the depositor's average quarterly Wisconsin
sales and use tax liability increased to the next highest even $100 amount. The
average quarterly sales and use tax liability shall be based on whichever of
the following the department considers most appropriate in the circumstances:
1. The depositor's previous sales and use tax
liability at the location specified on the permit.
2. The predecessor's sales and use tax
liability at the location specified on the permit,
3. The estimated tax liability shown on the
application for permit.
4. Other
factors, such as the department's estimate of estimated tax liability based on
its experience with other similar activities.
(b) If at the time of the security review the
retailer has an outstanding sales and use tax delinquency, the delinquent
amount shall be added to the average quarterly sales and use tax
liability.
(5) RETURN OF
DEPOSIT.
(a) Section
77.61(2) (a), Stats., provides any security deposited
under s.
77.61(2),
Stats., shall be returned to the taxpayer if the taxpayer has, for 24
consecutive months, complied with all the requirements of subch. III of ch. 77,
Stats.
(b) The 24 month compliance
requirement described in par. (a) shall begin on the day the deposit is
received by the department.
(c)
Within 30 days after the conclusion of the 24-month period described in par.
(a), the department shall review the taxpayer's compliance record. If the
taxpayer has complied with subch. III of ch. 77, Stats., the department shall
within 60 days after the expiration of the 24-month period certify the deposit
for refund.
(d) Compliance with
subch. III of ch. 77, Stats., means that:
1.
Sales and use tax returns were timely filed.
2. All payments were made when due.
3. No delinquencies of sales or use tax,
interest, or other charges existed.
4. No penalties due to negligence or fraud
were assessed for filing periods within the 24-month compliance
period.
5. No assessment of
additional tax, interest, or other charges for filing periods within the
24-month compliance period is unpaid at the end of the 24-month compliance
period.
(e) If a
taxpayer does not meet the compliance requirements set forth in par. (d), the
deposit shall be retained by the department until the taxpayer is in compliance
for 24 consecutive months from the date of the latest non-compliance.
Note: Section Tax 11.925 interprets s.
77.61(2),
Stats.
The interpretations in s. Tax 11.925 are effective under
the general sales and use tax law on and after September 1, 1969, except: (a)
The return of deposit provisions in sub. (5) became effective March 13, 1980,
pursuant to Chapter 125, Laws of 1979; (b) The $15,000 limit for security
deposits became effective October 1, 1985, pursuant to 1985 Wis. Act 29; and
(c) The provision to require certified ser- vice providers to submit surety
bonds and the provision to allow the secretary of revenue to waive the
requirement became effective October 1, 2009, pursuant to 2009 Wis. Act
2.
