1. What should I expect if I am audited by the Wisconsin Department of Revenue?

2. What should I do if I disagree with the changes to my return made by the Wisconsin Department of Revenue?

1. What should I expect if I am audited by the Wisconsin Department of Revenue?

   An Office Audit usually involves the following steps:

   1. The department reviews tax returns and credit claims to determine if the correct amounts were reported.

   2. We may request more information or receipts to clarify or support some items.

   3. An audit will conclude with either:

   • An assessment notice explaining the amount due, showing the tax, interest and penalty (if any), or

   • A refund notice explaining the amount of tax and interest (if any) to be refunded

   • No change

   For a more detailed description of an office audit, refer to Publication 511, Office Audit of Wisconsin Income Tax Returns.

   A Field Audit usually involves the following steps:

   1. The audit begins when the department sends a letter, or makes a phone call, notifying the taxpayer that the taxpayer's tax returns have been selected for examination. The letter, or call also informs the taxpayer of the date and time of the first meeting with the auditor. If the audit contact was made via phone call, then a follow-up letter is sent to the taxpayer confirming the audit. At this meeting, the auditor will want to discuss the nature of the business or employment, the accounting or record keeping system used, and other related matters. If the records are assembled in a neat and orderly manner before this meeting, unclear items may be resolved with the least amount of time and effort.

   2. An auditor will perform a detailed examination of the tax returns and the taxpayer's books and records to determine if the correct amounts were reported on the tax returns. If possible, the audit will be conducted at the taxpayer's place of business. In some instances the auditor will obtain information from third-party sources.

   3. Upon completing the examination, the auditor may determine that adjustments should be made which result in an amount due or a refund. The auditor generally discusses the proposed audit report in a final conference and a complete copy of the proposed report is given to the taxpayer and/or the taxpayer's representative at that time. The taxpayer is then asked to sign the Notice of Proposed Audit Report form indicating either full or partial agreement or total disagreement with the proposed adjustments.

   4. The department will notify the taxpayer by mail of the results of the field audit. If there are adjustments, the taxpayer will receive an assessment or refund notice. If there is no tax due and no refund, a letter will be sent explaining that there is no change in the tax liability.

   For a more detailed description of the field audit, assessment, and refund processes refer to Publication 501, Field Audit of Wisconsin Tax Returns.

2. What should I do if I disagree with the changes to my return made by the Wisconsin Department of Revenue?

   If you disagree, you may do one of the following:

   • Pay the full amount due without filing any appeal and then consider whether to appeal later by filing a claim for refund. Note: You may file a claim for refund of income or franchise taxes up to 4 years from the date of the notice of amount due if the additional tax assessed was for any taxable year beginning after 1999. You may file a claim for refund of income or franchise taxes up to 2 years from the date of the notice of amount due if the additional tax assessed was for any taxable year beginning before 2000. This is explained in "How to File a Claim for Refund of a Paid Assessment" below. A taxpayer who was field audited may also file a claim for refund of sales tax within the general 4-year statute of limitations, provided the amounts refunded are passed on to customers pursuant to their valid refund claims. See Publication 216, Filing Claims for Refund of Sales or Use Tax, for more information.

     Note: A 2005 law change expands the situations under which a seller is required to refund sales or use taxes to buyers. The new law first applies to notices of refunds or notices of amounts due dated, offsets taken, and the discovery of amounts collected erroneously as taxes, on October 28, 2005, even if the notices, offsets, and amounts relate to sales that occurred as far back as September 1, 1994. See Wisconsin Tax Bulletin 146 (February 2006), page 11, for additional information.

   • File an appeal with the Department of Revenue within 60 days of receiving the notice. This is explained in "Appeal to the Department of Revenue" below.

     Note: To stop the accumulation of interest on amounts owed, you may either:

   • Deposit the entire amount of the additional assessment, including interest and penalty, if any, with the Department of Revenue when filing the appeal or at any time while the appeal is pending.

     You will be paid interest at 3% per year on any portion of the deposit which is later refunded to you.

   • Pay any portion of an assessment with which you agree. Such payment shall be considered an admission of the validity of that portion of the assessment and may not be recovered in an appeal or any other action or proceeding.

   The Appeal Process

   You have six levels of appeal available to you, to be taken in this order:

   • Wisconsin Department of Revenue - Resolution Unit

   • Wisconsin Tax Appeals Commission

   • Circuit Court

   • Court of Appeals

   • Wisconsin Supreme Court

   • U.S. Supreme Court

   Note: With regard to taxpayers who file joint individual income tax returns which the department adjusts, an appeal by one spouse is considered an appeal by both spouses. Either spouse may appeal an action relating to a joint return. However, a spouse may not appeal an assessment or a denial of a claim for refund issued with respect to a separate return filed by the other spouse.

   The Department of Revenue will notify spouses jointly that they may deposit with the department the amount of an additional assessment being appealed to stop the further accrual of interest. If the spouses have different addresses and if either spouse notifies the department in writing of those addresses, the Department of Revenue will send a duplicate notice regarding the deposit procedure.

   Appeal to the Department of Revenue

   Any taxpayer (or the taxpayer's representative) may appeal to the Department of Revenue if the taxpayer disagrees with a notice of assessment or refund.

       Office Audit appeals may be:

   • Filed online as indicated on your notice or

   • Faxed to (608) 267-0834 or

   • Mailed to the Wisconsin Department of Revenue, PO Box 8906, Madison, WI 53708-8906

       Field Audit appeals may be:

   • Filed online as indicated on your notice

   • Faxed to (608) 261-6222 or mailed to the Wisconsin Department of Revenue, Resolution Unit -- Mail Stop 6-173, PO Box 8907, Madison, WI 53708-8907

   An appeal must be:

   • In writing, stating the specific reasons for objecting to the adjustments and including supporting documents.

   • Filed online, faxed, or mailed to the Wisconsin Department of Revenue (see above).

   • Actually received by the department within the 60 days, or mailed in a properly addressed envelope with postage prepaid, which is postmarked before midnight of the 60th day and received by the department within 5 days of the 60th day.

   If an appeal is not filed with the department within the required 60-day period, the department's action is final. If an assessment was received, it must be paid. The only recourse then is to file a claim for refund of income or franchise taxes within 2 years of the assessment notice date for taxable years beginning before 2000 and within 4 years for taxable years beginning after 1999 (or within 4 years provided the sales tax amounts refunded are passed on to customers pursuant to their valid refund claims).

   Appeals may be handled through the mail or by a conference in Madison, Milwaukee, Eau Claire, or Appleton. Taxpayers may represent themselves or may be represented by another person, such as an attorney or an accountant.

   The Department of Revenue will notify the taxpayer in writing of its decision on the appeal.

   Appeal to the Wisconsin Tax Appeals Commission

   The Wisconsin Tax Appeals Commission is entirely separate from the Department of Revenue.

   If a taxpayer disagrees with a decision from the Department of Revenue and wishes to contest it, an appeal must be filed with the Commission. The appeal must be filed within 60 days of the taxpayer's receipt of the department's decision.

   Note: If the taxpayer chose not to deposit the taxes with the department prior to the time of filing an appeal with the Commission, the taxpayer may, at any time while the appeal is pending before the Commission or a court, elect to either deposit the total taxes and interest with the Department of Revenue Resolution Unit or pay the portion of the assessment not being appealed.

   Appeal to the Courts: Circuit Court, Court of Appeals, and Supreme Court

   A taxpayer or the Department of Revenue may appeal a Tax Appeals Commission decision to the Circuit Court within 30 days after the date of mailing of the Commission's decision. The taxpayer or the department may then appeal the Circuit Court decision to the Court of Appeals, and the Court of Appeals decision to the Wisconsin Supreme Court.

   How to File a Claim for Refund of a Paid Assessment

   • Send the appropriate amended return to the Audit Bureau, Wisconsin Department of Revenue, PO Box 8991, Madison, WI 53708-8991.

   • Include name, address, and social security number or federal employer identification number.

   • Identify the tax year disputed and state the facts and reasons for disagreeing with the assessment.

   If you are entitled to a refund, we will figure interest and include it in your refund check.

   What You Can Do if Your Refund Claim Is Denied

   File an appeal with the Resolution Unit within 60 days of receiving the denial notice as explained in "Appeal to the Department of Revenue" above.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Audit Assistance
PO Box 8906
Madison, WI 53708-8906
Phone: (608) 266-2486
Fax: (608) 267-0834
Email: DORIncome@wisconsin.gov

December 10, 2015