Revenues generated by businesses in Wisconsin are subject to state taxation. This statutory requirement applies to out-of-state companies as well as state-based companies and it is the responsibility of the Wisconsin Department of Revenue (DOR) to ensure compliance. 

 

We believe the DOR must carry out its audit-related activities in the same manner for hometown Wisconsin companies and their out-of-state competitors. That's easier said than done.  

 

Identifying and collecting the state taxes owed by out-of-state businesses is more time-consuming and labor-intensive. In 2015, state lawmakers approved a plan to improve the identification and collection of state taxes owed by out-of-state companies. 

 

The "Audit Initiative" authorized the DOR to hire an additional 87 front-line tax auditors to conduct: 

• economic nexus investigations to identify out-of-state entities that should be collecting, filing and paying Wisconsin income and sales taxes; 

• sales tax audits of non-Wisconsin businesses with tax liability in Wisconsin; and

• corporate income tax audits of large multi-state apportionment entities with tax liability in Wisconsin. 

The ongoing costs of the Audit Initiative are substantial - $13.6 million annually. The DOR assured state lawmakers that additional tax collections would exceed these ongoing costs. State lawmakers added an annual reporting requirement to the plan to hold the Department accountable.

 

Recently, the DOR issued its 2019 report. As of June 30, 2019, the Audit Initiative has generated an additional $159.9 million in state tax collections.

Earlier this month, the Unemployment Insurance Advisory Council received its annual report on the financial status of the state Unemployment Insurance (UI) Trust Fund and an update on administrative changes in 2020. Outlined below are the noteworthy details.

 

As of December 31, 2019, the balance in the UI Trust Fund was $1.96 billion - up 13.3% from the previous year. One of the factors used to determine the UI tax rate for Wisconsin employers is the balance in the UI Trust Fund. Rates are progressively lower as the balance increases. For the third year in row, Wisconsin employers will pay at the lowest rate schedule in 2020.

 

In 2019, state UI tax collections were $553.6 million - down $39.2 million from the previous year. The decline in UI tax collections is due to overall improvement in the experience rating of Wisconsin employers and a slight reduction in the amount of UI benefits paid. In 2019, UI benefit payments were $372.3 million.

 

The Wisconsin Department of Workforce Development (DWD) conducts in-person hearings on UI benefit eligibility determinations at offices located throughout the state. The DWD will not renew leases for hearing offices located in Eau Claire, Appleton and Madison and they are slated to close in March 2020. This decision was based on several factors including reduced federal funding, a decline in UI appeals and participant (employers and claimants) preference for telephone hearings. Currently, about 80% of UI appeal hearings are held via telephone.

 

When a UI appeal in these areas requires an in-person hearing, hearings will be held at nearby locations. The DWD will continue to identify additional alternative in-person hearing locations with the intent to reduce the travel distance for those who live in rural communities.

This spring, Wisconsin voters will elect a Justice to a 10-year term on the Wisconsin Supreme Court. Three candidates have filed the necessary paperwork with the Wisconsin Elections Commission.

 

Incumbent Supreme Justice Daniel Kelly will face two challengers - Marquette University Law School Professor Ed Fallone and Dane County Circuit Court Judge Jill Karofsky - in the February 18th primary election. The two candidates who receive the most votes in the primary election advance to the April 7th general election.

 

The seven-member Wisconsin Supreme Court is the final authority on matters pertaining to the Wisconsin Constitution and their rulings can adversely or beneficially impact Wisconsin employers. We encourage members to learn more about these candidates and vote in this important statewide election.