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PDtax
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1744
Experience:  32 years tax experience, including four years at a Big 4 firm.
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I owed the state of Wisconsin a tax that was assessed against

Resolved Question:

I owed the state of Wisconsin a tax that was assessed against me because I had an investment in an ethanol plant in Wisconsin that paid dividends. The state then sent me a tax bill to pay the tax they said was due.

I didn't pay it. Wisconsin put a tax levy for the amount of the tax due on the account in which the ethanol investment shares are held. If I sell the shares, the account holder is required to send Wisconsin the amount of the lien and then will send me what is remaining.

Interest is accumulating at the rate of 18% a year.

When does that lien expire? That is, how long can Wisconsin enforce that lien against my account?
Submitted: 6 months ago.
Category: Tax
Expert:  PDtax replied 6 months ago.

PDtax :

Welcome to the site. I'm PDtax, and will be helping you today.

PDtax :

I think 18% is the old rate. After January 2011, I think the interest rate is 12%. http://www.revenue.wi.gov/html/sumcamp3.html is the link to that explanation.

PDtax :

They do offer a voluntary filing procedure that allows tax and interest at the 12% rate. Information can be found on the same page. I know that wasn't your question, just passing that along to make an informed decision.

PDtax :

There is a technical issue of nonfiling in the state, and some states consider non-filing to never have started the four year (WI collection statute) collection statute. That is, no tax return filed means the statute never starts.

PDtax :

I assume you did not file in wisconsin for other income reasons.

PDtax :

Wisconsin, like most states, does not start its collection statute until a return is filed. As such, they received information from the dividend payor and levied against the shares. They could estimate the amount of tax due and pursue collection by estimating a tax (which does not start the statute, by the way).

PDtax :

Thanks for asking at Just Answer. Please get back to me with any follow up questions. Positive feedback closes out your question if I have answered it. I'm PDtax.

Customer:

OK.............

Customer:

So what should I do to make sure the statute of limitations has a starting date.

Customer:

And how long does the statute of limitations run.

Customer:

I have a private holding the account to which they sent the dividends. That's the account they put the lien on. I don't have to sell that private holding for many years.

Customer:

So I want to avoid ever paying the tax or the interest on reasons of principle. The principle is that when I invested, they did not have a system to charge state income tax on investments in the state from people outside the state. They changed that and didn't grandfather people like me so I am refusing to pay the tax. It's not much, but for me it's a matter of principle, and I want to wait them out until the statute of limitations is reached on the lien, have the lien removed, and then sell the private holding.

Customer:

Given the Wisconsin laws, 'what is the best way for me to do accomplish that?

Customer:

This income from the ethanol plant is the only income I have had in Wisconsin.

Customer:

I don't think my account ever filed a tax return. If he did, what's the statute of limitations?

Customer:

Wisconsin, like most states, does not start its collection statute until a return is filed. As such, they received information from the dividend payor and levied against the shares. They could estimate the amount of tax due and pursue collection by estimating a tax (which does not start the statute, by the way).

Customer:

Yes, the above answer I just copied in is what I think happened. They just sent me a tax notice.

Customer:

So what steps should I take to avoid ever paying the tax?

Customer:

Thank you for your answers. They seem very good and it looks like I will eventually get all of the information I want.

Customer:

Here's another of your answers I want to comment on below:

Customer:

They do offer a voluntary filing procedure that allows tax and interest at the 12% rate. Information can be found on the same page. I know that wasn't your question, just passing that along to make an informed decision.

Customer:

If I have to file a Wisconsin return to start the statute of limitations to run, what would I put in the return......that I would pay $100 in tax but not the rest and then the statute would start?

PDtax :

The best way to get the statute to start is, as you have come to, file a tax return. WI likely created a tax based on a straight percentage against the dividends.

PDtax :

You may find that your WI tax return may not have a tax due. Depending on the income earned and things like standard deductions/income floors, you may owe little or no tax.

PDtax :

Once you prepare accurate nonresident returns, and determine the actual amount due, if no tax is due, file them, get your levy release, and you're done.

PDtax :

If a tax is due, and you choose not to pay it, WI has the later of four years from the due date or the filing date to collect any taxes due.

PDtax :

Thanks again from Just Answer.

PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1744
Experience: 32 years tax experience, including four years at a Big 4 firm.
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