71.805 Tax avoidance transactions voluntary compliance program.

(1) Definitions. In this section:

(a) “Tax avoidance transaction" means a transaction, plan, or arrangement devised for the principal purpose of avoiding federal or Wisconsin income or franchise tax. “Tax avoidance transaction" includes a listed transaction as provided under U.S. department of the treasury regulations as of October 27, 2007, and may include a transaction, as determined by the department, that provides a tax benefit for Wisconsin income or franchise tax purposes without providing a similar benefit for federal income tax purposes.

(b) “Taxpayer" means a person who is subject to the taxes imposed under this chapter and who has a tax liability attributable to using a tax avoidance transaction for any taxable year beginning before January 1, 2007.

(2) Penalty waiver or abatement. All of the following apply with regard to a taxpayer who satisfies the conditions under sub. (3):

(a) Except as provided under sub. (4) (b), the department shall waive or abate all penalties that are applicable to the underreporting or underpayment of Wisconsin income or franchise taxes attributable to using a tax avoidance transaction for any taxable year for which the taxpayer satisfies the conditions under sub. (3).

(b) The department shall not seek a criminal prosecution against the taxpayer with respect to using a tax avoidance transaction for any taxable year for which the taxpayer satisfies the conditions under sub. (3).

(3) Taxpayer eligibility. A taxpayer is eligible for the benefits described under sub. (2) (a) and (b), if, during the period beginning on January 1, 2008, and ending on May 31, 2008, the taxpayer does the following:

(a) Files an amended Wisconsin tax return for each taxable year for which the taxpayer has previously filed a Wisconsin tax return that uses a tax avoidance transaction to underreport the taxpayer's Wisconsin income or franchise tax liability and the amended return reports the total Wisconsin net income and tax for the taxable year, computed without regard to any tax avoidance transaction and without regard to any other adjustment that is unrelated to any tax avoidance transaction.

(b) Pays, in full, for each taxable year for which an amended return is filed under par. (a), the entire amount of Wisconsin income or franchise tax and interest due that is attributable to using a tax avoidance transaction, except that the secretary of revenue may enter into an agreement with the taxpayer to make payments in installments. A taxpayer who does not comply with an installment agreement provided under this paragraph is ineligible to receive the benefits described under sub. (2) (a) and (b) and the total amount of tax, interest, and penalties shall be immediately due and payable.

(4) Limitations and administration.

(a) A taxpayer who receives the benefits described under sub. (2) may not file an appeal or a claim for credit or refund with respect to the tax avoidance transactions for the taxable years for which the taxpayer satisfied the conditions under sub. (3), except to the extent that a timely filed appeal or claim for a refund results from an adjustment to the taxpayer's federal income tax liability regarding such transactions.

(b) The department may not waive or abate a penalty as provided under sub. (2) (a) if the penalty relates to an amount of Wisconsin income and franchise tax that is attributable to a tax avoidance transaction and assessed and paid prior to January 1, 2008, or after May 31, 2008.

History: 2007 a. 20.