Wisconsin Tax Fraud and Tax Evasion Laws

Code Sections

Wisconsin Statutes Chapter 71: Income and Franchise Taxes for State and Local Revenues

Civil Penalties

Civil penalties for tax fraud or evasion are generally fines paid to the tax collector, in addition to any other taxes owed. Examples of these penalties are:

• Any person making incorrect tax reports or failing to make a report, if the intent is to evade taxes, owes 100% of the unpaid part of the tax. This is an additional tax for purposes of assessment/collection. Repeatedly filing tax returns late is considered intent to evade taxes.
• Anyone, individual or owner/employee, with a duty to act here, is required to withhold or pay any tax who intentionally fails to do so will owe a penalty equal to the total amount of the tax, plus interest and penalties on the unpaid tax.
• Any person, including corporation officers or partnership members with a duty to do this, is required to provide a written statement to an employee, but provides a false statement or intentional fails to provide one as required, is subject to a $20 penalty for each failure.
• Employees who file withholding exemption certificates with the intent to evade taxes must pay the amount that should've been withheld minus the amount actual withheld during that fraudulent certificate time period.
• Anyone who fraudulently files an inaccurate tax refund or credit claim owes a penalty of 100% of the amount claimed minus the amount he or she should've claimed.
• If a person owes a federal income tax penalty for medical savings or health savings account fraud then he or she owes a penalty to the Wisconsin Department of Revenue equal to 33% of the IRS penalty.

Criminal Penalties

Tax evasion laws that are punished criminally are divided into misdemeanor and felony violations.

Misdemeanor Examples

• Signing or willfully making a false statement or report, refusing to file a return when required, or willfully failing to make payments is a misdemeanor with a maximum fine of $10,000 and up to 9 months in jail.
• Willfully making any tax return or statement that you believe isn’t true or correct can be punished by up to a $10,000 fine and 9 months in jail.
• Violating the confidentiality law by divulging any information derived from any tax return or claim (except, for example, state statisticians, documentation for divorce proceedings, newspapers, etc) or browsing tax returns for information can be punished with a $100-$500 fine and 1-6 months imprisonment.
• Failing to comply with the construction surety bond requirements for non-residents is fined $300 to $5,000.
• Employers who coerce their employees to prepay their taxes can be fined from $25 to $200 for each violation.
• Employees who willfully give their employers false information to evade the proper tax withholding amount can spend up to 6 months in jail and be fined up to $500, plus the cost of prosecution.

Felony Examples

• Anyone giving a false income tax return with the intent to evade any tax assessment or get a refund with fraudulent intent is guilty of a Class H felony, punishable by at most 6 years in prison and a $10,000 fine.
• Any officer of a corporation required to make or sign franchise or income tax returns who does so fraudulently with the intent to evade taxes is guilty of a Class H felony.
• Anyone who removes or conceals any property that can be taxed with the intent to evade the tax assessment or collection is guilty of a Class I felony, punishable by up to 3.5 years in prison and up to a $10,000 fine.
• Anyone filing a claim for a tax credit that is false or excessive or helps in its filing and it’s filed with fraudulent intent is guilty of a Class H felony.

In addition to the fines, tax evaders convicted of felonies need to pay for the cost of prosecution.

Administrative Penalties

Some administrative penalties tax evaders face include that if a person or partnership that's required to file an income tax return fails to do so within the allowed or extend time, then a late fee of $50 is added to the tax bill. The fee is $150 for late returns by corporations and companies.

If a person files a fraudulent claim for a tax credit, then the person can't file a tax credit claim for 10 tax years after the fraud. If the person filed a tax claim recklessly, meaning an improper claim for credit done with intentional disregard of the tax laws, then for the next two tax years the person can't file a claim for a tax credit. The Department of Revenue can impose requirements that must be met for the person subject to this disallowance period can still make a credit claim, just less easily.