If a person (which includes individuals, partnerships, corporations, limited liability companies, and fiduciaries) hasn't filed the required Wisconsin tax returns, but now wants to comply with the tax laws, what should that person do? If a person waits until a letter is received from the Wisconsin Department of Revenue, the person could be subject to costly civil and criminal penalties. For example, failure to file a corporation franchise/income tax return with intent to evade the tax may result in a civil penalty (equal to 100% of the tax) and criminal penalties.

Don't wait for a contact from the Department of Revenue. A better alternative is to voluntarily disclose to the Department of Revenue the nonfiling of prior years' returns and request that a settlement agreement be executed. The information below describes the department's policy relating to voluntary disclosure and the procedures for persons to follow.

The interest rate charged on taxes due through voluntary disclosure of unfiled returns is reduced from the 18% delinquent interest rate to the 12% regular interest rate.

The late filing fees apply as follows:

• Late filed individual or fiduciary income tax return--$50.
• Late filed corporation income or franchise tax return or insurance company return--$150.
• Late filed withholding report or late deposit of withheld taxes--$50 for individuals, partnerships, and fiduciaries, and $150 for corporations and insurance companies.
• Late filed partnership return--$50.
• Late filed Form PW-1--$50.
• Late filed sale and use tax returns--$20

Penalties may be waived, and the number of past periods for which tax returns must be filed may be reduced.

To be considered for such treatment, a person must meet certain requirements, provide a written description of its activities in Wisconsin, and enter into a written settlement agreement with the Department of Revenue.

(Note: This policy applies to income, franchise, sales/use, withholding, motor vehicle fuel, alternate fuel, alcohol, beer, wine, cigarette, tobacco and vapor taxes, except where noted otherwise.)

1. Conditions for Voluntary Disclosure
   
   

   A disclosure is considered to be voluntary if the person meets all of the following conditions:

   1. Submits a written request for voluntary disclosure treatment.
   2. Has not filed tax returns for the periods in question.
   3. Is not registered during the periods in question for the tax involved, although tax may have been collected from customers or withheld from employees.
   4. Has not been contacted within the last six years by the Wisconsin Department of Revenue regarding a registration or filing requirement, an assessment or audit assignment, for the tax type involved. Note: A request for completion of nexus questionnaires by the department constitutes the commencement of an office audit.
   
   

   Subscribing to the Wisconsin Tax Bulletin or having received a written response to a question submitted to the Department of Revenue does not disqualify a person.

   Registration for and/or filing returns for a different or related tax type does not disqualify a person (for example, a sales tax registrant may be allowed to settle a withholding tax liability).

2. Settlement Agreements
   
   

   A written settlement agreement must be executed whenever a penalty is waived or the number of periods for which returns must be filed is reduced pursuant to this policy. Persons may remain anonymous until a settlement agreement is reached. All settlement agreements shall include provisions reserving the Department of Revenue's right to:

   1. Audit factual representations made as part of the agreement and to void the agreement where facts are misrepresented. Also, see II.C.2.a. and b. below.
   2. Audit the person and/or any returns filed.
   3. Void the settlement agreement if not accepted within 60 days by the person. Additional time to accept the agreement may be permitted based on the facts and circumstances of the case.
   4. Void the settlement agreement if factual misrepresentations have been made by the person and assess additional tax, penalties, and interest, as appropriate.
   5. Void the settlement agreement if the person fails to comply with any of its terms.
   
   
3. Filing and Payment Requirements
   
   
   1. Number of years
      
      
      1. A person with nexus in Wisconsin who makes a voluntary disclosure shall generally be requested to file returns for the "current year" and the four preceding years, assuming a liability existed in those years. A person with no nexus for a year is not required to file returns for such year, except as provided in II.C.1.b. and c. below.
         
         "Current year" is the taxable year for which an income/franchise tax return unextended due date has not passed.
         
         Due dates for income/franchise tax returns are described in the tax form instructions. Note: The unextended due dates for 2019 and 2020 income/franchise tax returns were affected by COVID and the IRS changes:
         
         
         • 2019 tax return due dates
         • 2020 tax return due dates
           
           
         1. Franchise and income tax:
            
            

            Example 1: If on November 11, 2024, a calendar year filer voluntarily disclosed a corporation franchise or income tax liability for the years 2016 through the present, franchise or income tax returns must be filed for the prior years 2020, 2021, 2022, and 2023. The year 2024 is the current year, but is not required to be filed until the due date of the return.

            Example 2: If on January 20, 2025, a calendar year filer voluntarily disclosed a corporation franchise or income tax liability for the years 2016 through the present, franchise or income tax returns must be filed for the prior years 2020, 2021, 2022, and 2023. The year 2024 is the current year, but is not required to be filed until the due date of the return.

            Example 3: If on June 1, 2025, a calendar year filer voluntarily disclosed a corporation franchise or income tax liability for the years 2016 through the present, franchise or income tax returns must be filed for the prior years 2021, 2022, 2023, and 2024. The year 2025 is the current year, but is not required to be filed until the due date of the return.

         2. Sales and use tax:
            
            

            Example 4: If on August 1, 2024, a calendar year taxpayer voluntarily disclosed a sales or use tax liability for the years 2016 through the present, quarterly sales and use tax returns must be filed for the prior years 2020, 2021, 2022, and 2023, and the first two quarters of 2024.

            Example 5: If on February 14, 2025, a calendar year taxpayer voluntarily disclosed a sales or use tax liability for the years 2016 through the present, quarterly sales and use tax returns must be filed for the prior years 2020, 2021, 2022, 2023, and the current year 2024. The year 2024 is the current year since it is before the due date of their franchise or income tax return.

            Example 6: If on February 14, 2025, a taxpayer with a June 30th year end voluntarily disclosed a sales or use tax liability for the years 2016 through the present, quarterly sales and use tax returns must be filed for the prior years ending June 30, 2021; June 30, 2022; June 30, 2023; June 30, 2024; and the first two quarters of taxable year ending June 30, 2025.

         3. Any tax that was collected or withheld prior to the first return we require to be filed (i.e., four prior years), must also be reported as requested.
            
            

            Example 7: If on August 1, 2024, a calendar year taxpayer voluntarily disclosed a sales or use tax liability for the years 2016 through the present, and they began collecting sales tax from their customers starting in 2016, the tax collected from 2016 through 2019 must be reported in addition to the four prior years 2020 through 2023 and the first two quarters of the current year 2024.

      2. A person that discloses a liability for an excise tax under Chapter 78 of the Wisconsin Statutes is requested to file as in II.C.1.a. above, whether or not the person has nexus.
      3. A person with no nexus for a year, but for which the person collected a sales tax from a customer or withheld an income tax from an employee or partner, must file returns beginning with the earliest year tax was collected or withheld, but not more than four years, as long as all tax collected or withheld is remitted with the returns as in II.C.l.a. above.
      
      
   2. Misrepresentation of facts
      
      
      1. If an unintentional misrepresentation of facts is discovered, the person is requested to file returns for the current year and the six preceding years, assuming a liability existed in those years.
      2. If an intentional misrepresentation of facts is discovered, the Department of Revenue may void the agreement and make any assessment it deems necessary.
         
         

         For example, an audit of the person's records uncovers an internal memo signed by an officer directing the accounting department to represent that the Wisconsin office location was opened two years later than the office was actually opened.

   3. Sales/use and withholding tax
      
      

      All sales/use and withholding tax returns for prior years are requested to be filed as if on a quarterly filing basis, regardless of any filing frequency established for future periods. Quarterly sales/use and withholding tax returns will also be requested for the current year, if necessary, to bring the person's filing record up to the current period.

   4. Time period for filing returns
      
      

      Returns must be filed within ninety days of signing the settlement agreement. Additional time to file may be permitted based on the facts and circumstances of the case.

4. Interest and Penalties
   
   
   1. General
      
      
      1. If there is no discovery by the Department of Revenue of any misrepresentation of facts by the person, only late filing fees, underpayment interest, and regular interest are applied on late filed returns which have been voluntarily filed.
      2. If there is discovery of an unintentional misrepresentation as in II.C.2.a. above; the late filed returns may be subject to the negligence penalty, if there is evidence to support the negligence penalty.
      3. If there is discovery of an intentional misrepresentation of facts as in II.C.2.b. above, the Department of Revenue may consider the assessment of any additional penalties deemed appropriate, including fraud penalties.
      
      
   2. Sales/use and withholding tax
      
      
      1. Late filing fees

         If the annual liability is $300 or less, one late filing fee is assessed.

         If an annual liability exceeding $300 exists, late filing fees are assessed for each quarterly return not previously filed in a timely manner.

      2. Interest

         If the annual liability is $300 or less, regular interest is computed from the due date for annual returns (for example, January 31 for a calendar year filer).

         If the annual liability exceeds $300, regular interest is computed from the due dates for the quarterly returns that should have been filed (for example, April 30 for the March quarter, July 31 for the June quarter, October 31 for the September quarter, and January 31 for the December quarter).

      3. If there is discovery of an intentional misrepresentation of facts as in II.C.2.b. above, the Department of Revenue may consider the assessment of any additional penalties deemed appropriate, including fraud penalties.
      
      

A taxpayer or the taxpayer's representative may request voluntary disclosure treatment by submitting Form A-020 to the department for consideration. The request must include the following information:

• Description of Wisconsin activities for the years involved.
• List of property owned or leased in Wisconsin.
• Taxpayer's taxable year-end.
• Taxpayer's federal tax return type.
• Date taxable activities began in Wisconsin.
• Whether the tax involved has been collected or withheld and for what periods. For sales and use tax purposes, whether tax has been paid to a vendor in error for which a credit is being claimed.
• Approximate liability (by tax type) for each of the years involved.
• Prior contacts by the Department of Revenue.
• Other types of tax returns currently being filed with the department.
• Whether the taxpayer is registered with the Wisconsin Department of Financial Institutions (formerly the Secretary of State) to transact business in Wisconsin.

Note: If unable to complete the electronic request for voluntary disclosure, submit a written request including the information above. Also, for a written request, if applying for voluntary disclosure for more than one tax type, each tax type must be specified. For example, a request for voluntary disclosure for income tax does not cover sales tax.

A person submitting a written request for voluntary disclosure treatment should send the request to: