State Asks Buyers To Be Fair, Pay Tax

A state request has sent thousands of Wisconsin taxpayers scrambling for old receipts and credit card statements — if they kept them.

State Department of Revenue officials sent a letter to about 3,000 people in late January, urging them to pay taxes on online or out-of-state purchases made from 2007 to 2010.

“This is not an audit,” said Stephanie Marquis, a department spokeswoman. “It’s really just an informational letter to make them aware that we believe they may have made that purchase and may owe state taxes on that purchase.”

It arrived in the mail in the middle of the 2012 tax season, a period in which Wisconsin will miss out on $62 million in uncollected use tax on online purchases, according to an informational letter from the Legislative Fiscal Bureau.

State auditors know the letter recipients owe money because of agreements with other states and U.S. Customs. The item’s out-of-state seller didn’t charge sales tax — but, if the buyer intends to use the item in Wisconsin, the state expects to collect use tax.

The state typically goes after big-ticket items, such as boats, cameras or jewelry, Marquis said. She added that recipients can appeal the letter by calling 608-266-9642, although they’ll need a receipt or credit card statement for proof.

But smaller purchases can become targets, too, said some letter recipients.

“My initial thought was shock. I didn’t really understand; I thought, why am I getting this?” said a Janesville woman who asked not to be identified because of the personal tax information involved. “Most people think it’s on big-ticket items, but it’s not. It’s on anything — $20 here, $20 there.”

Despite the state’s focus on educating taxpayers, at least two letter recipients told WISC-TV they were frustrated that Department of Revenue auditors wouldn’t tell them how much money they owed.

“People don’t know this. They need to be educating people on what you should be doing,” said the Janesville woman. “They don’t do a good job of educating people on it.”

The letter indicates that people must pay the back taxes, plus 18 percent interest. Additional late filing fees also apply.

One woman said it took a considerable amount of work to find her receipts, allowing her to return the tax form. But others said they simply didn’t keep receipts dating back to 2007, complicating the process.

“It’s helpful if they track during the year what they purchased — but that’s hard,” said Rick Blatter, a tax adviser with Mennenga Tax and Financial in Monona. “I think most people want to pay the tax. They’re just unaware that they owe it.”

Many people have come to him surprised about the use tax, Blatter said. He said Wisconsin taxpayers now must check a box on their tax form certifying that they don’t owe any use tax, or they must indicate how much they owe.

The Department of Revenue’s effort has collected more than $10.8 million since the mailings began in 1998, Marquis said.

“It is a very small piece of our efforts, but it’s very important,” she said. “We have to look at how we potentially collect the taxes that are owed out of fairness to everyone in the state.”