Public service tax; administrative provisions; rights and remedies.

(1) A municipality may, during the seller’s normal business hours at the official location of the seller’s books and records, audit the records of any seller of a service that is taxable by the municipality under s. 166.231 or s. 166.232, for the purpose of ascertaining whether taxable services have been provided or the correctness of any return that has been filed or payment that has been made, if the municipality’s power to assess tax or grant a refund is not barred by the applicable limitations period. Each such seller must provide to the municipality, upon 60 days’ written notice of intent to audit from the municipality, access to applicable records for such service, except an extension of this 60-day period must be granted if reasonably requested by the seller. The seller may at its option waive the 60-day notice requirement. If either the municipality or the seller requires an additional extension, it must give notice to the other no less than 30 days before the existing extension expires, except in cases of bona fide emergency or waiver of the notice requirement by the other party. In an audit, the seller is liable only for its taxable accounts collected which correspond to the information provided to it by the municipality under s. 166.233(3). As used in this section, “applicable records” means records kept in the ordinary course of business which establish the collection and remittance of taxes due. Such applicable records may be provided to the municipality on an electronic medium if agreed to by the seller and the municipality. No fee or any portion of a fee for audits conducted on behalf of a municipality shall be based upon the amount assessed or collected as a result of the audit, and no determination based upon an audit conducted in violation of this prohibition shall be valid.

(2) Each seller of services that are taxable under s. 166.231 or s. 166.232 shall preserve applicable records relating to such taxes until the expiration of the time within which the municipality may make an assessment with respect to that tax; however, a seller is not required to retain duplicative or redundant records.

(3) Before auditing a seller under subsection (1), the municipality shall, upon request of the seller, discuss with the seller the municipality’s proposed audit methodology. The municipality shall prepare and furnish to the seller a report of each audit which identifies the nature of any deficiency or overpayment, the amount thereof, and the manner in which the amount was computed. In addition, the municipality, upon request and no less than 45 days before issuing a determination under subsection (8), shall furnish the seller with all other information or material in possession of the municipality or its agents which is necessary to supplement the audit findings.

(4)(a) A municipality may issue a proposed assessment of tax levied under s. 166.231 or s. 166.232 within 3 years after the date the tax was due. However, this limitation is tolled for 1 year if within the 3-year period the municipality issues to the seller a notice of intent to audit. If the audit cannot be completed prior to the expiration of this limitation period as extended by tolling, and such condition is due to the seller’s refusal or delay in allowing access to applicable records, the municipality may make a proposed assessment from an estimate based upon the best information available for the taxable period, unless the seller agrees in writing to extend the limitation period. The municipality may also make a proposed assessment from such an estimate if, notwithstanding agreed extensions of the limitation period to a date which is 3 years following issuance of the notice of intent to audit, the seller does not allow access to applicable records prior to such date.

(b) A seller may apply to a municipality for refund of, or may take a credit for, any overpayment of tax or interest or penalty thereon within 3 years following remittance by the seller, and the municipality must refund or allow the seller credit for such overpayments as were remitted to the municipality. However, in the case of an overpayment which the seller has previously refunded or credited to a purchaser in accordance with subsection (6), the limitation period for the seller’s refund application or credit shall expire 3 years following the seller’s remittance to the municipality or 60 days following the seller’s issuance of the refund or credit to the purchaser, whichever is later.

(c) Upon expiration of the periods set forth in this subsection, the municipality’s right to assess tax, interest, or penalty and the seller’s right to apply for a refund or credit expire and are barred, unless fraud has occurred; however, sellers and municipalities may enter into agreements to extend these periods.

(5) Notwithstanding subsection (4), a municipality shall offset a seller’s overpayment of any tax, interest, or penalty revealed by an audit against any deficiency of tax, interest, or penalty which is determined to be due for the same audit period, and such offsets must be reflected in any proposed assessment. If the overpayments by the seller exceed the deficiency, the municipality must refund to the seller the amount by which the aggregate overpayments exceed the total deficiency. Absent proof to the contrary, the methodology that is employed in computing the amount of a deficiency is presumed to yield an appropriate computation of the amount of any overpayments. As used in subsection (4) and this subsection, “overpayment” to a municipality means and includes all remittances of public service tax, interest, or penalty which were not due to the municipality, including amounts properly collected but remitted to the incorrect municipality.

(6) Any purchaser of a service may request from a seller a refund of, or credit for, taxes collected from the purchaser upon the ground that the amounts collected were not due to any municipality. The seller shall issue the refund or allow a credit to the purchaser entitled thereto, if the request is made within 3 years following collection of the tax from the purchaser. In any event, a seller shall issue a refund or credit to a purchaser within 45 days following the seller’s determination of the amount of taxes collected from the purchaser within the preceding 3 years that were not due to any municipality.

(7) Municipalities are authorized to assess interest and penalties in accordance with this subsection for failure to pay any tax when due or to file any required return, except that no penalty shall be assessed absent willful neglect, willful negligence, or fraud. Interest may be assessed at a maximum rate of 1 percent per month of the delinquent tax from the date the tax was due until paid. Penalties may be assessed at a maximum rate of 5 percent per month of the delinquent tax, not to exceed a total penalty of 25 percent, except that a municipality may provide that in no event will the penalty for failure to file a return be less than $15. In the case of a fraudulent return or a willful intent to evade payment of the tax, the seller making such fraudulent return or willfully attempting to evade payment of the tax, shall be liable for a specific penalty of 100 percent of the tax. Interest and penalties shall be computed on the net tax due after application of any overpayments, and are subject to compromise pursuant to subsection (14). Interest or penalties and the rates thereof shall be authorized by ordinance.

(8) Any proposed assessment or finding of amounts due the seller constitutes a determination of the municipality for purposes of this section. A determination must separately state the amounts of tax, interest, and penalty claimed to be due or to be refunded, must be accompanied by a written narrative explanation of the basis for the municipality’s determinations, must inform the seller of the remedies available to it if it disagrees with any such determination, and must state the consequences of the seller’s failure to comply with any demand of the municipality which is stated in the determination.

(9) A seller may file with the municipality a written protest of any determination within 60 days after the determination is issued. The municipality must consider the protest and must, within 60 days, issue a written notice of decision to the seller. The seller may petition the municipality for reconsideration of a notice of decision within 30 days after the issuance of the notice, and, following reconsideration of such a petition, the municipality must, within 30 days, issue a written notice of reconsideration to the seller.

(10) A determination becomes final 60 days after the date of issuance, unless the seller, before the 60-day period expires, has filed a protest or secured a written extension of time within which to file a protest. If the seller has secured a written extension of time and fails to file a protest within the extended time period, the proposed assessment becomes a final assessment at the expiration of the extended filing period. If a protest is timely filed and the seller and the municipality are unable to resolve the disputed issues, the determination becomes final as of the date of issuance of the notice of decision, unless the seller timely files a petition for reconsideration. If a petition for reconsideration is timely filed, the determination becomes final upon issuance of a notice of reconsideration.

(11) A notice of decision or a notice of reconsideration must address each issue raised in the protest or petition, must explain the reasoning underlying the conclusions reached, and must advise the seller of the remedies available to it if it disagrees with the municipality’s disposition of the issues.

(12) A seller may contest the legality of any determination by filing an action in circuit court within 60 days after the date the determination becomes final. However, in any action filed in circuit court to contest the legality of any tax, penalty, or interest assessed under this section, the plaintiff must pay the municipality the amount of the tax, penalty, and accrued interest which is not being contested by the seller. Venue lies in the county where the municipality is located. The defendant in any such action is the municipality.

(13) A seller’s failure to protest a determination under this section administratively or judicially does not waive or impair the seller’s right to seek refund of any overpayment within the time allowed under subsection (4).

(14) A seller’s liability for any tax, interest, or penalty may be settled or compromised by the municipality upon the grounds of doubt as to liability or doubt as to the collectibility of such tax, interest, or penalty. A municipality and a seller may enter into a written closing agreement that reflects the terms of any settlement or compromise. When such a closing agreement has been approved on behalf of the municipality and the seller, it is final, conclusive, and binding on the parties with respect to all matters set forth therein; and, except upon a showing of fraud or misrepresentation of material fact, additional assessment may not be made against the seller for the tax, interest, or penalty specified in the closing agreement for the time period specified in the closing agreement, and the seller may not institute any judicial or administrative proceeding to recover any tax, interest, or penalty paid under the closing agreement. In issuing a determination, a municipality must include in its notification thereof to the seller the names of the persons authorized to approve compromises and to execute closing agreements. A municipality may also enter into agreements for scheduling payments of taxes, interest, and penalties, which agreements must recognize both the seller’s financial condition and the best interest of the municipality, if the seller gives accurate, current information and meets all other tax obligations on schedule.

(15) All notices of intent to audit, determinations, notices of decisions, and notices of reconsideration issued under this section must be transmitted to the seller by certified mail, return receipt requested, and the date of issuance is the postmark date of the transmittal. All protests and petitions for reconsideration are timely filed if postmarked or received by the municipality within the time prescribed by this section. If mailed, protests and petitions must be transmitted by certified mail, return receipt requested.

(16) A seller may pay any contested amount, in whole or in part, at any time, and the payment does not impair any of the seller’s remedies as provided in this section.

(17) Each municipality that levies the public service tax shall furnish sellers with prompt, accurate responses to questions and to requests for tax assistance. In the event a law is enacted requiring payment of interest on refunds of taxes paid pursuant to chapter 203 or chapter 212, municipalities shall pay interest on public service tax refunds at the rate required by such law.

(18) In all matters connected with the administration of the public service tax, sellers have the right:

(a) To be represented by counsel or other qualified representatives;

(b) To procedural safeguards with respect to the recording of interviews during tax determination processes conducted by the municipality; and

(c) To have audits, inspections of records, and interviews conducted at a reasonable time and place.

(19) Municipalities may communicate with each other concerning the following:

(a) Technical information concerning a seller’s tax and accounting system necessary to conduct an accurate and efficient audit of a specific company; however, in no event shall the information include any data relevant to a specific purchaser or account or the seller’s tax treatment of specific services;

(b) Names and addresses of companies selling taxable services within their respective jurisdictions; and

(c) The name of any company issued a refund of taxes and the total amount of taxes refunded to such company.

(20) Except as otherwise provided in this subsection, a municipality may not assess or attempt to assess a seller for any costs incurred by or charged to the municipality in connection with performing an audit of the seller’s books and records, including all travel expenses. Any assessment or proposed assessment of such costs shall be void and unenforceable. A municipality may, however, assess and collect from the seller the reasonable travel expenses incurred by or charged to the municipality in connection with performing an audit of the seller’s books and records if the seller received timely notice requesting access to such books and records in accordance with subsection (1) and the seller failed or refused to allow such access and did not propose an alternative date on which the audit was to commence, or if the seller and the municipality agreed in writing to an alternative date on which the audit was to commence but the seller then failed or refused to permit reasonable access to its books and records on the alternative date.

(21) The provisions of this section, other than subsection (6), shall not apply to the extent that the seller is the municipality levying the tax under audit or a separate utility authority, board, or commission of such municipality.