608-266-1279
Fiscal Estimate
Under the proposed order, the department establishes forfeiture dollar amounts for violations of s.
50.375 (2)
and
(3)
, Stats., relating to emergency contraception services to a female victim of sexual assault. The proposed forfeiture assessment ranges from $2,500 for a first violation to $5,000 for a subsequent violation. The Wisconsin constitution requires that all forfeitures are to be deposited in the Common School Fund with this department receiving no benefit from the forfeiture assessment. The State of Wisconsin operates 4 hospitals, 11 other hospitals are operated by counties or other local governmental entities and would be subject to forfeiture assessment if they were found to be out of compliance. There may be an increase in costs for government run hospitals that violate s.
50.375
, Stats. There are no other provisions in the proposed rules beyond statutory requirements that would affect state or local government costs.
There is no fiscal impact on small business as defined in s.
227.114 (1)
, Stats., as none of Wisconsin's hospitals meet the definition of a small business.
A copy of the fiscal estimate may be obtained from the department upon request.
State fiscal effect
Indeterminate. Increase in costs that may be possible to absorb within the agency's budget.
Fund sources affected
GPR.
Affected Ch.
20
appropriations
Local government costs
Increase costs.
Local government units affected
Cities and Counties.
Private sector fiscal effect
None.
Agency Contact Person
Pat Benesh, Quality Assurance Program Spec-Senior
Division of Quality Assurance
1 West Wilson St., Room 1150
Madison, WI 53701
Phone: 608-264-9896
Fax: 608-267-7119
Notice of Hearing
Natural Resources
Fish, Game, etc., Chs. NR 1—
NOTICE IS HEREBY GIVEN THAT pursuant to s.
227.11 (2) (a)
, Stats., the Department of Natural Resources will hold a public hearing on revisions to section
NR 45.04 (1) (g)
, Wis. Adm. Code, relating to regulation of firewood entering department lands. The proposed amendment would prohibit anyone from bringing onto department managed lands firewood from greater than 25 miles from the campground or property, from outside of Wisconsin, or from areas quarantined by the state, a federal agency or tribal government or designated zones of infestation if the property is outside of the quarantine or infested zone unless the firewood source is approved by the Wisconsin DATCP. The amendment also defines firewood for the use of this rule.
Hearing Information
The hearing will be held on:
December 15, 2009, 7:00 p.m
. at the following sites:
•
Pyle Center, 702 Langdon St., Room 315, Madison
•
UW-Green Bay, 2420 Nicolet Drive, Room IS1034, Green Bay
•
UW-Marathon County, 518 S. 7th Ave., Room 220, Wausau
•
UW-Eau Claire, 105 Garfield Ave., Room 1118, Old Library, Eau Claire
Pursuant to the Americans with Disabilities Act, reasonable accommodations, including the provision of informational material in an alternative format, will be provided for qualified individuals with disabilities upon request. Please call Dr. Andrea Diss-Torrance at 608-264-9247 with specific information on your request at least 10 days before the date of the scheduled hearing.
Copies of Proposed Rule and Submission of Written Comments
The proposed rule and supporting documents, including the fiscal estimate may be viewed and downloaded and comments electronically submitted at the following Internet site:
http://adminrules.wisconsin.gov
. (Search this Web site using the Natural Resources Board Order No. FR-25-09. Written comments on the proposed rule may be submitted via U.S. mail to Dr. Andrea Diss-Torrance, Division of Forestry, P.O. Box 7921, Madison, WI 53707 or by e-mail to
Andrea.DissTorrance@wisconsin.gov
. Comments may be submitted until December 31, 2009. Written comments whether submitted electronically or by U.S. mail will have the same weight and effect as oral statements presented at the public hearings. If you do not have Internet access, a personal copy of the proposed rule and supporting documents, including the fiscal estimate may be obtained from: Dr. Andrea Diss-Torrance, Division of Forestry P.O. Box 7921, Madison, WI 53707 or by calling (608) 264-9247.
Analysis Prepared by the Department of Natural Resources
Statutes interpreted
Statutory authority
Related statute or rule
Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) ch.
ATCP 21
regulates import and movement of firewood and other host material of the emerald ash borer, Asian longhorn beetle, hemlock woolly adelgid and sudden oak death. The Wisconsin Department of Natural Resources ch.
NR 40
prohibits the movement of materials carrying specific invasive species, such as firewood with emerald ash borer (EAB) or asian longhorned beetle. This rule supports ch.
ATCP 21
and
NR 40
.
Plain language analysis
This rule will prohibit anyone from bringing onto department managed lands firewood from greater than 25 miles from the campground or property, from outside of Wisconsin, or from areas quarantined by the state, a federal agency or tribal government or designated zones of infestation if the property is outside of the quarantine or infested zone unless the firewood source is approved by the Wisconsin DATCP. The purpose of this rule is to reduce the risk of introduction and spread of EAB and other invasive insects and diseases of trees by reducing the distance firewood used on the properties is moved. Currently, EAB is moving primarily on firewood and parks and campgrounds in other states have been sites of new introductions as a result (Muirhead et al. 2006). This rule will provide additional protection for state parks and forests, set a good example for county, municipal and private campgrounds and reduce a reason people move firewood: for use while camping. While this rule may cause some inconvenience for campers, it is dwarfed by the cost of infestation or establishment of this pest to the public and the state. To minimize any inconvenience, the department is working with firewood dealers and the Wisconsin DATCP to assure a sufficient supply of safe and affordable firewood at department campgrounds.
Invasive, foreign pests and diseases are often very destructive as native trees typically have little resistance, there are rarely effective natural enemies to regulate infestations and effective pesticides may be unavailable. EAB is a dramatic example of this situation. Where it is established, it has eliminated all ash species in the region. Cities and towns in southeastern Michigan have been stripped of street trees and lowland forests decimated as this beetle has killed the ash trees that dominate these landscapes. The cost of removal of hazardous dead trees alone has cost communities millions and they continue to suffer associated costs from reduced property values and increased energy and water costs. Wisconsin is at least as vulnerable to EAB as Michigan. Thirty percent of our community trees are ash and ash species are common to dominant in our northern hardwood, central hardwood and lowland forests. Dealing with EAB and other invasives once established is very expensive but EAB and many other invasives move slowly if not transported on firewood or other host material. If this artificial movement can be reduced, many communities and woodlands in Wisconsin need not suffer damage from EAB for many years. While federal and state quarantines on nursery stock and logs have been effective, those on firewood have largely failed to prevent movement of this pest. Most infestations distant from the core infestation in southeastern Michigan have been traced back to firewood as the source of the introduction. Recognizing this risk, the Wisconsin DATCP and DNR have proposed additional limits on movement of firewood into and within the state. This rule supports DATCP's external quarantine and DNR's NR 40. In addition, the further tightening of restrictions on firewood allowed into state properties sends a strong message that we need to be even more active in preventing spread of EAB now that it is in the state. In the event that an infestation of emerald ash borer is discovered on a department property, movement from that property of all infested host material including firewood would be halted by the DATCP and NR 40, minimizing the risk of spread.
The regulation of firewood into department properties is supported by an intensive information and education program to reach campers who could be affected by the new regulation and to raise awareness of the risk posed by the movement of firewood. The department also reaches out to municipal and private campground managers to educate them on why we are taking this step and encourage and support them if they decide to do likewise. The department will also work with the DATCP and firewood dealers to ensure campers have a sufficient supply of safe and reasonably priced firewood.
Comparison with federal regulations
The Apostle Islands National Park has prohibited bringing any firewood into the park since 2006. The Chequamegon-Nicolet National Forest prohibits firewood from greater than 25 miles onto the forest. The Army Corp of Engineers regulates the firewood they allow onto their lands along the upper Mississippi.
Comparison with rules in adjacent states
Michigan:
Michigan prohibits movement of ash products including firewood from the quarantined counties. Campers from quarantined areas entering Michigan parks are questioned if they brought firewood from the quarantined area and if so confiscation of firewood and fines could result.
Minnesota:
Minnesota state parks allow wood from approved vendors that are within Minnesota and within 100 miles of the park. To be approved, vendors must either exclude ash from their wood, heat treat or debark the wood. Firewood from EAB quarantined counties is not allowed into parks outside the quarantined area.
Iowa:
Iowa state parks prohibit wood from EAB or gypsy moth quarantined areas unless carrying a USDA certificate stamp indicating the wood has been treated to prevent transmission of the pest.
Illinois:
Illinois prohibits the movement of host materials including wood from the area quarantined for Asian longhorned beetle and is considering regulation of firewood entering state lands.
Summary of factual data and analytical methodologies
Firewood is generally recognized as a major source of new infestations of EAB (Muirhead et al 2006) and other invasives that infest wood. Figure 1. shows the outlying infestations of EAB in Michigan in 2005 and their probable source. Note that most of the colonies outside epicenter in the Detroit area were traced back to infested firewood brought in from the quarantined area. Quarantines on nursery stock and logs have been successful in discouraging exportation of infested host material from these sources. When such quarantines are broken, it is often detected quickly and material can be retrieved or at least the potentially infested area can be accurately delineated and treated. This happened in Maryland and Virginia where a dealer received an illegal shipment of nursery stock from Michigan. The Virginia introduction appears to have been successfully eradicated though the one in Maryland is still being treated. In contrast, much firewood is moved by individuals and there is little that can be done to regulate its movement out of a quarantined area except to try and educate the public to the risk. An external quarantine can add a second opportunity to intercept the infested host material and enforcement is often more vigorous since the people enforcing the quarantine are trying to protect their own resources.
One advantage we have in dealing with wood infesting pests and diseases is that many move slowly on their own, like EAB. If we can reduce the distance infested firewood moves, we can slow the spread of these invasives. Slowing the expansion of infestations and establishment of new populations has benefits. It buys time for the development of new control options. It delays the time when a community or forest will suffer impacts allowing time to prepare, minimizing losses. Once an invasive has become established in the state it is even more important to prevent spread, even locally. It is our communities and forests that directly benefit. Further restricting the distance from which firewood may be brought into state lands sends a strong message that we must increase our efforts to prevent spread of invasives like EAB and not give up just because it is now found in the state. Recently, Forestry staff working with a Forest Service scientist developed a model of the risk of introducing a wood borne invasive into Wisconsin state campgrounds given increasing numbers of populations of the invasive in the state and differing distances from which firewood was allowed into the property. Figure 2. shows the results of this model. As the number of populations of an invasive increases in Wisconsin, the number of state campgrounds that are at risk because a population of the pest is within the circumference for allowable firewood also increases. However, the rate at which the number of campgrounds at risk increases is very different for the four distances modeled. For example, at 8 populations of invasive X in Wisconsin, 54% of the state campgrounds were at risk in the 50 mile radius model, 21% were at risk in the 25 mile radius, and only 4% were at risk when only wood from 10 miles away was allowed into the campground. This model shows the importance of reducing the distance firewood moves in reducing the risk of introductions into our parks, communities and forests.
Figure 1. 2005 Map of infestations of emerald ash borer and probable source of infestation.
While risk of introduction of EAB or other wood borne pests and diseases would be minimized if we did not allow wood from outside the property to enter, that is not practical. Many state campgrounds could not supply wood from within their boundaries. We presented the results of our model to Parks program leaders and State Forest staff and asked for input on whether to reduce the distance from which wood could be brought into their properties. They responded that the distance should be reduced to reduce the risk of introduction and send the right message to the public but that they felt that they could not reliably supply enough firewood at all campgrounds if we reduced the distance below 25 miles. For these reasons, the DNR recommends that firewood be allowed onto state lands from no more than 25 miles from its point of origin.
Figure 2. Mean number (+SD) of Wisconsin state campgrounds where a population of wood borne invasive X occurs within the distance firewood is allowed into the campground given a number of populations of invasive X (# Invasives) randomly distributed in Wisconsin. Four allowable distances were plotted; 100, 50, 25 and 10 miles from the campground. There are 172 state campgrounds used in this model.
Analysis and supporting documents used to determine effect on small business
This rule is designed to reduce the spread of invasive forest pests and diseases such as the EAB which pose a grave threat to Wisconsin forest and urban landscapes. This rule will help protect Wisconsin industries associated with tourism and forest products by protecting the resources on which they depend. Some firewood dealers may be initially impacted by this rule if they get firewood from greater then 25 miles from the state campgrounds or from out of state. Early analysis of a statewide survey of firewood dealers indicates that most dealers are obtaining their wood within 50 miles of the area where they sell it so fewer dealers may be impacted than might at first be thought. Dealers supplying firewood to state campgrounds have been able to segregate their wood into that from within the allowable distance and that from outside. DATCP has developed an approval process so that larger dealers that distribute over a wider area can have their wood approved for use on department properties using several treatments.
While this rule will require campers to obtain firewood near their campsite, this small expense will be dwarfed by savings to individuals and private business in its contribution to preventing or delaying the establishment of EAB and other invasive pests and diseases. Where EAB has been introduced, homeowners must pay hundreds of dollars to remove yard trees killed by the beetle as well as suffer property value decline due to loss of the trees. Communities must bear the cost of removal and replacement of killed ash trees along streets and in parks. Michigan communities have requested 6 million from Federal Emergency Management Agency to remove and replace street trees. Businesses that deal in nursery stock, logs and firewood are also impacted by establishment of EAB as markets outside the infested area no longer want their products or require costly inspections to show the shipment is pest free.
Small Business Impact
Pursuant to s.
227.114
, Stats., it is not anticipated that the proposed rule will have an economic impact on small businesses.
Environmental Analysis
The Department has made a preliminary determination that this action does not involve significant adverse environmental effects and does not need an environmental analysis under ch.
NR 150
, Wis. Adm. Code. However, based on the comments received, the Department may prepare an environmental analysis before proceeding with the proposal. This environmental review document would summarize the Department's consideration of the impacts of the proposal and reasonable alternatives.
Fiscal Estimate
Summary
We do not expect any fiscal effects on county, city, village, town, school district, technical college district or sewerage districts from these rules.
We expect that the major expense may be in communicating the new regulations to the public. Publications will be developed and printed in quantities sufficient to supply all campers arriving at our public campgrounds for the next 2 years. Therefore, printing costs are estimated at $50,000 in the first year. We expect that the public information and education effort will last 2 years with the greatest costs in the first year. We do not expect to add any staff to implement these rules, and we do not anticipate costs to the private sector as a result of these rules.
State fiscal effect
Increase costs that may be possible to absorb within agency's budget.
Local government costs
None.
Fund sources affected
SEG.
Affected Ch.
20
appropriations
Long-range fiscal implications
We do not expect long-term fiscal impacts. Expenses associated with public education and information will be in the next 2 years.
Agency Contact Person
Dr. Andrea Diss-Torrance
Phone: 608-264-9247
Fax: 608-266-8576
Notice of Hearing
Natural Resources
Environmental Protection — General, Chs. NR 100—
NOTICE IS HEREBY GIVEN that pursuant to sections
281.12 (1)
,
281.15
,
281.19 (1)
and
299.11
, Stats., and ch.
160
, Stats., the Department of Natural Resources will hold public hearings on amendments to Chapter
NR 140
, Wis. Adm. Code, relating to groundwater quality.
Hearing Information
The hearings will be held on the following dates and locations [Note: it is useful to check the website, or at the Visitor Center, for the UW campus locations listed below, for assistance locating campus buildings and to obtain information on campus visitor parking policies]:
December 11, Friday, 10:00 a.m.
Natural Resources State Office Building/GEF 2, Room G09, 101 South Webster Street, Madison, WI, 53703
December 14, Monday, 10:00 a.m.
Sauk County-UW Extension, West Square Administration Building, Room B30, 505 Broadway, Baraboo, WI, 53913
December 15, Tuesday, 10:00 a.m.
Eau Claire State Office Building, Room 139,
718 West Clairemont Avenue, Eau Claire, WI, 54701
December 15, Tuesday, 4:00 p.m.
UW-Stevens Point, Communications Arts Center (
CAC
), Room 211,
1101 Reserve Street,
Stevens Point, WI, 54481
December 16, Wednesday, 10:00 a.m.
UW-Oshkosh, Halsey Science Center, Room 259,
921 Elmwood Avenue,
Oshkosh, WI, 54901
Pursuant to the Americans with Disabilities Act, reasonable accommodations, including the provision of informational material in an alternative format, will be provided for qualified individuals with disabilities upon request. Please call Jim McLimans at (608) 266-2726 with specific information on your request at least 10 days before the date of the scheduled hearing.
Copies of Proposed Rules and Submission of Written Comments
The proposed rule and fiscal estimate may be reviewed and comments electronically submitted at the following Internet site:
http://adminrules.wisconsin.gov
. Written comments on the proposed rule may be submitted via U.S. mail to: Mr. Mike Lemcke, Wisconsin Dept. of Natural Resources, Bureau of Drinking Water & Groundwater, P.O. Box 7921, Madison, WI, 53707. Comments may be submitted until December 30, 2009. Written comments, whether submitted electronically or by U.S. mail, will have the same weight and effect as oral statements presented at the public hearings. A personal copy of the proposed rule and fiscal estimate may be obtained from Mr. Lemcke.
Analysis Prepared by the Department of Natural Resources
Statutory authority
Plain language analysis
Chapter
160
, Stats., requires the Department to develop numerical groundwater quality standards, consisting of enforcement standards and preventive action limits. Chapter
NR 140
, Wis. Adm. Code, establishes groundwater standards and creates a framework for implementation of the standards by the Department. These proposed amendments to ch.
NR 140
would add new state groundwater quality standards for 15 substances and revise existing standards for another 15 substances. In accordance with ch.
160
, Stats., amendments to ch.
NR 140
groundwater quality standards are based on recommendations from the Department of Health Services.
New public health related groundwater quality standards are proposed for: 1,4-Dioxane, Acetochlor, Acetochlor - ESA + OXA, Aluminum, Ammonia, Chlorodifluoromethane, Chlorpyrifos, Dimethenamid/Dimethenamid-P, Dinitrotol- uenes, Ethyl Ether, Manganese, Metolachlor - ESA + OXA, Perchlorate, Propazine and Tertiary Butyl Alcohol.
Revised public health related groundwater quality standards are proposed for: 1,3-Dichlorobenzene, 1,3-Dichloropropene, Acetone, Boron, Carbaryl, Chloromethane, Dibutyl Phthalate, Ethylene Glycol, Methyl Ethyl Ketone, Metolachlor, Metribuzin, Phenol, Prometon, Toluene and Xylene.
Minor revisions, to clarify rule language and update rule reference information, are also proposed to ch.
NR 140
. These revisions include:
•
Replacing current "Chromium" in ch.
NR 140
Table 1 with "Chromium (total)" to clarify that ch.
NR 140
standards apply to total chromium (combination of chromium III and chromium VI).
•
Replacing current "Cyanide" term in ch.
NR 140
Table 1 with "Cyanide, free" to clarify that ch.
NR 140
standards apply to "free cyanide" (HCN, CN
-
and metal-cyanide complexes that are easily dissociated into free cyanide ions).
•
Changing "Metolachlor" in ch.
NR 140
Table 1 to "Metolachlor/s-Metolachlor" to clarify that ch.
NR 140
standards apply to both Metolachlor (CAS RN 51218-45-2) and its stereo isomer, s-Metolachlor (CAS RN 87392-12-9).
•
Revising units for field specific conductance in s.
NR 140.20
Table 3 from micromhos/cm (micromhos per centimeter) to
m
S/cm (microsiemens per centimeter).
•
Revising s.
NR 140.28(5)(c)
6 note to add "for discharges, as defined by s.
283.01(4)
, Stats" language related to the need for a wastewater discharge permit.
•
Adding CAS RN of 142363-53-9 for Alachlor-ESA to Appendix I to Table 1.
•
Changing existing Appendix I to Table 1 CAS RN for Asbestos from 12001-29-5 (chrysotile asbestos) to 1332-21-4 (asbestos, all forms).
•
Adding "Chromium (total)", with CAS RN of 7440-47-3, to Appendix I to Table 1.
•
Adding CAS RN of 542-75-6 for cis/trans 1,3 Dichloropropene (mixed isomers) to Appendix I to Table 1.
•
Changing existing Appendix I to Table 1 CAS RN for Fluoride from 16984-48-8 to 7681-49-4.
•
Adding 1,1,1,2-PCA synonym for 1,1,1,2 tetrachloroethane to Appendix I to Table 1.
•
Adding 1,1,2,2-PCA synonym for 1,1,2,2 tetrachloroethane to Appendix I to Table 1.
•
Adding 1,1,1-TCA synonym for 1,1,1 trichloroethane to Appendix I to Table 1.
Comparison with federal regulations
The United States Environmental Protection Agency (US EPA) establishes health based drinking water maximum contaminant levels (MCLs), cancer risk levels and health advisories (HAs). Federal drinking water MCLs are established based on scientific risk assessments and, in some cases, economic and technological considerations. Cancer risk levels are established as the concentration of a chemical in drinking water that corresponds to a specific excess estimated lifetime cancer risk. Federal lifetime health advisories (LHAs) are developed based on an established health risk acceptable daily intake (ADI) level or reference dose (RfD). An ADI or RfD is the daily oral exposure to a chemical that is likely to be without an appreciable risk over a lifetime.
No federal drinking water MCLs have yet been established for any of the substances for which new Wisconsin state groundwater quality standards are proposed. Federal 1 in 1,000,000 drinking water cancer risk levels have been established at 3 ppb for 1,4-Dioxane and at 0.05 ppb for DNT (mixture of 2,4-/2,6-DNT). US EPA LHAs have been established at 2 ppb for Chlorpyrifos, at 300 ppb for Manganese and at 10 ppb for Propazine. The US EPA has also developed an "Interim Drinking Water Health Advisory" of 15 ppb for Perchlorate. RfDs have been established by EPA for: Dimethenamid at 0.05 mg/kg-day, Ethyl Ether at 0.2 mg/kg-day and Perchlorate at 0.0007 mg/kg-day. A
Reference Concentration (RfC) for Chronic Inhalation Exposure
of 50 mg/cu.m has been established by EPA for Chlorodifluoromethane.
US EPA Contaminant Candidate List (CCL): The Contaminant Candidate List (CCL) is the US EPA's
list of unregulated contaminants which may require national drinking water regulation in the future. The current list is designated
Contaminant Candidate List 2 (
CCL 2).
Substances currently on EPA's CCL 2 include: Aluminum, Acetochlor, Acetochlor-ESA, Acetochlor-OXA, Metolachlor-ESA, Metolachlor-OXA and Perchlorate. Substances currently proposed for inclusion on EPA's draft CCL 3
include: 1,4-Dioxane, Acetochlor, Acetochlor-ESA, Acetochlor-OXA, Chlorodifluoromethane, Metolachlor- ESA, Metolachlor-OXA, and Perchlorate
.
Comparison of rules in adjacent states
The proposed amendments to ch.
NR 140
, Wis. Adm. Code, would add new state numeric groundwater quality standards for 15 substances: 1,4-Dioxane, Acetochlor, Acetochlor ESA + OXA, Aluminum, Ammonia (as N), Chlorodifluoromethane, Chlorpyrifos, Dimethenamid/ Dimethenamid-P, Dinitrotoluenes (Total Residues), Ethyl Ether, Manganese, Metolachlor ESA + OXA, Perchlorate, Propazine and Tertiary Butyl Alcohol. The groundwater quality standards contained in ch.
NR 140
are used in Wisconsin by state regulatory agencies as state groundwater protection standards. These standards are used as contamination site cleanup levels, design and management criteria for regulated activities and as minimum public health and welfare protection standards for contaminants in groundwater.
The states surrounding Wisconsin: Minnesota, Michigan, Illinois and Iowa, also use groundwater protection values/levels/standards in their regulation of practices and activities that might impact the quality of groundwater resources. Three of the states surrounding Wisconsin have promulgated individual state groundwater protection standards and one utilizes established federal standards (federal drinking water maximum contaminant levels, lifetime health advisory levels and established cancer risk levels) as their state groundwater protection standards.
Groundwater protection quality standards are usually developed based on health risk assessments. States are often required to follow state specific health risk assessment methodology when establishing groundwater protection quality standards. States may use state specific health risk assessments; factors and methodology in calculating and developing their groundwater protection standards. This use of different health risk assessment factors and methodologies has lead to the establishment of different state groundwater protection standard levels for the same substance. For example, the health based groundwater protection quality standard for manganese used by the states surrounding Wisconsin varies by state - the standard used in Minnesota is 300 ppb, the standard used in Michigan is 860 ppb, Illinois uses 150 ppb and the standard used in Iowa is 300 ppb, the federal Lifetime Health Advisory level.
Minnesota:
The state of Minnesota has established state groundwater protection "Health Risk Limits" (HRLs) under Minnesota Statutes Section 103H.201. The State of Minnesota has established HRLs for Acetochlor at 9 ppb and for Ethyl Ether at 1,000 ppb. The Minnesota Department of Health has also calculated "Health Based Values" (HBVs) for some groundwater contaminants. Minnesota HBVs are not standards that have been promulgated by rule but are calculated concentrations that may be used as advisory levels by Minnesota state groundwater and environmental protection programs. The State of Minnesota has established HBVs for: Metolachlor-ESA at 800 ppb, Metolachlor-OXA at 800 ppb, Acetochlor-ESA at 300 ppb and Acetochlor-OXA at 100 ppb. The Minnesota Department of Health also issues Risk Assessment Advice (RAA) levels for some groundwater contaminants. Minnesota Department of Health RAAs are advisory concentrations developed to assist Minnesota agencies in evaluating potential health risks to humans from exposures to a chemical. Generally, RAAs contain greater uncertainty than HRLs and HBVs because the information available to develop them is more limited. The State of Minnesota has established a RAA for Manganese at 300 ppb.
Michigan:
The state of Michigan has established state groundwater protection quality standards. Michigan "Drinking Water Criteria and Risk Based Screening Levels (RBSLs)" are Michigan state groundwater protection standards authorized in accordance with Michigan's Natural Resources and Environmental Protection Act, 1994 PA 451 (NREPA). The State of Michigan has established a Drinking Water Criteria/RBSL for: 1,4-Dioxane at 85 ppb, Manganese at 860 ppb, Aluminum at 300 ppb, Propazine at 200 ppb, Chlorpyrifos at 22 ppb, Ethyl Ether at 3,700 ppb and Tertiary Butyl Alcohol at 3,900 ppb. The State of Michigan also has established a Drinking Water Criteria/RBSL for "all potential sources of nitrate-nitrogen", including ammonia nitrogen, in groundwater drinking water supplies at 10,000 ppb.
Illinois:
The state of Illinois has established state groundwater quality standards for "potable resource groundwater". Illinois Groundwater Quality Standards are state groundwater protection standards promulgated in 35 Ill. Adm. Code 620, environmental protection regulations. Illinois state "Groundwater Quality Standards for Class I: Potable Resource Groundwater" have been established for Manganese at 150 ppb. The state of Illinois also has established "Groundwater Cleanup Objectives" in 8 Ill. Adm. Code 259. Illinois Groundwater Cleanup Objectives include both Illinois state Groundwater Quality Standards and Human Threshold Toxicant Advisory Concentrations (HTTACs). Illinois has established state Groundwater Cleanup Objectives for Class I, Potable Resource Groundwater: at 21 ppb for Chlorpyrifos, at 2 ppb for Acetochlor and at 10,000 ppb for Ammonia. The Illinois Acetochlor groundwater cleanup objective value was established in accordance with the Acetochlor Registration Agreement monitoring program. The state groundwater cleanup objective for Ammonia was developed based on the US EPA's 30,000 ppb Lifetime Health Advisory level for ammonia in drinking water.
Iowa:
The state of Iowa has not established specific state groundwater protection standards. In accordance with Iowa Environmental Protection Regulations 567 IAC Chapter
133
, Iowa uses established federal EPA
lifetime health advisory levels, "negligible risk levels" (NRLs) for carcinogens (estimate of one additional cancer case per million people over a lifetime of exposure) and federal drinking water maximum contaminant levels (MCLs) as "Action Levels" in their regulation of practices and activities that may adversely impact groundwater quality. As noted in section 6 above, federal lifetime health advisory levels have been established at 2 ppb for Chlorpyrifos, at 300 ppb for Manganese and at 10 ppb for Propazine. Federal 1 in 1,000,000 drinking water cancer risk levels have been established at 3 ppb for 1,4-Dioxane and at 0.05 ppb for DNT (mixture of 2,4-/2,6-DNT).
Summary of the factual data and analytical methodologies
In accordance with s. 160. 07, Stats., the Department is required, for substances of public health concern, to propose rules establishing recommendations from the Department of Health Services (DHS) as state groundwater quality enforcement standards. In accordance with s.
160.15
, Stats., the Department is required to establish by rule a preventive action limit for each substance for which an enforcement standard is established.
The DHS has provided the Department, in a document titled
Scientific Support Documentation for Cycle 9 Revisions of NR 140.10 Groundwater Enforcement Standard & Preventive Action Limit Recommendations
(dated May 2009), its recommendations for new state public health related groundwater quality standards for 15 substances: 1,4-Dioxane, Acetochlor, Acetochlor ESA + OXA, Aluminum, Ammonia (as N), Chlorodifluoromethane, Chlorpyrifos, Dimethenamid/Dimethenamid-P, Dinitrotolu- enes, Ethyl Ether, Manganese, Metolachlor ESA + OXA, Perchlorate, Propazine and Tertiary Butyl Alcohol. DHS has also provided recommendations for revisions to existing public health related state groundwater quality standards for 15 additional substances: 1,3-Dichlorobenzene, 1,3-Dichloropropene, Acetone, Boron, Carbaryl, Chloromethane, Dibutyl Phthalate, Ethylene Glycol, Methyl Ethyl Ketone, Metolachlor, Metribuzin, Phenol, Prometon, Toluene and Xylene.
The Department is proposing rules establishing the DHS enforcement standard recommendations as ch.
NR 140
, Wis. Adm. Code, state groundwater quality enforcement standards. The Department is also proposing rules establishing ch.
NR 140
, Wis. Adm. Code, state groundwater quality preventive action limits in accordance with s.
160.15 (1)
, Stats.
Analysis and supporting documentation used to determine effect on small businesses
In its determination of the effect of this proposed rule on small businesses, the Department used analysis and supporting documentation that included information from the U.S. Department of Agriculture—National Agricultural Statistics Service (NASS), the University of Wisconsin (UW)—Department of Agronomy and the Wisconsin Department of Agriculture Trade and Consumer Protection (DATCP). Information used from the United States Department of Agriculture NASS included agricultural chemical usage reports from 2001-2007, and the NASS Agricultural Chemical Use Database. Information used from the UW Department of Agronomy included the UW Extension 2008 Herbicide price list and the UW Extension Corn and Soybean Herbicide Chart. Information from DATCP included data from DATCP's
Agricultural Chemicals in Wisconsin Groundwater - Final Report March 2008
document and results from the agency's groundwater monitoring and pesticide registration databases.
Small Business Impact
The Department has determined that this rule order will not have a significant economic impact on small businesses. Chapter
NR 140
, Wis. Adm. Code, currently contains groundwater standards for 123 substances of public health concern, 8 substances of public welfare concern and 15 indicator parameters. The proposed groundwater standard revisions would apply to all regulated facilities, practices and activities which may impact groundwater quality.
The enforcement of Wisconsin state groundwater quality standards is done by state regulatory agencies through their groundwater protection programs. State regulatory agencies, in exercising their statutory powers and duties, establish groundwater protection regulations that assure that regulated facilities and activities will not cause state groundwater quality standards to be exceeded. A state regulatory agency may establish specific design and management criteria to ensure that regulated facilities and activities will not cause the concentration of a substance in groundwater, affected by the facilities or activities, to exceed state groundwater quality enforcement standards or preventive action limits at an applicable "point of standards application" location.
Regulated facilities, practices and activities, which are sources of the substances for which new and revised groundwater standards are proposed are, for the most part, likely sources of substances for which groundwater standards already exist. Consequently, there will likely be few cases where the proposed standards will be exceeded where existing standards are not currently being exceeded. Additional monitoring costs may be imposed upon regulated facilities, practices and activities, but the extent of such monitoring and any costs associated with it, while too speculative to quantify at this time, are not expected to be significant.
The proposed revisions to state groundwater quality standards include new and revised standards for some pesticides and pesticide degradation products found in Wisconsin groundwater. New proposed groundwater quality standards include standards for the insecticide chlorpyrifos, the herbicides acetochlor, dimethenamid and propazine, and the herbicide degradation products acetochlor ethane sulfonic acid and oxanilic acid, and metolachlor ethane sulfonic acid and oxanilic acid.
The insecticide active ingredient chlorpyrifos is used in corn to control rootworm, and in soybeans to control aphids and spider mites. There are currently 32 insecticide products registered in Wisconsin that contain the active ingredient chlorpyrifos. Chlorpyrifos has been reported as detected in groundwater at 2% of DATCP Agricultural Chemical Cleanup Program sites. In a DATCP 2007 statewide survey of agricultural chemicals in Wisconsin groundwater, no chlorpyrifos was reported detected in 398 private water supply wells sampled.
Acetochlor and dimethenamid/dimethenamid-P are herbicides that have been used in Wisconsin to control weeds in corn and soybeans. There are currently 46 herbicide products registered in Wisconsin that contain the active ingredient acetochlor or dimethenamid/dimethenamid-P. Acetochlor has been reported as detected in groundwater at 25% of DATCP Agricultural Chemical Cleanup Program sites and dimethenamid/dimethenamid-P has been reported as detected at 27% of those sites. In DATCP's 2007 statewide survey of agricultural chemicals in Wisconsin groundwater, no "parent" acetochlor or dimethenamid/dimethenamid-P were reported as detected in 398 private water supply wells sampled. Metabolite degradation products of these herbicides were, however, detected in some of the sampled wells.
Propazine is a herbicide used for weed control on sorghum, umbelliferous crops (carrots, parsley etc.) and greenhouse ornamentals. It is also a contaminant of the herbicide atrazine, which is used in Wisconsin on corn. There are currently no herbicide products registered in Wisconsin that contain the active ingredient propazine. Propazine has been reported as detected in groundwater at 22% of DATCP Agricultural Chemical Cleanup Program sites.
The acetochlor ethane sulfonic acid and oxanilic acid (acetochlor ESA & OXA) degradation products of acetochlor have been found in Wisconsin groundwater. In DATCP's 2007 statewide survey of agricultural chemicals in Wisconsin groundwater, acetochlor ESA & OXA were reported as detected in 16 private water supply wells and 3 private water supply wells respectively, of 398 wells sampled. The highest levels of acetochlor ESA & OXA reported in the DATCP study were 2.32 ppb and 4.36 ppb respectively. The highest levels reported in the DATCP groundwater monitoring database for private water supply wells are 9.52 ppb for acetochlor-ESA and 4.36 ppb for acetochlor-OXA.
In the DATCP's 2007 statewide survey of agricultural chemicals in Wisconsin groundwater, metolachlor ESA & OXA were reported as detected in 106 private water supply wells and 18 private water supply wells respectively, of 398 wells sampled. The highest levels of metolachlor ESA & OXA reported in the DATCP study were 6.54 ppb and 1.37 ppb respectively. The highest levels reported in the DATCP groundwater monitoring database for private water supply wells are 31.2 ppb for metolachlor-ESA and 22.8 ppb for metolachlor-OXA.
As it appears that the occurrence of the pesticides chlorpyrifos, acetochlor, dimethenamid/dimethenamid-P and propazine in Wisconsin groundwater is limited to DATCP Agricultural Chemical Cleanup Program sites, and as the pesticide metabolite degradation products acetochlor ESA & OXA and metolachlor ESA & OXA have been detected statewide at levels relatively low compared to proposed state groundwater quality standards for those substances, and as comparably priced alternative herbicide products appear to be available to state farmers, the Department has determined that any management practice restrictions placed on the pesticides chlorpyrifos, acetochlor, dimethenamid/dimethenamid-P and propazine to limit their impact on Wisconsin groundwater, or on acetochlor or metolachlor to limit the impact of their ESA or OXA metabolite degradation products on groundwater, are unlikely to have a significant economic impact on corn or soybean growers in Wisconsin.
Small business regulatory coordinator
Environmental Analysis
The Department has made a preliminary determination that this action does not involve significant adverse environmental effects and does not need an environmental analysis under ch.
NR 150
, Wis. Adm. Code. However, based on the comments received, the Department may prepare an environmental analysis before proceeding with the proposal. This environmental review document would summarize the Department's consideration of the impacts of the proposal and reasonable alternatives.
Fiscal Estimate
Summary
Although additional monitoring costs may be imposed upon the state or local government entities that are within the regulated community, the extent of such monitoring and any costs associated with it — while too speculative to quantify at this time — are not expected to be significant. Further, any increased monitoring costs associated with the setting of an ES and PAL for new substances and the lowering of the existing ES and PAL for other substances may be offset by cost savings associated with the relaxing of ESs and PALs for other compounds. Thus, on balance, the Department believes it is unlikely that there will be additional costs to state and local governments resulting from adopting these groundwater standards
State fiscal effect
None.
Local government costs
None.
Agency Contact Person
Mike Lemcke, Chief, Groundwater Management Section, Wisconsin Department of Natural Resources, Bureau of Drinking Water & Groundwater, 101 S. Webster Street, Madison, WI 53707-7921; (608) 266-2104;
Michael.Lemcke@wisconsin.gov
.
Notice of Hearings
Revenue
NOTICE IS HEREBY GIVEN That pursuant to ss.
71.80 (9m) (c)
,
77.61 (19) (c)
, and
227.24
, Stats., the Department of Revenue will hold public hearings to consider emergency rules and the creation of permanent rules revising Chapters
Tax 2
and
11
, relating to penalties for failure to produce records.
Hearing Information
The hearings will be held:
December 10, 2009 at 1:30 p.m.
Events Room
State Revenue Building
2135 Rimrock Road
Madison, Wisconsin
December 21, 2009 at 9:00 a.m.
Events Room
State Revenue Building
2135 Rimrock Road
Madison, Wisconsin
Handicap access is available at the hearing location.
Submission of Written Comments
Interested persons are invited to appear at the hearings and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearings. Written comments may also be submitted to the contact person shown below no later than December 21, 2009. Written comments will be given the same consideration as testimony presented at the hearings.
Dale Kleven
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
Analysis Prepared by the Department of Revenue
Statutes interpreted
Statutory authority
Explanation of agency authority
Sections
71.80 (9m) (c)
and
77.61 (19) (c)
, Stats., provide that the Department shall promulgate rules to administer the penalties for failure to produce records.
Related statute or rule
There are no other applicable statutes or rules.
Plain language analysis
This proposed rule does the following:
•
Reflects changes in Wisconsin's tax laws due to the adoption of penalties for failure to produce records.
•
Provides guidance to Department employees and taxpayers so that the penalties can be administered in a fair and consistent manner. This includes providing a standard response time, a standard for noncompliance, and penalty waiver provisions.
Comparison with federal regulations
There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
Comparison with rules in adjacent states
The department is not aware of a similar rule in an adjacent state.
Summary of factual data and analytical methodologies
2009 Wisconsin Act 28
adopted statutory changes creating penalties for failure to produce records. Within these provisions are requirements that the Department promulgate rules to administer these penalties. The department has created this rule to reflect these changes in Wisconsin's tax laws and comply with statutory requirements.
Analysis and supporting documents used to determine effect on small business
As explained above, this emergency rule is created to reflect changes in Wisconsin's tax laws and comply with statutory requirements. As the rule itself does not impose any significant financial or other compliance burden, the department has determined that it does not have a significant effect on small business.
Anticipated costs incurred by private sector
This proposed rule does not have a significant fiscal effect on the private sector.
Small Business Impact
This proposed rule does not have a significant effect on small business.
Fiscal Estimate
Summary
The fiscal effect of these changes (a minimal increase in state revenues) was included in the fiscal estimates of
2009 Wisconsin Act 28
. Consequently, this proposed rule has no fiscal effect.
State fiscal effect
None.
Local government costs
None.
Text of Proposed Rule
SECTION 1.
Tax 2.85 is created to read:
Tax 2.85 Penalty for failure to produce records under s.
71.80(9m)
, Stats.
(1) GENERAL. A person who fails to produce records or documents, as provided under ss.
71.74 (2)
and
73.03 (9)
, Stats., that were requested by the department may be subject to the following penalties:
(a)
The disallowance of deductions, credits, exemptions or income inclusion to which the requested records relate.
(b)
In addition to any other penalties that the department may impose, a penalty for each violation under s.
71.80 (9m)
, Stats., that is equal to the greater of $500 or 25% of the amount of the additional tax on any adjustment made by the department that results from the person's failure to produce the records.
(2)
DEFINITIONS. In this section:
(a)
"Disallowance," "inclusion," or "adjustment" include action taken by the department when a proposed assessment or refund or notice of assessment or refund is issued to a taxpayer.
(b)
"Records" or "documents" include both paper and electronic formats. Examples include, but are not limited to, bills, receipts, invoices, contracts, letters, memos, accounting statements or schedules, general ledgers, journal entries, and board of director's minutes.
(c)
"Records requested were not provided" means that all records requested were not provided to the department within the time specified by the department.
(d)
"Written request for records" includes requests made by letter, e-mail, fax or any other written form.
(3)
PROCEDURES. The penalties in this section may be imposed if the records requested were not provided and the department provided the following notifications regarding the records requested:
(a)
A first written request for records where the department allowed the person a minimum of 15 days for the records to be provided.
(b)
A second written request for records where the department allowed the person a minimum of 30 days for the records to be provided. This second written request for records shall include a statement explaining that if the requested records are not provided by the date specified, the penalties provided by s.
71.80(9m)
, Stats., may be imposed.
Examples: 1) The department issues a first written request for records to John Jones on May 5, 2010, allowing him until May 20, 2010 to provide the records requested. Mr. Jones does not provide the requested records to the department by May 20, 2010. The department issues a second written request for records to him on June 1, 2010, allowing him until July 1, 2010, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s.
71.80(9m)
, Stats. Mr. Jones does not provide the requested records by July 1, 2010. Therefore, the department may disallow the deductions, credits, or exemptions or include in Wisconsin income the additional income to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Mr. Jones not providing the records requested.
2) The department issues a first written request for records to Corporation A on September 1, 2009, allowing Corporation A until October 6, 2009, to provide the records requested. Corporation A does not provide the requested records to the department by October 6, 2009. The department issues a second written request for records to Corporation A on October 21, 2009, allowing Corporation A until November 30, 2009, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s.
71.80(9m)
, Stats. Corporation A does not provide the requested records by November 30, 2009. Therefore, the department may disallow the deductions, credits, or exemptions or include in Wisconsin income the additional income to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Corporation A not providing the records requested.
3) The department issues a first written request for records to Corporation B on January 5, 2010, allowing Corporation B until January 20, 2010, to provide the records requested. Corporation B does not provide the requested records to the department by January 20, 2010. The department issues a second written request for records to Corporation B on February 8, 2010, allowing Corporation B until March 10, 2010, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s.
71.80(9m)
, Stats. Corporation B provides records to the department by March 10, 2010, but the department determines that the taxpayer did not provide some of the records requested by March 10, 2010. Therefore, since the taxpayer did not provide all of the records requested by March 10, 2010, the department may disallow the deductions, credits, or exemptions or include in Wisconsin income the additional income to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Corporation B not providing the records requested.
(4)
WAIVER OF PENALTIES. (a) The penalties in this section may be waived if the person whose records were requested can show that, under all the facts and circumstances, its response to the written request for records or its failure to respond to the written request for records was reasonable or justified by factors beyond the person's control. In determining whether the penalties will be waived, the department may consider the following factors:
1. Death of the taxpayer, tax preparer, accountant or other responsible party.
2. Onset of debilitating illness or injury of the taxpayer, tax preparer, accountant or other responsible party.
3. Natural disaster such as tornado, flood or fire.
4. Records that were destroyed due to events beyond control of the taxpayer or other responsible party and not due to neglect.
5. Any other unusual circumstance that the department believes pertinent.
(b) Providing requested records after the time period required for providing the records has expired, as provided in sub. (3), may result in a reduction of the penalty provided in sub. (1) (a) if the department determines that these records support a reduction in the disallowance or inclusion previously made by the department, but would not result in a reduction of the penalty provided in sub. (1) (b) unless the person can show that under all the facts and circumstances providing the requested records at that time was reasonable or justified by factors beyond the person's control.
Examples: 1) Since Corporation C does not provide the records requested by the date specified in a second written request for records to support interest expense deducted, the department issues a proposed audit report to Corporation C disallowing all the interest expense previously deducted. Additional tax of $100,000 and penalty of $25,000 results in the proposed audit report from disallowing this interest expense. Corporation C provides the records requested 26 days after the department issues the proposed audit report but before the notice of assessment is issued and explains that they were too busy with other aspects of their business to respond to the two written requests for records by the dates specified. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person's control. However, the records provided support half of the interest expense deduction previously claimed. Therefore, the interest expense adjustment is modified to reduce the proposed additional tax from $100,000 to $50,000, but the original proposed penalty of $25,000 for failure to provide records remains.
2) Since Mr. Smith does not provide the records requested regarding his cash business to support the reported gross receipts by the date specified in a second written request for records, the department issues a notice of assessment to Mr. Smith including an estimated amount into income for unreported receipts. Additional tax of $60,000, a negligence penalty of $15,000 and a penalty for failure to produce records of $15,000 results in the assessment from including these estimated receipts. Mr. Smith appeals the assessment, provides the records that were requested during the audit, and explains that he forgot to provide the records that were previously requested. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person's control. However, the records provided show that unreported receipts were only 20% of the amount previously included by the department as estimated unreported receipts. Therefore, the unreported receipts adjustment and negligence penalty are modified to reduce the additional tax from $60,000 to $12,000 and the negligence penalty from $15,000 to $3,000, but the original penalty for failure to produce records of $15,000 remains.
3) Assume the same facts as example 2, except that Mr. Smith explains that he did not previously provide the requested records because his accountant had possession of them and was in the hospital when the records were requested during the audit. In this situation the failure to provide the records requested is reasonable or justified by factors beyond the person's control. Therefore, the unreported receipts adjustment is modified to reduce the additional tax from $60,000 to $12,000, the negligence penalty is reduced from $15,000 to $3,000 and the original penalty for failure to produce records of $15,000 is waived.
SECTION 2.
Tax 11.90 is created to read:
Tax 11.90 Penalty for failure to produce records under s.
77.61 (19)
, Stats.
(1) GENERAL. A person who fails to produce records or documents, as provided under ss.
73.03(9)
and
77.59(2)
, Stats., that were requested by the department may be subject to the following penalties:
(a)
The disallowance of deductions, credits, exemptions or inclusions of additional taxable sales or additional taxable purchases to which the requested records relate.
(b)
In addition to any other penalties that the department may impose, a penalty for each violation under s.
77.61(19)
, Stats., that is equal to the greater of $500 or 25% of the amount of the additional tax on any adjustment made by the department that results from the person's failure to produce the records.
(2)
DEFINITIONS. In this section:
(a)
"Disallowance," "inclusion," or "adjustment" include action taken by the department when a proposed assessment or refund or notice of assessment or refund is issued to a taxpayer.
(b)
"Records" or "documents" include both paper and electronic formats. Examples include, but are not limited to, bills, receipts, invoices, contracts, letters, memos, accounting statements or schedules, general ledgers, journal entries, and board of director's minutes.
(c)
"Records requested were not provided" means that all records requested were not provided to the department within the time specified by the department.
(d)
"Written request for records" includes requests made by letter, e-mail, fax or any other written form.
(3)
PROCEDURES. The penalties in this section may be imposed if the records requested were not provided and the department provided the following notifications regarding the records requested:
(a)
A first written request for records where the department allowed the person a minimum of 15 days for the records to be provided.
(b) A second written request for records where the department allowed the person a minimum of 30 days for the records to be provided. This second written request for records shall include a statement explaining that if the requested records are not provided by the date specified, the penalties provided by s.
77.61 (19)
, Stats., may be imposed.
Examples: 1) The department issues a first written request for records to John Jones on May 5, 2010, allowing him until May 20, 2010, to provide the records requested. Mr. Jones does not provide the requested records to the department by May 20, 2010. The department issues a second written request for records to him on June 1, 2010, allowing him until July 1, 2010, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s.
77.61(19)
, Stats. Mr. Jones does not provide the requested records by July 1, 2010. Therefore, the department may disallow the deductions, credits, or exemptions or include the additional taxable sales or additional taxable purchases to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Mr. Jones not providing the records requested.
2) The department issues a first written request for records to Corporation A on September 1, 2009, allowing Corporation A until October 6, 2009, to provide the records requested. Corporation A does not provide the requested records to the department by October 6, 2009. The department issues a second written request for records to Corporation A on October 21, 2009, allowing Corporation A until November 30, 2009, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s.
77.61 (19)
, Stats. Corporation A does not provide the requested records by November 30, 2009. Therefore, the department may disallow the deductions, credits, or exemptions or include the additional taxable sales or additional taxable purchases to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Corporation A not providing the records requested.
3) The department issues a first written request for records to Corporation B on January 5, 2010, allowing Corporation B until January 20, 2010, to provide the records requested. Corporation B does not provide the requested records to the department by January 20, 2010. The department issues a second written request for records to Corporation B on February 8, 2010, allowing Corporation B until March 10, 2010, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s.
77.61 (19)
, Stats. Corporation B provides records to the department by March 10, 2010, but the department determines that the taxpayer did not provide some of the records requested by March 10, 2010. Therefore, since the taxpayer did not provide all of the records requested by March 10, 2010, the department may disallow the deductions, credits, or exemptions or include the additional taxable sales or additional taxable purchases to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Corporation B not providing the records requested.
(4)
WAIVER OF PENALTIES. (a) The penalties in this section may be waived if the person whose records were requested can show that, under all the facts and circumstances, its response to the written request for records or its failure to respond to the written request for records was reasonable or justified by factors beyond the person's control. In determining whether the penalties will be waived, the department may consider the following factors:
1. Death of the taxpayer, tax preparer, accountant or other responsible party.
2. Onset of debilitating illness or injury of the taxpayer, tax preparer, accountant or other responsible party.
3. Natural disaster such as tornado, flood or fire.
4. Records that were destroyed due to events beyond control of the taxpayer or other responsible party and not due to neglect.
5. Any other unusual circumstance that the department believes pertinent.
(b) Providing requested records after the time period required for providing the records has expired, as provided in sub. (3), may result in a reduction of the penalty provided in sub. (1) (a) if the department determines that these records support a reduction in the disallowance or inclusion previously made by the department, but would not result in a reduction of the penalty provided in sub. (1) (b) unless the person can show that under all the facts and circumstances providing the requested records at that time was reasonable or justified by factors beyond the person's control.
Examples: 1) Since Corporation C does not provide the records requested by the date specified in a second written request for records to support deductions for exempt sales, the department issues a proposed audit report to Corporation C disallowing all the deductions for exempt sales previously claimed. Additional tax of $100,000 and penalty of $25,000 results in the proposed audit report from disallowing the deductions for exempt sales. Corporation C provides the records requested 26 days after the department issues the proposed audit report but before the notice of assessment is issued and explains that they were too busy with other aspects of their business to respond to the two written requests for records by the dates specified. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person's control. However, the records provided support half of the deductions for exempt sales previously claimed. Therefore, the deductions for exempt sales adjustment is modified to reduce the proposed additional tax from $100,000 to $50,000, but the original proposed penalty of $25,000 for failure to provide records remains.
2) Since Mr. Smith does not provide the records requested regarding his cash business to support the reported gross receipts by the date specified in a second written request for records, the department issues a notice of assessment to Mr. Smith including an estimated amount into taxable sales for unreported receipts. Additional tax of $60,000, a negligence penalty of $15,000 and a penalty for failure to produce records of $15,000 results in the assessment from including these estimated receipts. Mr. Smith appeals the assessment, provides the records that were requested during the audit, and explains that he forgot to provide the records that were previously requested. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person's control. However, the records provided show that unreported receipts were only 20% of the amount previously included by the department as estimated unreported receipts. Therefore, the unreported receipts adjustment and negligence penalty are modified to reduce the additional tax from $60,000 to $12,000 and the negligence penalty from $15,000 to $3,000, but the original penalty for failure to produce records of $15,000 remains.
3) Assume the same facts as example 2, except that Mr. Smith explains that he did not previously provide the requested records because his accountant had possession of them and was in the hospital when the records were requested during the audit. In this situation the failure to provide the records requested is reasonable or justified by factors beyond the person's control. Therefore, the unreported receipts adjustment is modified to reduce the additional tax from $60,000 to $12,000, the negligence penalty is reduced from $15,000 to $3,000 and the original penalty for failure to produce records of $15,000 is waived.
Agency Contact Person
Dale Kleven
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
PO Box 8933
Madison WI 53708-8933
Telephone: (608) 266-8253
