STATE OF WISCONSIN TAX APPEALS COMMISSION. Petitioner, RULING AND ORDER JENNIFER E. NASHOLD, CHAIRPERSON:

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1 STATE OF WISCONSIN TAX APPEALS COMMISSION TITAN INTERNATIONAL, INC., DOCKET NO. 04-T-204 Petitioner, vs. RULING AND ORDER WISCONSIN DEPARTMENT OF REVENUE, Respondent. JENNIFER E. NASHOLD, CHAIRPERSON: This matter comes before the Commission for a ruling on cross-motions for summary judgment filed by the parties. Petitioner, Titan International, Inc., ("petitioner") is represented by Attorney David D. Wilmoth of Quarles & Brady, LLP, who has filed a Notice of Motion and Motion for Summary Judgment, an affidavit, a brief, and a reply brief in support of its motion. Respondent, Wisconsin Department of Revenue ("Department"), is represented by Attorney John R. Evans, who has filed a response brief and an affidavit with attached exhibits. In addition, each party filed supplemental briefs in response to the Commission's January 5, 2006 Order to do so. Having considered the motion and the entire record herein, the Commission finds, rules, and orders as follows: FACTS 1. On June 17, 2004, Cheri T. Holley, General Counsel for petitioner,

2 received via facsimile a Real Estate Transfer Fee Assessment dated April 8, 2004 ("Assessment") from the Department regarding Dico, Inc. ("Dico"). 2. The Assessment was in the amount of $31, for a quit claim deed recorded on May 19, 2000 between the grantor, Dico, and the grantee, Titan Wheel Corporation of Wisconsin ("Titan Wheel"). 3. Petitioner claims that it is the parent corporation of Dico and Titan Wheel. 4. The Assessment notice was addressed to Ms. Holley at an address of 2701 Spruce Street, Quincy, Illinois ("the Spruce Street address"). 5. On June 17, 2004, prior to the Assessment being sent by facsimile, Jeremy Wedige, of the Department's Bureau of Utility and Special Taxes, telephoned Ms. Holley and left a message. He subsequently received a telephone call from Ms. Holley regarding the Assessment and informed her that the Assessment was "past due." (Affidavit of Jeremy Wedige, Ex. 4 at 2.) Following the phone call, Mr. Wedige faxed the Assessment dated April 8, 2004 to Ms. Holley. 6. In an affidavit filed with the Commission, Ms. Holley states under oath that she had neither seen nor received a copy of the Assessment prior to receiving it by facsimile on June 17, Ms. Holley further states under oath that because the Assessment was addressed to her at petitioner's principal office, had it been received by U. S. mail at such office it would have been promptly brought to her attention. She states that she made an inquiry of those individuals in petitioner's principal office who would have 2

3 handled in-coming mail during the week of April 8 through April 15, 2004, and that none of them remembered seeing or receiving the Assessment or any other communication from the Department during that time. 8. Mr. Wedige issued a letter on February 12, 2004 to Dico at the Spruce Street address requesting additional information on the sale of the property from Dico to Titan Wheel. Mr. Wedige obtained the address and Ms. Holley's name from the Wisconsin Real Estate Transfer Return dated April 28, 2000, wherein Ms. Holley's signature appeared for both Dico and Titan Wheel. 9. Mr. Wedige received a letter dated March 12, 2004 from Ms. Holley, stating that Dico had received the Department's February 12, 2004 letter. Ms. Holley's letter was date-stamped by postage meter on March 17, Mr. Wedige discussed or attempted to discuss this case with Ms. Holley by telephone on five occasions between March 17 and March 19, 2004, the first four of which involved their only leaving messages. On March 19, 2004, Ms. Holley and Mr. Wedige discussed the audit by telephone. According to Mr. Wedige's affidavit, Ms. Holley told him during that conversation that Dico and Titan Wheel were "sister corporations 100% owned by Titan." (Wedige Affidavit at 2.) Mr. Wedige states in his affidavit that he prepared the original Assessment notice dated April 8, 2004 and the mailing envelope stamped with "Address Service Requested" and that he placed the envelope in his out-basket for pickup by the 1 In its Brief, the Department states that during the March 19, 2004 conversation, Mr. Wedige told Ms. Holley that the transfer "would be assessed." (Department's Brief at 5). Neither Mr. Wedige's affidavit nor his notes contained in Exhibit 4 to his affidavit support that assertion. 3

4 Department's regular mail service, which is the means by which all of his mail is posted in the United States Postal Service ("USPS"), and that "Form 3547 was not returned." According to the USPS website, Address Service Requested is a type of Ancillary Service Endorsement provided by the USPS which provides forwarding of mail to the recipient's new address, if one exists, and provides the sender with notification of the new address, whereupon a fee is charged to the sender, presumably, via Form Mr. Wedige further states under oath that he did not receive the Assessment notice back from the USPS. 14. Immediately after receiving the Assessment via facsimile on June 17, 2004, petitioner sent the Department its petition for redetermination by FedEx, which the Department received on June 18, In a letter to Mr. Wedige dated June 17, 2004, Ms. Holley stated that the faxed Assessment had never been received by her office. She further stated, "If it had been, I would not have called your office at all, I would have just sent in a Notice of Appeal." (Wedige Affidavit, Ex. 8.) This letter was date-stamped by postage meter on June 21, The petition for redetermination claimed that petitioner first 2 The Department does not explain how the Address Service Requested operates or the significance of Form Rather, it provides as Exhibit 11 to Mr. Wedige's affidavit a copy of an envelope stamped, "Address Service Requested," which is not a copy of the envelope addressed to petitioner or Ms. Holley. Similarly, Exhibit 12 to Mr. Wedige's affidavit provides a copy of a Form 3547 from the USPS, showing a fee due of 70 cents and providing the recipient with an old and new address for an individual other than petitioner or Ms. Holley. As a result, the Commission takes official notice of the USPS website, which explains its Address Service Requested feature, summarized in Fact No. 12. The Commission was unable to locate any information on the website on Form

5 received the Assessment dated April 8, 2004 on June 17, 2004, via facsimile. It also challenged the Assessment on the following grounds: (1) the Assessment was deficient on its face, since it was not addressed or made out specifically to Dico; (2) the Assessment was untimely and past the statute of limitations; (3) Titan International, Inc., (petitioner) is the parent corporation of Dico and Titan Wheel, the property was quit claim deeded from Dico to Titan Wheel on April 28, 2000 for no consideration since Titan Wheel had been running the facility since July 1997, and the deed was only to make sure the chain of title was clear; (4) Titan Wheel had assumed all debt associated with the facility since July 1997, Dico received no consideration for the quit claim deed, and transfer tax was paid when the property was sold to a third party in May 2000; and (5) the transaction was exempt from real estate transfer fees under Wis. Stat (7), (10) or (15). Based on the foregoing, petitioner requested that the Assessment, interest, and penalty "be dismissed as erroneous." (Wedige Affidavit, Ex. 9 at 4.) 17. On June 24, 2004, the Department issued a Notice of Action denying the petition for redetermination on grounds that it was not filed in a timely manner under Wis. Stat (1) and 77.26(3) (appeals must be made to Department within sixty days). The Notice claimed that the Assessment was mailed April 8, 2004, and that the deadline to appeal was June 7, The Notice further stated that none of the exemptions contained in Wis. Stat applied, and that a conveyance between sister corporations is specifically subject to transfer fee pursuant to Wis. Admin. Code Tax 15.03(1)(h). 18. A petition for review to the Commission was timely filed by 5

6 petitioner on August 24, RULING Summary judgment standards Petitioner has moved for summary judgment on grounds that the Department failed to comply with the service requirements of Wis. Stat (11) in sending the Assessment via facsimile on June 17, 2004 and in sending the Assessment by regular first class mail, as the Department claims to have done, on April 8, Because the Department failed to comply with the statutory service requirements, petitioner argues, the Department improperly denied the petition for redetermination as untimely. Accordingly, petitioner requests that we reverse the Department's denial of the petition for redetermination and dismiss the Assessment in this case. The Department responds that summary judgment should not be granted to petitioner because there exists a dispute of material fact as to whether petitioner received the Assessment. Alternatively, the Department argues that summary judgment should be granted in favor of the Department because (1) there was satisfactory evidence of petitioner's receipt of the Assessment; (2) petitioner is equitably estopped from arguing lack of receipt; and (3) there was constructive receipt of the Assessment by petitioner. A summary judgment motion will be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Wis. Stat (2). A 6

7 party moving for summary judgment has the burden to establish the absence of a genuine, that is, disputed, issue as to any material fact. Grams v. Boss, 97 Wis. 2d 332, , 294 N.W.2d 473 (1980). Service Requirements Under Wis. Stat (11) Wisconsin Statutes 71.74(11) states, in relevant part: Department audits, additional assessments and refunds. * * * (11) NOTICE OF ADDITIONAL ASSESSMENT. The department shall notify the taxpayer in writing of any additional assessment by office audit or field investigation. That notice shall be served as are circuit summonses, or by registered mail, or by regular mail if the person assessed admits receipt or there is satisfactory evidence of receipt. The Department does not argue, and there would be no basis for arguing, that faxing the Assessment to petitioner on June 17, 2004 complied with the service requirements of 71.74(11). Thus, the issue is whether the original Assessment, which the Department claims to have sent by first class mail on April 8, 2004, was properly served under 71.74(11). There is no dispute that the original Assessment was not served "as are circuit court summonses, or by registered mail," and that petitioner does not "admit[] receipt" of the Assessment under 71.74(11). Rather, the Department maintains that there is "satisfactory evidence of receipt," as provided in 71.74(11), or, at minimum, that a genuine issue of material fact exists as to this question. In support of its assertion that there is satisfactory evidence of receipt by mail, the Department argues that receipt may be assumed because other correspondence to the same address reached petitioner, and that if the Assessment 7

8 failed to reach Ms. Holley specifically, it was due to petitioner's deficient office procedures and not the result of failures on the part of the Department or the USPS to deliver the Assessment to petitioner. The Department also relies on Mr. Wedige's assertion that he stamped the envelope containing the Assessment with "Address Service Requested," and that he did not receive anything back from the USPS indicating that the address had been changed. The Department correctly states that its February 12, 2004 inquiry letter reached petitioner at the same address contained on the Assessment, the Spruce Street address. The fact that one item of correspondence successfully reached petitioner, however, is not "satisfactory evidence" that petitioner received another item of correspondence, particularly where there is no evidence beyond Mr. Wedige's statement that he placed the Notice in his out-box for mailing that the Notice left the Department's office building or was successfully delivered to the USPS for mailing. Moreover, even taking as accurate Mr. Wedige's assertion that the Assessment envelope was stamped with "Address Service Requested" and that he did not receive a new address from the USPS, these facts would only demonstrate that petitioner's address had not changed (an undisputed issue), not that petitioner received the Assessment. Nor has the Department made a compelling case that satisfactory evidence of receipt is established by petitioner's "defective" office practices. The Department notes that two letters from Ms. Holley, dated March 12, 2004 and June 17, 8

9 2004, respectively, were stamped by postage meter four or five days later. 3 This fact is of little moment, and certainly does not show that the Assessment was received by petitioner. As yet another example of petitioner's alleged errors, the Department refers to the petition for review to the Commission, in which petitioner stated that it "hereby appeals the Notice of Action on Petition for Redetermination received June 18, 2004, filed in response to Real Estate Transfer Fee Assessment Notice dated April 8, 2004." The Department notes that the Notice of Action was not mailed until June 24, 2004, and states that petitioner's recitation is therefore incorrect. In so arguing, the Department apparently interprets the June 18, 2004 date recited in the petition for review as referring to the date the Department's Notice of Action was received (which was June 24, 2004), rather than to the date the Petition for Redetermination was received by the Department, which was, in fact, on June 18, While the quoted sentence is grammatically ambiguous, the Department's interpretation is not necessarily the correct one: the quoted sentence may certainly be read as accurately asserting that the petition for redetermination was received on June 18, 2004, rather than as incorrectly asserting that the Notice of Action was received on that date. In short, none of the alleged factors, either standing alone or in combination, demonstrates, or raises a genuine issue of material fact as to, "satisfactory 3 The Department asserts that petitioner's "casual approach" is also demonstrated by an Admission of Service of the Department's First Request for Production of Documents. (Department's Brief at 3.) The Department states that Ms. Holley admitted service on September 9, 2004, but that the return envelope was meter-dated on September 14, Because neither the Admission nor the Request is contained in the record, the Commission does not consider any arguments related to these documents. 9

10 evidence of receipt," under 71.74(11). 4 Equitable Estoppel The defense of equitable estoppel consists of action or non-action which, on the part of one against whom estoppel is asserted, induces reliance thereon by the other, either in action or non-action, which is to his detriment. Department of Revenue v. Moebius Printing Co., 89 Wis. 2d 610, 634, 279 N.W.2d 213 (1979). The Department argues that petitioner is estopped from alleging nonreceipt because petitioner's officer, Ms. Holley, caused the Department to acknowledge her as the representative and to forward correspondence, including the Assessment, directly to her at the Spruce Street address. The Department contends that "by directing the Department to [Ms. Holley's] direct address, the Petitioner directed the Department to an unreliable address to its detriment," and, therefore, petitioner should be estopped from asserting non-delivery. (Department's Brief at 5.) This argument is without merit. Petitioner does not assert that the Department should not have served the Assessment on Ms. Holley, nor is there any 4 The Department compares this case to Bolkiah, et. al. v. Superior Court, 74 Cal. App. 4th 984, 1001 (Cal. Dist. Ct. 1999). This case was first cited by the Department in its Supplemental Brief which was submitted pursuant to the Commission's Order to provide supplemental briefing on certain defined issues, which did not include the underlying issue of whether there was "satisfactory evidence" of receipt under 71.74(11) while "assuming that respondent did not comply with" the statutory service requirements. Petitioner asserts that the Department, in re-arguing the issues raised in the initial briefs, is violating the directives of the Commission's Order for supplemental briefs. As a result, petitioner requests that the Commission strike those sections of the Department's supplemental brief, including references to Bolkiah, in which the Department reasserts that it complied with the statutory service requirements. The Commission agrees that the Department's additional briefing on this issue was inappropriate. In addition, the Bolkiah decision, which is not controlling, is unpersuasive. In contrast to the Bolkiah case, the Department did not mail the Assessment here with return receipt requested even a single time, let alone twice. Nor do the facts in this case demonstrate the repeated attempts at service and the repeated efforts to avoid service, as in Bolkiah. 10

11 evidence in the record that the Spruce Street address was incorrect. Rather, petitioner simply argues that, for whatever reason, it did not receive the Assessment until Ms. Holley received it by facsimile on June 17, Accordingly, petitioner is not equitably estopped from arguing non-receipt. Constructive Receipt The Department alleges that there was "constructive receipt" of the Assessment notice because the Department informed Ms. Holley of the Assessment, and Ms. Holley had actual knowledge of the basis and amount of the Assessment. This argument is also unconvincing. Section 71.74(11) does not provide for constructive receipt, nor does the Department cite any authority suggesting that constructive receipt satisfies the statute's service requirements. In addition, even if petitioner had constructive notice that the Department was planning to serve an assessment, it had no way of knowing when the Department would serve it. This is critical, because service of the assessment triggers the time for appeal. If the Department is allowed to serve its assessments constructively, in the manner suggested by the Department in this case, taxpayers' appeal rights will be impeded as they would have no way of determining when such rights expire. In view of the foregoing, petitioner was not properly served with the Assessment in this case, and the 60-day time period for filing a petition for redetermination did not commence on April 8, 2004, as asserted in the Department's Notice of Action. 11

12 Finally, with regard to petitioner's request that we "dismiss" the Assessment in this case, that request is denied. Even if the Commission had jurisdiction to do so, dismissing the Assessment is unnecessary in view of our conclusion that any attempted service of the Assessment on April 8, 2004 was invalid under 71.74(11) and therefore did not trigger the 60-day time limitations for appeal under Wis. Stat (1) and 77.26(3). IT IS ORDERED 1. Petitioner's motion for summary judgment is granted. 2. The Department's motion for summary judgment is denied. 3. The Department's Notice of Action is reversed. Dated at Madison, Wisconsin, this 7th day of June, WISCONSIN TAX APPEALS COMMISSION Jennifer E. Nashold, Chairperson Diane E. Norman, Commissioner (not participating) David C. Swanson, Commissioner ATTACHMENT: "NOTICE OF APPEAL INFORMATION" 12