Wisconsin Bankers Association Asks Members to Calculate Back Taxes

MADISON, Wis. – The Wisconsin Bankers Association has asked affiliated banks to figure out how much they may owe the state in back taxes under a multiyear settlement over the use of tax shelters. The amount is expected to be in the millions, including interest in as much as 18% on some of the money owed. The situation centers around out-of-state subsidiaries, mostly in Nevada, set up by approximately 280 Wisconsin banks which typically hold income-producing assets such as stocks and bonds. Madison cannot tax this type of income earned by out-of-state banks, even if the subsidiaries are owned by Wisconsin companies. Since Nevada doesn’t have a state corporate tax, the earnings escape state taxation. Earlier this year, Wisconsin revenue officials said they intended to audit the bank subsidiaries to determine if they were set up only for tax purposes. If it turned out they had been, then the state would reallocate some of the earnings back to the Wisconsin parent company and assess taxes on those earnings. The state has so far started about 40 audits and had settlement discussions in three cases. One case has reportedly been settled.