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MADISON, Wis. – The number of back-taxes agreements reached with Wisconsin banks on their use of Nevada subsidiaries has grown, but the tax money brought in by the settlements has not. According to the Wisconsin Department of Revenue, as of Oct. 18, the state had reached settlements with 48 banks on their use of subsidiaries. However, the money brought in by the settlements is $23.4 million, according to the DOR, nearly unchanged from the amount reported on Sept. 13 when the DOR reported that it had reached agreements with 26 banks. The state cracked down this year on practices in which some banks shift some income-earning assets, such as loans and bonds, to subsidiaries in Nevada. It has been noted that Nevada has no tax on corporate profits but that Wisconsin’s corporate income tax is 7.9%. While the department does not release details of the settlements, including for what years the agreements focus on, Eva Robelia, communications officer for the department, said the settlements are a one-time, to-date agreement. Earlier, the department had noted that Wisconsin banks can use subsidiaries as long as their use is in compliance with Wisconsin law. Compliance hinges on whether the income assigned to subsidiaries is really being generated by the subsidiary itself or is being generated by the parent bank in Wisconsin and allocated to the subsidiary. Robelia said the settlements involve all sizes and complexities of banks. The department announced in mid-September that it had heard from 221 (including those who have reached settlement) of the 320 banks it had notified in July. As of Monday, it had not heard from any additional banks. Asked if the department has heard if any banks plan to contest the action, Robelia said the department has not heard of any that have mentioned litigation. While the department had hoped to wrap up the settlements in about two months, Robelia noted that the agreements are taking time. Discussions can range from two weeks to two months because the department has said it is treating all similarly situated businesses the same to ensure fair and consistent treatment. Robelia said the number of settlements could increase in the next few days. State Rep. Spencer Black has spoken out against current state law that requires information about tax settlements to be kept secret. In a statement on his Web site, Black notes that: “When state officials blow the whistle on a pattern of tax shelter abuses by dozens and perhaps hundreds of corporations, it has broad public policy implications. People deserve to know what is going on.” He has announced that he is drafting legislation to require the Department of Revenue to disclose the amount of and the reason for any settlement of a corporate tax audit that increases the corporation’s tax liability by $100,000 or more. -

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