STATE SUPREME COURT RELEASES IMPORTANT DECISIONS

This will be an interesting situation to follow in the middle of an election cycle, with a larger-than-normal number of contested races for Assembly and Senate:
* The state Supreme Court ruled today that state government illegally collected sales taxes on customized computer software - a decision that could cost state government $265 million in refunds and interest it doesn't have.The 4-3 decision upheld the state Tax Appeals Commission, which ruled that the Menasha Corporation was illegally charged the 5% state sales tax on specialized software it purchased. State tax collectors had argued what the company bought was prewritten computer software, which is subject to the sales tax.Writing for the court, Justice Annette Ziegler said the three-member Tax Appeals Commission was created as "the final authority for hearing and determination of all questions of law and fact" on taxation issues. The commission's decision in the Menasha case had been reversed by a Dane County judge.The Legislative Fiscal Bureau has warned that the decision could cost state government about $265 million, when claims expected to be filed from other companies for refunds and interest is figured.Gov. Jim Doyle could call lawmakers, who are busy campaigning for their re-election in November, into special session to deal with the problem. Doyle spokesman Lee Sensenbrenner said the governor would consider whether to call a special session of the Legislature to rebalance the budget as a result of the court decision, or whether the refunds could be handled as part of the 2009-'11 budget that must pass next year. If a special session is called, it would be the second budget fix needed since the current two-year budget was signed into law last October."We've managed bigger revenue challenges than this before," Sensenbrenner added.State Revenue Secretary Roger Ervin said in a statement the decision showed why Wisconsin should join other states that have passed the Streamlined Sales Tax Agreement, a proposed national standards for items subject to the sales tax and items that are exempt. "With this (ruling) now settled, it will be our goal to work with industry to consider any legislative or rule changes to bring more clarity to our sales tax statutes," Ervin added.In spite of Menasha's interpretation of the law, the state imposed a sales tax on the software, which Menasha paid and then appealed. The state Tax Appeals Commission ruled in favor of Menasha, but Dane County Circuit Judge Steven D. Ebert later ruled that the Wisconsin Department of Revenue was correct in assessing the sales tax. In 2007, the Court of Appeals in Madison reversed Ebert's ruling and said the tax should not have been assessed. The Wisconsin business community rallied around Menasha, with the Wisconsin Manufacturers & Commerce organization helping to finance the appeal to the Supreme Court, as well as filing a friend-of-the-court brief in the matter. WMC also spent about $2 million in support of the campaign of Ziegler, a situation that caused complaints from some in Madison when she declined to step aside when the case was argued last year.Ziegler ultimately wrote the opinion.The decision worsened the state's budget picture significantly, because future spending commitments exceed revenues by more than $800 million - before today's ruling, which could cost an additional $265 million.The case had been widely followed in the business community, with dozens of other companies having claims for sales tax refunds similar to Menasha's.The case was a test of the definition of customized software under Wisconsin law. Customized software is not subject to sales tax, whereas off-the-shelf programs, such as those sold in boxes at retail outlets, are.Exactly where to draw the line between the two categories long has been a point of contention between the state Department of Revenue and the Wisconsin business community.The case decided Friday was seen as a test to answer that question. Specifically, it involved a companywide, multi-million dollar software package installed by the Menasha in the 1990s. Menasha, based in Neenah, is a privately held company that has sales of more than $900 million annually making packaging at plants across the United States. It spent considerable time and money modifying the software, leading it to argue that the program had been customized and was therefore tax exempt.
For those involved in lawsuits with the government:
* The state Supreme Court said today that government bodies can't keep information from closed meetings from people involved in lawsuits.The Supreme Court reversed a state appeals court finding that former Whitnall School District gifted and talented supervisor Barbara Sands was not entitled to information about what school board members said during a closed meeting about not renewing her contract.The Supreme Court says people involved in lawsuits should be entitled to such information. The court says excluding the public from closed meetings doesn't automatically shield a government body from those requests.
The impact on economic development in Wisconsin will be interesting to follow as the court rules further determinations should be made on a "case-by-case basis":
* In a separate ruling, the court ruled that a Beaver Dam economic group is subject to Wisconsin's open meetings and records laws.The court said today an entity is a quasi-governmental body and subject to those laws if it closely resembles a government corporation, but that a determination should be made on a case-by-case basis.A citizens group has alleged the Beaver Dam Area Development Corporation negotiated secretly with Wal-Mart to bring a $55 million distribution center to the city.The Supreme Court says the corporation is financed exclusively by tax dollars, its office was located in the municipal building, it was listed on the city's Web site and the city gave the group clerical support and office supplies.