963 N.W.2d 103
Wis. Ct. App.2021Background
- In 2017 the legislature added a personal property tax exemption for "machinery, tools, and patterns" (Wis. Stat. § 70.111(27)).
- Wisconsin Manufacturers and Commerce (WMC) sent DOR a letter with a hypothetical (a manufacturer’s forklift) asking how § 70.111(27) applies; DOR’s response disagreed with WMC’s view.
- WMC sued for declaratory relief, alleging DOR’s interpretation (1) is an unpromulgated administrative rule and (2) violates statutory law and constitutional protections (uniformity, due process, takings).
- The circuit court dismissed under the primary jurisdiction doctrine, directing WMC to pursue initial review at the Wisconsin Tax Appeals Commission (TAC).
- WMC appealed; the Court of Appeals affirmed, holding TAC has concurrent authority over the challenged rulemaking and "as-applied" constitutional questions and administrative review must be exhausted first.
- The court noted many TAC proceedings addressing § 70.111(27) were pending (and at least one TAC decision post‑briefing), supporting deferral to the agency.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the circuit court erred by dismissing under the primary jurisdiction doctrine | WMC: TAC lacks authority to decide rulemaking and constitutional as‑applied claims; court should decide now | DOR: TAC has concurrent jurisdiction; administrative process must proceed first | Affirmed dismissal; primary jurisdiction applies and TAC is the proper initial forum |
| Whether DOR’s guidance constitutes an unpromulgated administrative rule requiring rulemaking | WMC: DOR’s letter is a standard/policy amounting to an unpromulgated rule | DOR: Whether a rule exists and whether rulemaking was required are matters TAC can decide | TAC has authority to consider rulemaking challenge; courts should defer initially |
| Whether WMC’s constitutional claims (uniformity, due process, takings) can be adjudicated in court now | WMC: Constitutional harms justify immediate judicial review | DOR: "As-applied" constitutional claims require fact-finding and agency expertise; must be exhausted | As‑applied constitutional claims must proceed through TAC first; circuit court properly declined jurisdiction |
| Whether statutory structure permits deferral despite certain review provisions mentioning circuit court | WMC: Statutory review provisions implicitly preclude TAC jurisdiction over these claims | DOR: Statutory scheme and case law contemplate TAC initial review and later judicial review | Court rejects WMC’s statutory reading; TAC’s broad authority over "questions of law" covers these disputes |
Key Cases Cited
- Sawejka v. Morgan, 56 Wis. 2d 70 (recognizes TAC as independent tribunal and supports deferring to agency for tax-law applications)
- Butcher v. Ameritech Corp., 298 Wis. 2d 468 (applies primary jurisdiction where agency expertise and uniform tax administration are implicated)
- Metz v. Veterinary Examining Bd., 305 Wis. 2d 788 (as‑applied constitutional and rulemaking claims require administrative fact‑finding and exhaustion)
- Wisconsin Bell, Inc. v. DOR, 164 Wis. 2d 138 (courts should defer to administrative process for tax-law policy formation and uniform application)
- City of Brookfield v. Milwaukee Metropolitan Sewerage Dist., 171 Wis. 2d 400 (standard of review and principles supporting agency priority)
- Tetra Tech EC, Inc. v. DOR, 382 Wis. 2d 496 (agency conclusions of law receive no appellate deference, but statutory administrative review process remains mandatory)
- Heritage Credit Union v. Office of Credit Unions, 247 Wis. 2d 589 (agency forum must be used to raise rulemaking challenges before judicial review)