Wisconsin Court of Appeals rules voluntary payment doctrine bars suit by ratepayers.

Byline: David Ziemer

The voluntary payment doctrine bars a class-action suit by ratepayers who were charged sales tax on other taxes, as opposed to "telecommunication services," the Wisconsin Court of Appeals held on Dec. 21. Section 77.51(21m) requires that sales taxes be paid on "telecommunications services," defined as follows: "[S]ending messages and information transmitted through the use of local, toll and wide-area telephone service; channel services; telegraph services; teletypewriter; computer exchange services; cellular mobile telecommunications service; specialized mobile radio; stationary two-way radio; paging service; or any other form of mobile and portable one-way or two-way communications; or any other transmission of messages or information by electronic or similar means between or among points by wire, cable, fiber optics, laser, microwave, radio, satellite or similar facilities." Since the institution of the Federal Universal Service Fee (USF) -- a federal tax that raises revenue to provide Internet access to schools -- Wisconsin telephone customers have been paying sales tax on the federal tax. Stephen Butcher and two others filed a class action on behalf of all similarly situated rate payers against Ameritech, Inc., and Wisconsin Bell, Inc., arguing that the USF is not a "telecommunications service" within the meaning of the statute, and thus, the sales tax on it is unlawful. The complaint sought monetary and injunctive relief. The complaint also named the Wisconsin Department of Revenue as a defendant. The defendants unsuccessfully moved to dismiss the claims, but moved for reconsideration after the Wisconsin Supreme Court decided Putnam v. Time Warner Cable of Se. Wis., 2002 WI 108, 255 Wis.2d 447, 649 N.W.2d 626. In Putnam, the court adopted the voluntary payment doctrine, which places, upon a party wishing to challenge the legality of a bill, the obligation to make a challenge either before voluntarily making the payment, or at the time of making the payment. Citing Putnam, Dane County Circuit Court Judge Michael N. Nowakowski dismissed the complaint, holding that the doctrine barred the monetary claims, and holding that the injunctive claims must first go through an administrative challenge. The plaintiffs appealed, but the court of appeals affirmed, in a decision by Judge Margaret J. Vergeront. Putnam The court began with a review of the Supreme Court's decision in Putnam. In Putnam, the plaintiffs filed a class...