Wisconsin Supreme Court to hear Menasha software case

Madison, Wis. - Did the state of Wisconsin improperly apply its five percent sales tax to a software package installed by Menasha Corp.?

The Wisconsin Supreme Court will decide that question after agreeing last week to hear the case, and there is an estimated $350 million at stake for businesses throughout Wisconsin, including $600,000 for Menasha Corp.

At issue is the definition of modified software, which unlike off-the-shelf software is not subject to the state sales tax.

The state imposed the sales tax on a software package purchased by Menasha Corp. from the German-based SAP, a global business software company, even though the software was later modified by the company.

Menasha Corp. appealed the tax and won before the state Tax Appeals Commission, but that ruling was challenged by the Wisconsin Department of Revenue and overturned by Dane County Circuit Judge Steven D. Ebert. The Court of Appeals then overruled Ebert, prompting the Department of Revenue to seek the ultimate showdown at the Supreme Court.

Throughout the case, Menasha has been backed by business groups like Wisconsin Manufacturers and Commerce, which charged the DOR with misinterpreting the sales tax and called for legislation to prevent the state bureaucracy from expanding the tax beyond legislative intent.

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