Opinion ID: 1288234
Heading Depth: 2
Heading Rank: 2

Heading: Dane County Circuit Court's Decision[10]

Text: ¶ 36 The DOR petitioned the Dane County Circuit Court for review of the decision by the Commission, and both parties again filed cross-motions for summary judgment. Because the [circuit] court [found] error by the commission, the court vacate[d] the commission's decision and reinstate[d] DOR's determination that sales and use tax must be paid on the R/3 System. The circuit court concluded that the Commission erroneously interpreted and applied the law to the facts, as those facts are set forth in the commission's ruling. ¶ 37 The circuit court applied a due weight deference standard to the Commission's interpretation and application of Wis. Admin. Code § Tax 11.71(1)(e). [11] Thus, the circuit court stated it would uphold the commission's reasonable interpretation unless the [circuit] court deems another interpretation more reasonable. The circuit court concluded that due weight deference was appropriate because the Commission had not developed expertise that would necessarily place it in a better position than the court to make judgments about the administrative rule. ¶ 38 The circuit court also concluded that because the DOR, and not the Commission, promulgated the administrative rule, the DOR's interpretation should be afforded controlling weight deference because [a]n administrative agency's interpretation of its own rule is controlling unless plainly erroneous or inconsistent with that rule. The circuit court, thus, disagreed with Menasha's argument that the Commission was under no obligation to give deference to the DOR's construction of Wis. Admin. Code § Tax 11.71(1)(e). ¶ 39 While the circuit court found no error with the Commission's interpretation of the rule's introduction, it disagreed with the Commission's interpretation and application of some factors. The circuit court concluded: The [circuit] court finds that [the R/3 System] was existing and prewritten when SAP sold it to Menasha because 1) while there may have been significant presale consultation and analysis, and significant testing of the customized system, the fact that a former SAP employee installed it rather than SAP weighs in favor of deeming R/3 prewritten; 2) while DOR conceded the third, fourth, and fifth factors, R/3 fits the definition of a prewritten program because a) it was already prepared and available for general consumption prior to the sale thereof to Menasha, b) it was held by SAP to be licensed to thousands of world-wide customers as requested, and c) it was not written solely for Menasha upon Menasha's request therefore; and finally 3) given that R/3 was an existing program, the seventh factor does apply, and the facts as set forth by the commission do not show that SAP performed the significant modification of R/3 that was required to make it useful to Menasha. .... ... Where the software selected for purchase is an already existing program available for general use, significant modification must be made by the vendor for the software to be deemed custom. Thus, Menasha's purchase of R/3 did not involve the purchase of custom software....