Failure to surrender; discharge.

Except as provided in subd. 4., any person, including an officer or employee, who fails to surrender property that is subject to levy upon demand of the department is liable to the department for a sum equal to the value of the property not surrendered, but not exceeding the amount of taxes for the collection of which that levy was made, together with costs and interest at the rate of 18 percent per year from the date of that levy. Any amount, other than costs, recovered under this paragraph shall be credited against the tax liability for the collection of which that levy was made. The liability under this paragraph may be assessed, levied and collected as are additional income or franchise taxes or may be recovered by the department in a civil action.

In addition to the liability imposed under subd. 1., if any person required to surrender property fails or refuses to surrender that property without reasonable cause, that person is liable for a penalty equal to 50 percent of the amount recoverable under subd. 1. No part of the penalty under this subdivision may be credited against the tax liability for the collection of which that levy was made. The penalty under this subdivision may be assessed, levied and collected as are additional income or franchise taxes or may be recovered by the department in a civil action.

Any person in possession of, or obligated with respect to, property upon which a levy has been made who, upon demand by the department, surrenders that property, or discharges that obligation, to the department or who pays a liability under subd. 1. is discharged from any liability to the delinquent taxpayer or, in the case of payments under par. (c) 2., to a beneficiary, with respect to that property arising from that surrender or payment.

If a financial institution is in possession of, or obligated with respect to, property subject to levy upon which a levy has been made, the financial institution is liable under this paragraph for failure to surrender that property or discharge that obligation only upon expiration of a reasonable time to comply with the department’s demand for the property.