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Devil’s Head sues town of Merrimac

August 6, 2018

A ski resort and convention center is suing the town of Merrimac, alleging the government’s attempt to squeeze the business by pulling its liquor and lodging licenses in a dispute over taxes is improper.

The lawsuit, filed by Devil’s Head Resort and Convention Center in Sauk County Circuit Court, asks a judge to intervene in the dispute.

In June, the town said it would revoke the resort’s lodging permit and allow its liquor licenses to lapse because of an ongoing dispute over room tax payments.

The town alleges Devil’s Head has under-reported its lodging revenue in recent years, and owes hundreds of thousands of dollars in taxes.

The lawsuit asks a judge to invalidate the town’s attempt to force Devil’s Head into an appeals hearing, and to determine the appropriate venue to resolve the dispute. As part of the lawsuit, the resort asked for a temporary restraining order against the town.

Outgoing Sauk County Circuit Court Judge Guy Reynolds signed off on that order, which prohibits the town from “revoking, suspending, or otherwise refusing to renew” the resort’s licenses until Aug. 30. Arguments in the case are scheduled to be heard that day by Judge Patricia Barrett, who was sworn in Wednesday.

Loss of the licenses could have serious consequences for Devil’s Head, which was constructed in 1970 and includes a ski hill, golf course, bars, dining, a convention center, suites, condos and hotel rooms.

Dispute started years ago

The legal wrangling dates back to 2013, when Devil’s Head objected to its property tax assessment, according to court documents. Records filed in that dispute led town officials to believe the resort previously had not paid the correct amount of room tax.

The two entities have since gone back and forth through their attorneys, with the town requesting access to thousands of the resort’s financial records.

In 2016, the town demanded payment of more than $780,000 in unpaid room tax, interest and penalties over an eight-year period. That prompted a stern response from the resort’s attorney, Don Millis of Madison, who didn’t like how the town was treating his client.

“The property owned and operated by our client contributes meaningfully to the success of the town of Merrimac and strives to be a good corporate citizen,” Millis wrote. “With that said, it is extremely frustrating the town continues to make unsupported demands for huge payments while making veiled threats to revoke my client’s room tax permit if payment is not made as demanded.”

Millis and Joe Vittengl, the resort’s general manager, could not be reached for comment last week.

Merrimac Town Administrator Tim McCumber deferred to the town’s attorney, Natalie Bussan of Baraboo, for comment. She did not return messages.

In May, the town concluded an audit into the room tax issue and demanded the resort pay up or participate in an appeal hearing. In response, Millis fired back that the resort would not participate.

In June, the town gave notice to Devil’s Head that it planned to revoke its lodging permit and would refuse to renew its liquor license due to its failure to pay taxes.

Devil’s Head argues the onus is on the town to bring legal action if it feels taxes are owed. The lawsuit asks a judge to determine the proper venue for resolving the dispute.

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