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U.S. Tax Court reduces penalties against Eau Claire-based Menards

The U.S. Tax Court has reduced a penalty against Menards and its founder, John Menard of Eau Claire.

In 2005, the court agreed with the IRS that the home improvement giant should pay $5.7 million for listing taxable dividends as non-taxable salaries.

This week, the court reduced the penalty by $200,000. It agreed that Menards should get back the Medicare taxes it paid on the disputed salaries.

At issue was the nearly $21 million John Menard was paid in 1998 as the company's CEO.

Judge Paige Marvel said only $7 million of that should have considered a salary, based on what other home improvement CEO's were getting.

She said the rest should have been a dividend, for which the company should have paid taxes.

Menard himself owes a million in back taxes and penalties and that will be reduced as well.

He and his company have similar tax disputes involving five other years but they won't be addressed until the 1998 issue is settled.

Menards has 220 stores in 11 states.

Forbes says Menard, 68, is Wisconsin's richest man, worth $7.3 billion.