Comptroller of Public Accounts
An Audit Report on the Comptroller's Revenue Management Process
Report Number 95-030
The Office of the Comptroller of Public Accounts (Comptroller) has an effective and efficient tax revenue management function, which collected and processed taxes of over $17 billion in fiscal year 1994. The function educates taxpayers, processes tax payments and returns, audits returns, provides for formal hearings where there are disagreements, collects delinquent accounts, and identifies non-filers.
Total revenues could be increased by increasing the number of auditors. We estimate that additional auditors would bring in over three times the related additional costs, or approximately $13 million, if the total number of auditors were increased to 550. Funds were appropriated for this purpose in 1992. However, while total audit billings have exceeded projections, the net number of auditors has not increased.
The non-filer identification function could be more effective by concentrating on only identifying non-filers. Currently, this section also brings identified non-filers into compliance.
The formal hearings process, redeterminations, needs to be revised to address workload problems. The number of cases in redetermination has increased nearly 200 percent since 1991. The internal study of this issue should be completed. Additionally, the redeterminations data base needs to be revised to report reliable financial information. Our tests indicate that the May 1994 reported amount of $742 million was over twice the actual figure of approximately $350 million.
Additional monitoring tools should be developed to help ensure the Audit Division's effectiveness. These tools include capturing and monitoring actual dollar collections resulting from audits and more formal comparisons of field office productivity and coverage. These will better quantify the audit function's performance and allow more informed staffing decisions.
Interest earned by the State could be increased by applying payments to interest owed before the tax liability. Interest accrues on outstanding taxes, but not on interest due. The State lost $381,000 when one taxpayer paid overdue taxes but not the related interest.
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