I guess it depends on who you cheat or which foot the shoe is on, right Sam?
Tax cheats, others shorting Idaho $250 million
Tax Commission: Cheats, others shorting Idaho $250 million; lost cash hurts in budget crisis By John Miller, Associated Press Writer , On Wednesday February 3, 2010,
BOISE, Idaho (AP) -- Whether through cheating or ignorance, taxpayers are shorting Idaho by about $250 million annually at a time when Gov. C.L. "Butch" Otter and lawmakers are cutting budgets for public schools and other state agencies.
Idaho Tax Commission Chairman Royce Chigbrow told members of the Joint Finance-Appropriations Committee on Wednesday this uncollected tax gap undermines faith in the system and is unfair to people who are following the law.
His agency says not all of the $250 million is collectible, but figures it could probably bring in an additional $64.5 million -- if it had more staff and a few policy changes. Some are politically difficult, like collecting more taxes on Internet sales or going after out-of-state owners of Idaho homes after they sell their property for a profit. Bills aimed at doing both have stalled in recent years.
Chigbrow says the basic rule is, for an additional $1 million investment in staff, his employees could bring in $10 million more.
"With greater enforcement, compliance moves up automatically," he told members of the budget committee.
The Tax Commission is facing a proposed fiscal year 2011 budget starting next July of $31.9 million, about $200,000 less than the original appropriation for the current year that's now being trimmed back through a series of holdbacks.
Since last year, the commission has gotten about $2 million to hire 74 temporary tax auditors to go after tax cheats, including a $1.5 million infusion of reserves backed by Otter in late 2009. Otter is recommending the agency get another $1.5 million in fiscal 2011 to keep the auditors on board.
The temps were charged with bringing in an additional $17 million in revenue this year; Chigbrow says they are ahead of schedule and could bring in about $20 million by July.
"We are well on our way," he said. "It's money well invested."
Auditors are investigating people who haven't filed tax returns, prompting suspicions that they've joined the ranks of tax dodges amid an economic downturn that appears to be rippling tax collections.
For instance, the Tax Commission has recorded a 21 percent increase in underpayments, a 30 percent spike in non-filers and a 49 percent jump in underreporting, in addition to nearly a third more bankruptcy filings in 2009 -- all developments that will likely reduce state revenue.
To help meet holdbacks ordered by Otter over the last year, Chigbrow's agency hasn't filled 30 vacant positions and has ordered about 20,000 furlough hours for its roughly 400 employees. Amid tough budget times, it's also opted not to purchase upgrades to tax-collection software it's been using since 2002 to find more money, though that's an expense that can't be delayed forever.
"We will be coming to you in future budget years to ask you to protect your investment," Chigbrow said.
He did take some heat from budget panel members who questioned including auditors among the ranks of Tax Commission employees who must take furloughs to help meet budget cuts ordered by Otter. He says the agency tried to get by without, by reducing copier expenses and reducing out-of-state travel to a minimum.
Still, most of his agency's budget is personnel.
"If no cuts can be made in other areas of the Tax Commission, we have no other choice," Chigbrow said, pointing out that he and the three other tax commissioners -- David Langhorst, Tom Katsilometes and Sam Haws -- also took unpaid time off.
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