Friday, January 9, 2009

Hire More Tax Collectors?

In the Milwaukee Journal Sentinel we read that by hiring 155 more auditors and tax collectors at a cost of $25 million over the next two years the state expects an additional $200 million in revenue over the same period, a net increase of $175MM for you non-math majors. They point to Minnesota, where a recent investment of $100MM in tax collection resulted in increased tax revenue of $900MM over an unspecified period ... As I've said, expect a tougher approach to tax arrears collection for taxpayers everywhere who can pay but won't. Taxing jurisdictions will simply have no choice.

In line with this, expect taxing authorities to lower the minimum amounts due that will send cases out for field enforcement. Don't assume that cases once flying below the radar will stay that way. New tax collectors will need smaller cases to work and learn on and there is a LOT of low-hanging fruit at, say, the $15-50K balance due level or so. Wisconsin tax arrears have grown by "more than 50%" since 2001. Look for this to be a recurring topic ...

Lots of talk of IRS reducing its collection efforts in light of the economic downturn. Simultaneous talk of state and local jurisdictions doing just the opposite. Anyone see any problems here? If IRS really does back off some and the states pick up the slack, isn't that a disguised state bailout? Underlying assumption, of course, is that their respective taxpayer universes somewhat overlap.

OR NOT ...

While in Union County, PA, county officials are discouraging local tax collectors from running for office by lowering their commissions. The tax collectors are fighting back, though. Among their arguments, they are more "personable" and "accessible" than the counties. The county says it can do the same job for $200K less. Maybe, but will they be "personable"?

Property taxes are, of course, the most brain-dead easy of all taxes to administer. If a county thinks it can save $200K by taking over then they could probably double that by adding "and doing it right".

In the same vein, farming out property tax collection to commissioned agents is almost a guarantee of abuse.

BTW, neither side mentions how it is going to improve tax admin. The county just wants to have it its own way, only cheaper. The collectors resent the county regaining the authority they have taken over. No studies mentioned, either. Loser? Joe Taxpayer.

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From Don't Mess With Taxes we learn that President-elect Obama's brand-new Performance Officer (don't start) and founder of the IRS Oversight Board (I said don't start) Nancy Killefer herself ran afoul of a $946 federal tax lien (nanny taxes) in 2005 but was "cleared shortly after". Uh-huh. "Cleared"? What the heck is that? Is that the same as "paid"? This would be a non-story if told in simple English, but "cleared"? And when did IRS start filing $946 Notices of Lien?

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The Times of India reports on a company that goosed revenue and paid the taxes for years so as to shore up its value. Now... "OOPS, can we have our tax money back?" "A source in the (Income Tax) department insisted that the department may not even consider returning whatever extra tax that may have accrued as a result of the fudging of accounts." Fair warning: Do NOT invest in this company.

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