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Answers on $526M in tax mistakes expected in December

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Auditors reviewing $526 million in tax errors made by Indiana's tax collection agency said Monday they will investigate whether state employees are knowledgeable enough to track tax collections and whether the state has adequate internal controls to guard against future errors.

Auditors for the accounting firm Deloitte briefed members of the State Budget Committee on their 27-page risk assessment and audit plan. The auditors said they expect to begin their audit this week and expect to report findings to the budget panel in December.

In December, the Revenue Department discovered it had lost track of $320 million in corporate tax collections. Four months later, the state also discovered it had not paid $206 million in local income taxes owed to counties.

The errors led Gov. Mitch Daniels to force out three top officials in the department, and the discovery of the second error spurred Republicans to acquiesce to Democrats, who had sought an independent audit.

Deloitte employees Kathi Schwerdtfeger and Bari Faudree walked lawmakers through the plan they compiled following interviews with state workers at the Revenue Department, State Budget Agency, Department of Local Government and Finance, and the treasurer's and auditor's offices.

The state has become a national model, they said, for processing individual returns more quickly and efficiently, but may have been deficient in hiring staff with enough expertise to track a tax check through the entire processing system. There also may be problems with internal controls at the tax department caused in part by high turnover.

Internal controls and reviews, designed to catch errors immediately and avert problems like those which led to the two major errors, "appear to have been a lower priority" than the tax return processing, Deloitte wrote in its report. The management of the department's IT and tax collection areas "may not have been as rigorous in detecting errors within the financial accounting systems."

But Schwerdtfeger and Faudree were careful to note these are areas to investigate, and are not necessarily problems.

State budget director Adam Horst said he was happy that answers could come by the end of the year.

"We said 'Your goal here is as fast as you can get it done, but we said it has to be independent and it has to be right,'" he said.

Horst added that some areas the group will review, including employee proficiency, are not necessarily specific problems at the revenue department but could be part of general problems found in any government agency.

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  1. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

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