Indiana officials step down after $205M in local taxes mishandled

April 5, 2012

The head of Indiana's taxing authority tendered his resignation this week after it was discovered that $205 million in local income tax revenue hadn't been distributed to counties, the second such oversight in months found to have happened on his watch.

John Eckart, the Department of Revenue's commissioner, will step down at the end of the current tax season after seven years in charge of the agency, state budget director Adam Horst said at a news conference Thursday. He did not specify when, exactly, that would be.

Two other top revenue officials, Chief Information Officer Roy D. Gabriel and Chief Financial Officer Darrel Anderson, also left after the error was discovered, Department of Revenue spokesman Bob Dittmer said.

Horst blamed the problem on a programming error. A similar error caused state budget leaders to lose track of $320 million in corporate tax collections over four years. That error was discovered in December.

"It's all you can do at this point," Horst said, when asked about restoring public trust in the state's accounting.

The revenue department says the mishandled money will be distributed with interest to the 91 of Indiana's 92 counties that have local income taxes. Horst said the state is searching for an outside auditor to review the agency's procedures.

Marion County and the city of Indianapolis said it would receive an additional $41 million from the adjustment. Indianapolis Mayor Greg Ballard said the funds would be directed toward future budget shortfalls.

Hamilton County will receive $17.3 million in additional distributions, not counting interest, the state said. Hendricks County will receive nearly $5 million, Boone County will get nearly $4 million; Johnson $3.8 million; Morgan $3.7 million; Madison more than $3 million; Hancock more than $2 million; and Shelby about $1.1 million.

Indiana's Legislative leaders, Republican House Speaker Brian Bosma and Republican Senate President Pro Tem David Long, requested a say in who is selected for the audit and demanded that the findings be reported to the Assembly's budget leaders. Democrats initially requested an independent audit of the Department of Revenue last year after the $320 million error was discovered, but were rebuffed by promises the administration would conduct its own review.

Horst said he told Gov. Mitch Daniels about the problem Tuesday and alerted legislative leaders about the problem Wednesday. Daniels left on a private trip to Israel Tuesday and was not immediately available for comment.


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