Tuesday, August 21, 2018

State audit shows Department of Revenue inefficiencies affecting citizens at license offices

(From State Auditor Nicole Galloway)

Missouri State Auditor Nicole Galloway today released an audit of the state's sales and use tax collection processes, which are administered through the Department of Revenue. The report found inefficiencies affecting citizens at license offices throughout the state, especially in rural counties.

"Taxpayers should not have to provide the same documentation time and time again just to ensure they are not overcharged on tax for a new vehicle," Auditor Galloway said. "Taxpayers deserve an efficient and effective system regardless of where they live."

After a vehicle is purchased, the taxpayer is required to title and pay state and local sales tax. The Department of Revenue relies on a computerized mapping system to assign the appropriate local tax rate. However, in 15 counties that include rural communities, the system is often inaccurate, requiring taxpayers to produce additional proof of their residency in order to pay the correct rate. Even after the information is provided, the address location is frequently not corrected in the system. This means the potential of repeatedly having the same errors, requiring taxpayers to once again produce additional documentation on future transactions.

Missouri State Auditor Nicole Galloway today released an audit of the state's sales and use tax collection processes, which are administered through the Department of Revenue. The report found inefficiencies affecting citizens at license offices throughout the state, especially in rural counties. "Taxpayers should not have to provide the same documentation time and time again just to ensure they are not overcharged on tax for a new vehicle," Auditor Galloway said. "Taxpayers deserve an efficient and effective system regardless of where they live." After a vehicle is purchased, the taxpayer is required to title and pay state and local sales tax. The Department of Revenue relies on a computerized mapping system to assign the appropriate local tax rate. However, in 15 counties that include rural communities, the system is often inaccurate, requiring taxpayers to produce additional proof of their residency in order to pay the correct rate. Even after the information is provided, the address location is frequently not corrected in the system. This means the potential of repeatedly having the same errors, requiring taxpayers to once again produce additional documentation on future transactions.

The report also recommended changes to state law after a repeat finding regarding refunds on sales tax overpayments. This audit covered the 2015 through 2017 fiscal years, and lists the overall performance rating as "good."

Auditor Galloway's previous audit of the state's sales and use tax collection processes was released in 2015 and identified approximately $20 million in cash bonds being held by the department, which should have been refunded to Missouri businesses. The Department of Revenue has since addressed the issue and improved procedures to ensure businesses are refunded the money they are owed.

"Just a few years ago, our audit work identified a flawed process that resulted in millions of dollars not being returned to businesses," Auditor Galloway said. "Audits get results. Today, there are processes in place to make sure this money is returned and can be invested in Missouri's economy."

Auditor Galloway has focused on ensuring tax processes are efficient and designed to directly support services to taxpayers. Last fall, she released a report on the state's tax incentives and exemptions that highlighted concerns with timely sales and use tax discounts. These discounts are among some of the most generous in the nation and result in the state giving away millions to corporations for simply doing what the law requires. The 2017 report also found that the state does not monitor the effect of sales tax exemptions, making it difficult to know the actual fiscal impact.

The complete report on sales and use tax is available here.



1 comment:

Anonymous said...

How can any intelligent (key word here) not respect and admire her and her office staff for doing so much to try and correct the corruption of Missouri that has operated under republican control. She deserves to be in her office and anyone cannot deny her/office of their abilities when sitting in on one of her presentations. Witness the debacle at Goodman concerning the Fire Department and her findings that one of their board members literally stole from the taxpayers. Only too sad is that their work did not result in the prosecuting attorney not following through with any of the charges. Too often these rural counties operate much like the mafia and the "good ole boy" network prevails and the citizen is the buffoon left holding the banana peel.