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GG 27
Improve Tax Compliance and Delinquent Revenue Collections with Additional Enforcement Coverage

Summary

Although the Comptroller’s office collects almost $650 million annually from delinquent taxpayers, additional delinquent amounts are available for collection. Fifty-three new enforcement positions would allow the agency to increase coverage and collect additional tax revenue due the state.

Background

Comptroller enforcement personnel are responsible for providing taxpayer service and collecting delinquent taxes owed the state. Despite significant productivity gains from ongoing improvements in technology and operating processes, additional enforcement staffing would allow the agency to maximize collection of delinquent taxes.

The Comptroller’s office has 258 Enforcement Officers and 14 Criminal Investigators, 126 (46 percent) of whom are responsible for fraud investigations and collection activities conducted over the phone or in the field. The remaining 146 officers staff taxpayer service counters in 35 field offices across the state.

An increasing demand for taxpayer service limits the time that enforcement personnel can spend in the field, which effectively diminishes a major deterrent for tax fraud. Allowing the Comptroller’s office to hire more enforcement staff would increase tax compliance, deter tax fraud and capture additional revenue for the state.

Recommendation

To improve tax compliance and increase delinquent tax collections, the Comptroller’s office should be authorized to hire 50 additional Enforcement Officers and 3 additional Criminal Investigators.

Fiscal Impact

The following fiscal impact assumes a September 1, 2003 hire date.

The average field collector and telephone collector can be expected to bring in about $ 4.5 million and $13.1 million, respectively, each year.[1] Taking into account uncollected delinquencies, estimated delinquencies and diminishing marginal returns (that is, the fact that each additional dollar of delinquent tax requires more resources to collect), the agency conservatively estimates that each additional field collector would generate $900,000 in collections per year, and each additional phone collector $914,960 per year.[2] The average annual cost associated with each of the 53 new positions is approximately $69,170, producing a net gain to general revenue of $41,708,000.

Fiscal Year Gain to General Revenue (Cost) to General Revenue Net Gain to General Revenue Change in FTEs
2004 $45,374,000 ($3,666,000) $41,708,000 + 53
2005 $45,374,000 ($3,666,000) $41,708,000 + 53
2006 $45,374,000 ($3,666,000) $41,708,000 + 53
2007 $45,374,000 ($3,666,000) $41,708,000 + 53
2008 $45,374,000 ($3,666,000) $41,708,000 + 53


Endnotes

[1]Based on fiscal 2002 collection data.

[2]Based on fiscal 2002 collections per field collector multiplied by a 20 percent diminishing return factor ($4,500,000 x 0.20) and fiscal 2002 collections per phone collector multiplied by a 7 percent diminishing return factor ($13,070,857 x 0.07).