Just call state Department of Revenue Secretary Tim Barfield the $53 million man.
That’s how much money Barfield hopes to generate by assembling a discovery team, hiring new auditors and tapping into data mining tools. In simpler terms, Barfield wants to use technology and manpower to catch businesses that aren’t forking over the taxes they should.
An example might be a businessman who shows up at the Office of Motor Vehicles to register a fleet of 100 shiny, new cars. Through data mining, that visit would raise flags at the Revenue Department, where auditors would pull the businessman’s records to see if he is flush with cash because he was dishonest on his tax returns.
The idea is to make it easier for state agencies to exchange their data caches.
“We know the data’s out there, and we should be talking to each other,” Barfield said.
Barfield recently pulled the tax file of a corporation that does business in Louisiana. The corporation had high earnings but hadn’t paid taxes in Louisiana. It turned out that the corporation put a big asset into service and took an accelerated depreciation, resulting in a big tax loss for state government.
Other times, there aren’t good explanations. Businesses take tax deductions that they shouldn’t. They get too aggressive in their tax minimization. Sometimes, they get help from professionals.
New York turned state employees into undercover agents, fitting them with wires to call on tax preparers. Out of 170 visits over three years, 30 percent produced evidence of fraud.
Alvarez and Marsal, a consulting firm hired by the state, suggested the establishment of a discovery unit and the hiring of additional auditors as part of its assessment on how state government in Louisiana could save more money. The discovery unit would generate plans that would be executed by auditors.
Louisiana already has auditors across the country. They’re located where corporate headquarters are. Louisiana has auditors in New York City, Atlanta, Chicago, San Francisco and Los Angeles.
More recently, Louisiana began closing regional offices, mainly in Louisiana. Offices in Alexandria, Dallas, Houston, Lafayette, Lake Charles, Monroe and Shreveport closed in 2013. Auditors now work from home, with computer systems monitoring their log-on and log-off times.
“Those people are supposed to be in the field, collecting taxes, knocking on doors,” said Jarrod J. Coniglio, assistant secretary of the Revenue Department.
The big focus for the state Revenue Department for the next few years will be on closing the tax gap. The gap is the yawning hole between what is paid and what is supposed to be paid. If Alvarez and Marsal is to be believed, the gap is in the millions of dollars.
Each of the agency’s auditors is going to be under pressure to identify $1 million per year in previously uncollected tax revenue. The additional auditors will focus on areas with complex tax issues.
Some members of the Revenue Estimating Conference — which sets the state’s spending figures — were skeptical last month. They refused to build the expected enhanced tax collections into the state’s operating budget. They raised doubt over whether $53 million can be generated in a single year.
“The revenues will be forthcoming. And I have no doubt that they will be forthcoming. I just don’t know when or how much,” LSU economics professor Jim Richardson told the Jindal administration.
Weeks later, Barfield remained determined. The discovery unit is forming. Additional auditors are coming on board.
“I’ll be disappointed if we don’t collect an additional $53 million,” he said.
Michelle Millhollon covers the state budget for The Advocate Capitol news bureau. Her email address is email@example.com. Follow her on Twitter @mmillhollon. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/