Maryland spent $18 million on an effort to modernize its tax collection system, then abandoned the project without ever using it, a state audit found.
The development of a replacement to the SMART (State of Maryland Tax system) was suspended by the state’s comptroller — the collector of revenue for state programs — in December because of “cost concerns and the contractor’s failure to meet deliverables,” a report from the Maryland Office of Legislative Audits said. The report said the suspended project was to replace the state’s automated tax processing and recordation system, used to process tax returns and issue refunds.
“If the state’s at fault, then it’s going to be wasted funds,” said Bruce Myers, the legislative auditor who conducted the review, of attempts by the state to recover money.
But comptroller spokeswoman Christine Feldmann disputed that the $17.9 million already spent on the nixed development project has gone to waste. She said negotiations are taking place to see if any funds can be recouped from Accenture, the company developing the suspended project.
Feldmann said the suspended program was part of a larger ongoing $72.3 million Modernized Integrated Tax System project contracted to Accenture that will end up saving Marylanders money in the long run.
A separate component of the MITS project, which was not suspended, is the development of a data warehousing component that compiles taxpayer data for enforcement purposes — something Feldmann says has already identified taxpayers who owe them money.
“We’ve recovered more than $60 million through that program,” she said. “We’ve obviously invested that $18 million [for the suspended program] but the return has already more than doubled what we paid out.”
Jim McAvoy, a spokesman for Accenture, said “significant adjustments were made to the original contract’s scope” at the state’s request. He disputed that Accenture didn’t live up to its contract on the suspended component, but wouldn’t elaborate because of ongoing negotiations with the state over the larger project.
“Given the overall budget challenges the state is dealing with, it’s a responsible decision to focus on areas that can provide immediate benefits,” McAvoy said. “We understand the state’s decision to reset priorities.”
The comptroller will continue to use the old SMART system for tax collection, Feldmann said. “Nobody believed this was the best use of taxpayer funds if we were going to continue down the road we were heading.”
