State auditors found a number of problems with state tax collection in a report released Tuesday, including the failure to track down residents who had high incomes but filed no state tax returns. The state comptroller?s office also failed to identify taxpayers who claimed deductions and credits but did not report them on their federal tax returns as required.
Deputy Comptroller Linda Tanton and Compliance Division Director James Loftus responded in writing that the problems were largely due to a lack of personnel and computer services to follow up on the problems. But in the budget Gov. Martin O?Malley submitted and the legislature approved, the division will get 16 new employees and a new data warehouse.
All the problems in the report cited by Legislative Auditor Bruce Myers occurred from July 2003 to December 2006, the final 3 1/2 years of Comptroller William Donald Schaefer, who was defeated in the 2006 Democratic primary by current Comptroller Peter Franchot.
Franchot has repeatedly said the state could collect hundreds of millions more in taxes with more staff and information technology.
The auditors also found there were two unidentified state subdivisions that had reissued liquor licenses to establishments that owed $4 million in back taxes, apparently in violation of state law. The comptroller?s staff said the matter was referred to the attorney general three years ago but still hadn?t been resolved.
In one case, auditors identified 11 individuals who made a total of $21 million in 2004 according to W-2 income reporting forms, but who hadn?t filed tax returns and were not being pursued.
The compliance staff said the 11 were part of a group of 138,000 individuals paid more than $15,900 who did not file tax returns. The state followed up on 78,000 of them who still had a current Maryland employer.
It is not clear how many of the other wage earners actually owed the state money, because state income taxes had been withheld from the pay of many.
Tanton and Loftus said the new staff and database should take care of the problem.
