A legislative audit of Comptroller William Donald Schaefer?s tax collection operations found problems with “potential fraudulent use of Social Security numbers,” lack of documentation for tax credits, inadequate review of tax returns and too many employees being given unlimited computer access to sensitive tax information.
However, the Dec. 15 report of Legislative Auditor Bruce Myers to the Joint Audit Committee noted that the comptroller?s staff agreed with many of the findings and had already begun to take a number of corrective actions.
In astatement, Schaefer said, “I commend my Revenue Administration Division for its transparency in reporting and forthcoming, fact-based submissions of data. The integrity of this administration can never be held in question, nor can its service to the taxpayers of Maryland.”
The audit was conducted from November 2002 to January 2006 by a team of eight auditors, including six certified public accountants, four of whom are information systems specialists.
In one of its key findings, the auditors said about 1,700 Social Security numbers were used by two or more individuals to receive tax refunds totaling $3 million. In their response, Deputy Comptroller Linda Tanton and Revenue Administration Director James Arnie noted that the agency had taken corrective action, and adjusted and billed 365 returns that did not have valid numbers.
The use of invalid Social Security numbers has been a continuing concern, they said. After years of negotiations, this fall “the Internal Revenue Service has finally agreed to allow bulk matching of Social Security numbers” for tax administration and to validate the numbers. Tanton and Arnie also said this bulk matching should help identify taxpayers claiming too many dependents and some without valid numbers, another problem the auditors identified.
After the auditors found 644 employees “had unnecessary and unlogged access” to data files containing sensitive tax and banking information, the comptroller?s office deleted access for 515 of them. In general, they have also beefed up password security procedures for taxpayers accessing the electronic tax filing system.
Schaefer commented, “The state?s incoming comptroller [Peter Franchot] will have an opportunity to improve upon a system already serving as a model for the rest of the country.”
