Performance Details

Department of Revenue - Tax Division

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Mission

The mission of the Tax Division is to collect taxes, inform stakeholders, and regulate charitable gaming.

Core Services

• Maximize Compliance with Tax Programs
• Facilitate Voluntary Compliance
• Effectively Audit Tax Programs

Mission Results	Core Services
A: Maximize Compliance with Current Tax Statutes - Tax Programs include all programs under the Tax Division"s accountability and include the Charitable Gaming Program. Details > TARGET #1: 90% of existing taxpayers file their tax returns and make tax payments timely.	A1: Maximize Compliance with Tax Programs Details > TARGET #1: Open 10 new audit cases (taxpayers that have not been audited by the Tax Division in the prior five years). A2: Facilitate Voluntary Compliance Details > TARGET #1: Conduct five new compliance projects to identify non-filers. A3: Effectively Audit Tax Programs Details > TARGET #1: 1,000 hour increase in audit hours over prior year.

Performance Detail

Target #1: 90% of existing taxpayers file their tax returns and make tax payments timely. Taxpayers Filing and Paying Taxes Timely Fiscal Year % of Timely Filers FY 2024 89.4% FY 2023 85.7% FY 2022 85.8% FY 2021 83.2% FY 2020 88.8% FY 2019 88.2% FY 2018 88.8% FY 2017 87.4% FY 2016 89.7% FY 2015 89.0% Analysis of results and challenges: The Tax Division completed its final rollout of its Tax Revenue Management System (TRMS) in FY2017. The new system replaced many outdated legacy systems and allowed the Tax Division to get more accurate information from tax returns. While the above graph and table report a decrease in timely filing and paying of tax returns beginning in FY2015 (the year of the first rollout), the division believes the higher numbers in earlier years were not correct, but a flaw in previous system reports. The division has reached out to other states, and their timely filing rates are below 90 percent (some are far below). The new system is providing more accurate information. It should be noted that certain assumptions had to be made to produce the number provided. For example, only returns and payments that have been received are considered in the calculation. There may be returns and payments that will be late but have not yet been received. One of the primary functions of the division is to encourage voluntary compliance by all taxpayers across all tax programs. This is achieved in a variety of ways, i.e. taxpayer education and outreach programs, compliance activities where the division actively looks for non-filers, and collection activities. Taxpayers are more apt to voluntarily comply if they believe that everyone else is paying their fair share and the division makes it relatively easy to file returns and pay taxes. As such, the most effective way to measure performance is to look at the percentage of known taxpayers who timely file their returns and pay their taxes. TRMS has a public facing component which allows taxpayers to file and make payments online. The division has had great success with this system and believes it is a factor in the performance reported. Target Last Modified: 10/10/2024

Target #1: Open 10 new audit cases (taxpayers that have not been audited by the Tax Division in the prior five years). Number of New Audit Cases Opened Fiscal Year # of Audit Cases FY 2024 21 FY 2023 27 FY 2022 46 FY 2021 33 FY 2020 26 FY 2019 39 FY 2018 53 FY 2017 59 FY 2016 31 FY 2015 17 Analysis of results and challenges: The Tax Division maintains 100 percent audit coverage in oil and gas income and production taxes. Those audits are not reflected here because they do not meet the definition of “new audit.” An audit presence in each of the other tax types improves long-term voluntary compliance as well as generates new audit revenues. Furthermore, once established, audit generated revenues tend to recur as taxpayers modify their reporting to become compliant with the audit findings. The Tax Division had a decrease in the number of new audits opened this past fiscal year. This was the result of a major system upgrade in FY2024. Tax Division upgraded its Tax Revenue Management System (TRMS). This was a big lift and required a significant time commitment of staff. In order to ensure that the upgrade was successful, the Tax Division deliberately cut back on its audits and diverted those resources to the TRMS upgrade. TRMS has allowed the Tax Division to automate many processes and makes audit work more efficient. For those reasons, the Tax Division prioritized the TRMS upgrade in FY2024 which resulted in a decrease in new audits conducted. Target Last Modified: 10/10/2024

Target #1: Conduct five new compliance projects to identify non-filers. Compliance Projects Conducted Fiscal Year # of Compliance Projects # New Taxpayers FY 2024 30 5 FY 2023 120 8 FY 2022 180 11 FY 2021 207 18 FY 2020 250 22 FY 2019 72 11 FY 2018 73 45 FY 2017 67 27 FY 2016 27 15 FY 2015 12 18 Analysis of results and challenges: The Tax Division encourages voluntary compliance as the most effective tool for collecting tax revenues. An important aspect of voluntary compliance is for taxpayers to believe that they are paying about the same amount in taxes as other similarly situated taxpayers. Seeking out and finding new taxpayers and bringing them into compliance assists the Tax Division both in long-term voluntary compliance as well as bringing in the revenues from the new taxpayers. The Tax Division does not believe there are any major oil and gas taxpayers not filing. Therefore, the Tax Division focuses its compliance efforts on other tax types. This target and measure do not include federal or multi-state compliance programs in which the Tax Division currently participates. Compliance projects include analyzing databases of other states, the federal government, and local agencies to ensure that a person engaged in a taxable activity is filing required tax returns. The Tax Division also conducts taxpayer outreach and education through attendance at industry meetings and conferences. Target Last Modified: 10/10/2024

Target #1: 1,000 hour increase in audit hours over prior year. Change in Audit Hours over Prior Year Fiscal Year # of Hours Target FY 2024 -5786 1000 FY 2023 3450 1000 FY 2022 -316 1000 FY 2021 -2,083 1000 FY 2020 963 1000 FY 2019 455 1000 FY 2018 -92 1000 FY 2017 -2,670 1000 FY 2016 4,168 1000 FY 2015 -1,102 1000 Analysis of results and challenges: Although voluntary compliance remains the best tool for effective tax collection, that voluntary effort is enhanced by an audit presence, therefore, the Tax Division needs to increase its audit numbers. In general, the Tax Division strives to increase its year-over-year audit hours in an effort to be more efficient with its time and spend auditor time on things that will generate the greatest benefit to the State. In FY2024, the Tax Division upgraded its Tax Revenue Management System (TRMS). This was a big lift and required a significant time commitment of staff. In order to ensure that the upgrade was successful, the Tax Division deliberately cut back on its audit hours and diverted those resources to the TRMS upgrade. TRMS has allowed the Tax Division to automate many processes and makes audit work more efficient. For those reasons, the Tax Division prioritized the TRMS upgrade in FY2024 which resulted in a decrease in audit hours from the prior year. The decrease in hours in FY2017 — FY2018 can partially be explained by the fact that there have been significant changes in the oil and gas production tax regime which has required programming changes to TRMS. The oil and gas production tax and corporate income tax Audit Groups remain current on all oil and gas audits. Target Last Modified: 10/10/2024

Last refreshed: 05/12/2025 05:00 pm