The mission of the Tax Division is to collect taxes, inform stakeholders, and regulate charitable gaming.
- Enforce tax statutes
- Enforce charitable gaming statutes
- Facilitate voluntary compliance
- Increase number of audit hours
|Mission Results||Core Services|
|A: Result - Maximize compliance with current tax and gaming statutes.|
|A1: Core Service - Enforce tax statutes|
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
Analysis of results and challenges: The Tax Division maintains 100% audit coverage in oil and gas income and production taxes. 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. Not included in the new audit count are audits of exploration tax credit claims by existing taxpayers. These audits do not meet our definition of "new audits" although they represent new and expanded audit efforts by the Division.
|A2: Core Service - Enforce charitable gaming statutes|
Target #1: Conduct 50 gaming inspections each year.
Gaming Inspections Conducted
Analysis of results and challenges: The Tax Division believes that voluntary compliance is tied to how knowledgeable our taxpayers are about a specific tax program and if there are consequences for failing to comply with tax laws. This measure specifically targets the gaming tax, for which the Division also serves as the regulatory body. In FY2012, the Department of Revenue created the Criminal Investigations Unit (CIU) within the Commissioner's Office and transferred all investigators within the Tax Division, Child Support Services Division, and Permanent Fund Division to this unit. Although the Tax Division no longer has its own investigators, the CIU conducts routine inspections of gaming operators and permittees on behalf of the Tax Division to ensure that they are conducting gaming activities as required by law. During inspections, the taxpayer has the opportunity to ask questions about the gaming program and the investigator can educate the taxpayer about the gaming laws. We believe that routine inspections are a good way to promote voluntary compliance and conformance to gaming laws.
Inspections consist of visiting a licensee's establishment to ensure that they are conducting gaming activities in accordance with current statutes and regulations. Investigations go beyond merely inspecting an establishment and many include requesting books and records, interviewing employees and members of the community, and other follow-up to ensure that a licensee is in full compliance with gaming laws. CIU investigators work closely with Tax Division gaming auditors on many investigations and oftentimes those investigations lead to audits of permittees and/or operators by Tax Division staff.
|A3: Core Service - Facilitate voluntary compliance|
Target #1: Conduct five new compliance projects to identify non-filers.
Compliance Projects Conducted
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 Department of Revenue both in long-term voluntary compliance as well as bringing in the revenues from the new taxpayers. The Division does not believe there are any major oil and gas taxpayers not filing. Therefore, the Division focuses its compliance efforts on other tax types. This target and measure does not include federal or multi-state compliance programs in which the 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. In the past the Division has also conducted taxpayer outreach and education through attendance at industry meetings and conferences.
|A4: Core Service - Increase number of audit hours|
Target #1: 1,000 hour increase in audit hours over prior year.
Change in Audit Hours over Prior Year
Analysis of results and challenges: Although voluntary compliance remains our best tool for effective tax collection, that voluntary effort is enhanced by an audit presence, and therefore, the Division needs to increase its audit numbers.
The change in audit hours over the prior year decreased by 92 hours in FY 2018. This can partially be explained by the fact that there have been significant changes in the Oil and Gas Production Tax type which has required changes to our system. Our auditors participate in the development and testing of those changes and the changes require a significant time commitment. Also, the retirement of auditors—including an audit master--and significant medical leave for 2 auditors impacted audit hours in FY 2018, and the Production Audit and Corporate Income Audit groups remain current on all oil and gas audits.
Current as of January 2, 2019