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 Tax 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 charitable gaming fees and pull-tab tax, for which the Tax Division also serves as the regulatory body. In FY 2012, 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 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 does 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. In the past, the Tax 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 Tax Division needs to increase its audit numbers.
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. The Tax Division began design and development of its TRMS in April of 2013. In order to ensure that implementation was successful, the Tax Division deliberately cut back on the number of audits conducted in February of 2016. The project took a lot of our audit staff time in design and testing at various stages. The drop in audit hours in FY 2013 - FY 2015 is a result of diverting resources to TRMS. The drop in hours in FY 2017 and FY 2018 can partially be explained by the fact that there have been significant changes in the oil and gas productive 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.
Current as of November 5, 2019