January 29, 2003
Improved Collection Can Help Pay for Tax Cut, Agency Says
By Barry Massey
The Associated Press
SANTA FE Gov. Bill Richardson's top tax official delivered assurances to lawmakers on Wednesday that aggressive auditing and collection efforts will net an extra $50 million to help cover the price tag of the governor's proposed tax-cutting package.
In testimony to a House committee, Taxation and Revenue Secretary Jan Goodwin outlined a plan by the agency to scoop up more tax revenues during the next 18 months.
Goodwin said she was "very confident" that the state could pick up at least $50 million.
"We're trying to look under all of the rocks," Goodwin told the Taxation and Revenue Committee.
She and Ricky Bejarano, director of the audit and compliance division, said the department had been hampered in the past in trying to pursue some tax collections because of computer problems, which have been resolved.
Among the audit initiatives are checking businesses to ensure they have paid compensating tax on equipment acquired outside of New Mexico where no similar tax was paid.
On personal income taxes, the department will do a "tape match" to check state tax returns against a taxpayer's federal filing to ensure proper payments were made to New Mexico.
Bejarano said that delinquent personal income tax assessments total about $64 million and delinquent gross receipts tax assessments total about $145 million.
Overall, Goodwin said, the department estimates it should be able to pick up $68 million through its collection and auditing, with $50 million of that going to the state and the rest to local governments. For example, local governments receive a share of gross receipts taxes.
She said the state received an additional $45 million in revenues because of a similar department effort in 1992-93.
Rep. Donald Whitaker, D-Eunice, the committee chairman, questioned whether the state would end up spending extra money in legal fees to resolve challenges by taxpayers.
Goodwin said there should be few court battles because the legal issues were "straightforward and clear cut" in most of the compliance cases.
The department proposes to spend an additional $5 million to help hire 42 additional workers in the audit and compliance division and to form a 16-member fraud bureau.
The governor has proposed lowering personal income taxes and taxes on capital gains over four years. The first year of the reductions would mean a loss of about $21 million, but that could be offset if the department succeeds in picking up additional revenues through its plan.