SID SALTER: State still struggles to streamline tax collection processes

By Sid Salter

STARKVILLE – Since 2009, Mississippi’s government has struggled with the means and the methods to bring the state’s tax collection processes and mechanisms into the modern era. In effect, that means to optimize the state’s ability to collect all the legal tax revenue due from the taxpayers who owe it and to close the gap between the taxpayers who are meeting their obligations and those who are not.
Back in 2009, the alarms began sounding in earnest in the state Department of Revenue after a reorganization over a very real and immediate threat to government at all levels in Mississippi. In a letter that year to then-Lt. Gov. Phil Bryant and then-House Speaker Billy McCoy, Department of Revenue Chairman Ed Morgan raised what he called “the nightmare scenario.”
Morgan told the legislative leadership that the state’s antiquated computer system – the one that collects over 70 percent of the state’s General Fund revenue and processes the collection and reimbursement of over $1 billion back to county and municipal governments – was poised to crash.
The old computer software system at the Department of Revenue was implemented over 35 years ago in 1974. Morgan told Bryant and McCoy in 2009 that the tax revenue collection and processing computer software was “broken” and “on life support.”
In that same 2009 letter, Morgan told lawmakers that Mississippi’s antiquated computer system was, in fact, leaving vital state revenues that should be collected on the table at a time when the state could least afford not to collect every penny.
“In 1974, when this software was implemented, an agency of about 1,000 employees collected $400 million in revenues,” wrote Morgan. “In Fiscal Year 2008, we collected $7.1 billion with fewer than 700 employees using the same software. You can only handle so much volume before the levee breaks.”
The Legislature responded positively and decisively with $35 million to replace the aging computer system. But lawmakers didn’t address the concurrent request that Morgan made for additional Department of Revenue agents and analysts.
Both former Gov. Haley Barbour and Gov. Phil Bryant have asked lawmakers for an additional $4.5 to $5 million for the Department of Revenue to fund additional personnel to beef up tax collection efforts and close the “tax gap.” But in this era of tight state budgets, those requests were cut during the legislative process.
Morgan said this week that with an additional $5 million for personnel, he believed his agency over an 18-month period could collect at least an additional $25 million and realistically as much as $52 million with no new taxes levied.
With new Republican leadership in the Senate and House, the political survival of any “new tax” effort is expected to be nil. But it would seem that funding an effort to make a fair, full and comprehensive collection of the existing tax structure from all taxpayers would be an easy sell.
Unfortunately for those diligently paying the taxes they owe, Morgan said the “accounts receivable” of uncollected taxes from the “tax gap” is growing faster than the ability of the Department of Revenue to collect those taxes.
Sid Salter is a syndicated columnist. Contact him at (601) 507-8004 or sidsalter@sidsalter.com.