The state’s official estimate of unpaid taxes, including fees and interests, has officially topped $1 billion.
Over the course of the last year, the total amount of delinquent taxes owed to the state increased from about $800 million in July 2007 to more than $1 billion as of July 2008, according to Wisconsin Department of Revenue documents.
According to Jessica Iverson, spokesperson for the DOR, the increases are the result of the full implementation of the new processing system.
“It more efficiently processes returns, identifies errors and accrues interest to delinquent accounts,” Iverson said in an e-mail.
The previous system updated interest on unpaid accounts only when financial transactions occurred, like a payment or return adjustment. The new system, however, updates interest monthly. As a result, the number of bills increased by an average of 3 percent annually from 2002 to 2008, Iverson added.
Of the $1 billion owed, nearly 52 percent, or about $536 million, are more than 3 years delinquent. According to Iverson, the collection efforts is more successful for newer accounts than it is for older ones, decreasing the chance the older tax bills will ever be collected.
The record levels of delinquent taxes have sparked the concern of various third-party organizations as well as government officials over Gov. Jim Doyle’s proposed cuts to the department.
In his budget address in February, Doyle proposed making cuts to the DOR in favor of more electric collection methods.
“We can cut the number of processors at the Department of Revenue but still get you a speedy refund thanks to more online filing,” Doyle said in his address.
However, many officials argue with so much owed in back taxes, as well as tax increases proposed by the governor, the department should actually hire more auditors in an effort to collect as much of the money as possible.
“We think it’s really important that the state do everything in its power [to collect the money],” said Scott Spector, spokesperson for American Federation of Teachers, a trade union that represents members of the DOR. “These are corporations and wealthy individuals that avoid paying their share.”
According to a study by the Institute for Wisconsin’s Future, the state may benefit from adopting a plan similar to one used in Minnesota, where the state hired extra auditors, resulting an additional collection of $900 million the collection of revenue.
To help address these concerns, Senate President Fred Risser, D-Madison, plans to hold an informational meeting for the Senate Committee on Ethic Reform and Government Relations to look into hiring more auditors to collect revenue, according to Terry Tuschen, spokesperson for Risser.
Although the amount of backed taxes owed to the state is at record levels, the news should not have come as a surprise to the governor, according to some Republican lawmakers.
“It amazes me that either Gov. Doyle is unaware of this or too busy looking at choo-choo trains in Spain to go after these tax cheats, but Gov. Doyle should have been going after them all along,” said Rep. Scott Suder, R-Abbotsford.
