We asked Democratic gubernatorial hopeful Bill Bradbury
in an endorsement interview last week how he'd make state government more efficient. Bradbury, Oregon's former Secretary of State, responded that he'd get the Oregon Department of Revenue to do a better job collecting unpaid taxes from deadbeats.
That was an interesting answer because Bradbury's opponent in the May 18 Democratic primary, former Gov. John Kitzhaber, highlighted a couple of ways in which government could spend less money. Kitzhaber focused on reducing healthcare costs by increasing co-pays for elective or unproven medical treatment—while Bradbury focused on increasing revenue.
Despite that difference in approach, it appears Bradbury is on to something. Today his successor as Secretary of State, Kate Brown, released an audit
of the Department of Revenue's collection practices. To summarize, they are not very effective. The state collects about 81 percent of the income tax it is owed, the audit found, and does a poor job of collecting the rest. Here's what Brown's auditors found about the DOR:
We reviewed DOR's collection practices, surveyed private collection firms with which DOR contracts, and researched collection best
practices. Based on this work, we determined that DOR does not timely contact taxpayers by phone, does not have a strong performance
management approach to collections and does not sufficiently use technology and automation to improve the efficiency and effectiveness of
its collections efforts.
If DOR stepped up its collection practices, the audit says, it could bring in significant additional monies, although not nearly enough to cover what lawmakers say is a looming $2.5 billion deficit for the next biennium.
Using IRS data provided to DOR each year, we identified approximately 66,000 individuals who should have filed state income tax returns for tax year 2007, but had not as of the end of March 2009. We estimate these non-filers owed about $109 million in tax liability for tax year 2007. This represents an additional 2% of personal income tax liability. Based on past collection rates of non-filer debt, DOR would likely be able to collect about $54 million of the total liability over a five-year period.