Presentation on theme: "LOUISIANA DEPT OF REVENUE “FIELD AUDIT DIVISION”"— Presentation transcript:
1 LOUISIANA DEPT OF REVENUE “FIELD AUDIT DIVISION” 2015 LDR/TAX PRACTIONERS WORKSHOPJoseph Vaughn, Asst. Secretary, Group IIIDebbie Jenkins, Group III Executive AssistantCynthia Pugh, Director – Audit Intelligence TeamDarlene Allen, Director – FA Sales Tax DivisionKevin Richard, Director – FA Income Tax DivisionClarence Lymon, Director – FA Excise Tax DivisionJay Frost, Director – Audit Review & Appeals DivisionThese procedure discussions are for a wide ranging size operations of bars and restaurants. Big and Small.
2 WHAT WE WILL DISCUSS TODAY Field Audit case, production and collection stats;Staff Count, locationsUse of Contract Auditors – statsVoluntary Disclosure Program
4 AUDIT STATISTICSSUMMARY OF FIELD AUDIT SERVICES ROI/PRODUCTION CALCULATIONSAVERAGE PRODUCTION DISCOVERED PER $1 INCURRED FOR PERIODS FYEPERIODTOTALAVERAGE FIELD AUDITFYEPRODUCTIONEXPENSESRETURN ON EXPENSE$ PRODUCED PER $1FYE 6/30/2009$ ,998,718.00$ ,897,800.58$FYE 6/30/2010$ ,338,497.00$ ,086,529.19$FYE 6/30/2011$ ,139,043.00$ ,085,979.28$FYE 6/30/2012$ ,245,607.00$FYE 6/30/2013$ ,631,891.00$ ,663,556.09$$ ,575,353,756.00$ ,819,844.42$Removing outlyer years2010 and 2013$ ,447,383,368.00$ ,069,759.14$
6 AUDIT STATISTICS CONT.The last five (2009 – 2013) years of Field Audit compliance activity has generated the following findings:FIELD AUDITNumber of field audits performed = 11,270;Total Collections = $1,210,897,442.33ROE = $7.72 collected for each $1 spent.FYE 2014:Audit discoveries = $435,178,610.02Audit Collections = $363,189,599.30
7 Summary of Completed Field Audits AUDIT STATISTICS CONT.Summary of Completed Field Audits* Fiscal Years#%AVG DaysBCorporateCorporation Income & Franchise2,58325.52%223.97ExciseExcise - Alcohol10.01%780.00Excise - Beer20.02%219.00Excise - HZ Waste39.00Excise - Insp/Supv140.14%164.93Excise - Tobacco270.27%137.74Excise - Trans/Comm80.08%96.00Fuel TaxFT-Distrib/Export/Blender42.00FT-Supplier120.12%125.92IFTA3143.10%83.32OtherAudit - Motor Vehicle Sales60.06%54.33Audit - Natural Gas Franchise130.13%194.00SalesAutomobile Rental73.26New Orleans Exhibition Hall1471.45%109.23NO Hotel/Motel (4 col)400.40%240.186,23561.61%150.64Sales Prepaid Cell Phone110.11%50.09Statewide Hotel/Motel920.91%146.99SeveranceSeverance - Gas370.37%194.97Severance - Minerals119.50Severance - Oil820.81%265.76Severance - Timber41.50Withholding1691.67%112.01Total9,82697.09%IInd. IncomeIndividual Income2912.88%34.26Individual Income - Composite30.03%128.332942.91%10,120100.00%
10 FIELD AUDIT DIVISION REORGANIZATION Field Audit Operations were generally managed by one Director level manager;Managed all headquarters and district field audit operations, as well as Audit Review and administrative staff.Field Audit Operations were structured by geographic areasEach geographic area was managed by an Audit Manager and Supervisors
11 FIELD AUDIT DIVISION PRE-REORGANIZATIONS CONT. Field Auditors covered these geographic areas, and approached audits in “audit the taxpayer and not just the tax”.Auditors are cross trained to have at least a minimum amount of training experience in all tax types.
12 FIELD AUDIT DIVISION PRE-REORGANIZATIONS CONT. The result of this structure was:One Director level manager responsible for the activities of 120 FAS staff;Audit Management and staff that had to stretch their activities across all tax types;A very narrow and deep structure that stretched our Field Audit staff that may be beyond their level of expertise.A “reactive” more than a “proactive” audit program.
13 COMPLIANCE DIVISION REORGANIZATIONS CONT. The Decision was made by the LDR Executive Team to re-organize both Divisions by “tax type”.
15 FIELD AUDIT DIVISION POST-REORGANIZATION CONT. Expected Results:Director level emphasis on audit operations by specific tax type;Flatter organizational structure;Will allow Directors, Supervisors and managers to concentrate on one or two specific tax types resulting in subject matter experts with a deeper understanding of tax law and theory;
16 INCREASING COMPLIANCE STAFF Approximately 48 positions have been added to the Compliance Divisions of LDR includingField Auditors, Field Audit Supervisors, and Revenue tax Auditor Specialists;Compliance staff will be added in-state in areas of perceived need, based on current staffing levels and areas of dense business activities;Compliance staff will be added to out of state metropolitan areas where the Department has historically sent multiple Field Audit trips.
17 INCREASING COMPLIANCE STAFF For a total cost of about $90K, it is estimated that for each new revenue auditor position created and filled the Department would see an increase collections, on average, by $200,000 in the first full year of employment, $450,000 in the second year of employment and $750,000 in the third year of employment.Does not take into consideration collections from the resulting voluntary compliance.
18 INCREASING COMPLIANCE STAFF We have a perpetual posting on the Civil Service website nor for these auditor positions.We feel that the practioner community has many qualified candidates for these positions available.If you or any of your colleagues are interested, please contact us.COME TO THE DARK SIDE!
24 CONTRACT AUDIT INITIATIVES LDR audits .4% of all registered taxpayers in Louisiana.Last year the Louisiana Department of Revenue engaged with the Rapides Parish Sales and Use Tax Office in a multi year joint endeavor for that agency to perform audits on behalf of LDR.The theory was that one auditor/agency could complete both audits with minimum disruption to the taxpayers operation.
25 CONTRACT AUDIT INITIATIVES CONT. Rapides Parish Sales Tax Office has eight auditors for one parish audit operation; the Alexandria Regional Office has two auditors to cover the ten parishes around Alexandria. (More auditors are about to be added to that area).LDR keeps complete control over what audits are performed, but it is generally taxpayers they are also auditing.
26 CONTRACT AUDIT INITIATIVES CONT. LDR is in the process of also signing agreements with St. Charles Parish and St. Mary parish.LDR also engaged two contract audit firms to perform Louisiana sales tax audits, in conjunction with local audits they are performing.BPA Associates, and Revenue Recovery Group
27 CONTRACT AUDIT INITIATIVES CONT. All entities contracted to perform audits paid by the hours of audit services performed (no contingency agreements);All auditing entities provides a list to LDR of taxpayers they are requesting to audit;LDR retains complete control over which taxpayers are selected for audit;LDR performs all reviews of audits and assessments of liabilities.
28 CONTRACT AUDIT INITIATIVES CONT. Productive? Efficient?The three contracts have resulted in 97 audits performed;$485, in liabilities discovered and collection in progress;Total Audit Fees paid = $52,521.52$9.24 collected for every $1 spent.
29 VOLUNTARY DISCLOSURE AGREEMENT Voluntary disclosure is the process of reporting undisclosed liabilities for any tax administered by the Louisiana Department of Revenue. Taxpayers may anonymously enter into agreements and voluntarily pay their taxes with a reduced or no penalty.In most cases, taxpayers enjoy a limited “look-back” period.The voluntary disclosure program helps coordinate the registration and payment process and provides general responses to tax related questions.
30 VOLUNTARY DISCLODURE AGREEMENT CONT. Louisiana Department of Revenue has a voluntary disclosure program for all of the taxes it administers, including (but not limited to):Individual Income TaxSales and Use TaxCorporation Income and Franchise TaxSeverance Taxes, including Oil and Gas Severance TaxExcise Taxes
31 VOLUNTARY DISCLODURE AGREEMENT Any taxpayer who has a filing requirement for a tax administered by the Louisiana Department of Revenue,is not currently registered with the Department for the same tax, andhas not been previously contacted by the Department concerning their filing requirementis eligible for consideration of a voluntary disclosure agreement.
32 VOLUNTARY DISCLODURE AGREEMENT CONT. A company that is currently registered with the Department may request a voluntary disclosure agreement for an entity it has acquired by purchase or merger provided the acquired company would have qualified under the conditions listed above.Only the undisclosed taxes of the acquired company for taxes due prior to the acquisition or merger would be eligible for a voluntary disclosure agreement.
33 VOLUNTARY DISCLOSURE AGREEMENT CONT. A taxpayer who is registered but failed to file returns or who submitted returns, extensions, or payments for any tax for which the voluntary disclosure agreement (VDA) is requested is not eligible for consideration.These taxpayers must file the appropriate original or amended return(s) and pay the tax, interest, and delinquent penalty due.
34 VOLUNTARY DISCLOSURE AGREEMENT CONT. A taxpayer who has been contacted by the Department of Revenue concerning a liability or potential liability of tax for which a VDA is requested generally does not qualify.This includes any contact made for the purpose of performing an audit of the taxpayer’s records.Disclosures relating to delinquencies or deficiencies that are obvious and would routinely generate a billing if not otherwise self-disclosed are not eligible for consideration.Disclosures related to the non-filing affiliates of a taxpayer who has been contacted for audit are not eligible for consideration.
35 VOLUNTARY DISCLOSURE AGREEMENT CONT. After the tax and interest liabilities have been paid for the look-back period, delinquent penalties will be waived unless the tax being disclosed has been collected but not remitted.The look-back period is the period for which prescription would not have run had returns been filed timely.
36 VOLUNTARY DISCLOSURE AGREEMENT CONT. Generally, this includes returns due during the current calendar year and the three immediately preceding calendar years.The look-back period is established when the application is received by the Department.In the case of taxes collected but not remitted, the look-back period will include all taxable periods for which there were collected but unremitted taxes.
37 VOLUNTARY DISCLOSURE AGREEMENT CONT. You may apply anonymously by completing form R (Application to Request Voluntary Disclosure Agreement), which can be found on the Department’s website.If it is determined that you would qualify to participate in the program based upon your responses in the application, the Department of Revenue will mail a blank Voluntary Disclosure Agreement to you or your representative.
38 VOLUNTARY DISCLOSURE AGREEMENT CONT. You may remain anonymous until after the agreement is signed by both parties.If you choose to forego anonymity and include your payment along with the voluntary disclosure application, please include your FEIN or SSN (as applicable) on your check andan application for account number (CR-1, R-16019) to assist in properly applying the payment.Make your check payable to the Louisiana Department of Revenue.
39 VOLUNTARY DISCLOSURE AGREEMENT CONT. Mail the voluntary disclosure application to:Louisiana Department of Revenue Voluntary Disclosure Program – Field Audit Services Division PO Box 4936 Baton Rouge, Louisiana
40 VOLUNTARY DISCLOSURE AGREEMENT CONT. Or deliver it to:Louisiana Department of Revenue LaSalle Building Voluntary Disclosure Program – Field Audit Services Division 617 North Third St, Room 562 Baton Rouge, LouisianaApplications may also be faxed to or ed to
41 AUDIT INITIATIVES - CONCLUSION Secretary Barfield: “Closing the “Tax Gap”, which is the difference between what taxpayers should be paying under the law and what they are paying in practice”