Goshen News, Goshen, IN

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February 24, 2013

Mayor doubts LOIT accuracy

INDIANAPOLIS — The Indiana Department of Revenue has requested nearly $10 million in additional funding to hire more staff and upgrade its technology to do a better job of tracking and distributing the $1.5 billion in income tax revenues owed to local governments each year.

The request, included in the House’s two-year budget plan, comes in response to past revelations that the department lost track of $526 million in corporate and income tax revenues, including $206 million owed to cities and counties.

But some legislators and local government officials fear the department’s proposed fixes may not go far enough. They’re pushing for additional remedies to make sure the dollars owed to local governments get there in a full and timely manner.  

Among the changes they’re advocating: A faster turnaround of the Local Option Income Tax (LOIT) revenues collected by the state, and a tracking system that relies more on employers that withhold income tax dollars from paychecks and less on the workers who may fail to report them.

“We want to make sure every dollar collected by the state goes back to local government where it’s owed,” said Goshen Mayor Allan Kauffman, a member of a task force created last year by the State Budget Agency to look at how the state collects and distributes local tax revenues.

Kauffman explained that Local Option Income Tax revenue from employers is funneled directly into the state’s general fund. The state then estimates what the local governments should get back. His concern is that the state doesn’t keep track of what is coming in, therefore may not be distributing everything it should back to the locals.

“They know the difference between their estimate and what they actually distributed,” Kauffman said of the current state system. “But what they don’t know is the difference between what they really received and their distribution. It’s just fraught with the possibility of error.”

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