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LOUISIANA DEPT OF REVENUE
“FIELD AUDIT DIVISION”2015 LDR/TAX PRACTIONERS WORKSHOP
Joseph Vaughn, Asst. Secretary, Group III
Debbie Jenkins, Group III Executive Assistant
Cynthia Pugh, Director – Audit Intelligence Team
Darlene Allen, Director – FA Sales Tax Division
Kevin Richard, Director – FA Income Tax Division
Clarence Lymon, Director – FA Excise Tax Division
Jay Frost, Director – Audit Review & Appeals Division
WHAT WE WILL DISCUSS TODAY
• Field Audit case, production and collection stats;
• Staff Count, locations• Use of Contract Auditors – stats• Voluntary Disclosure Program
LDR ORGANIZATIONAL CHART
AUDIT STATISTICSSUMMARY OF FIELD AUDIT SERVICES ROI/PRODUCTION CALCULATIONS
AVERAGE PRODUCTION DISCOVERED PER $1 INCURRED FOR PERIODS FYE 2009 - 2013
PERIOD TOTAL TOTAL AVERAGE FIELD AUDIT
FYE PRODUCTION EXPENSES RETURN ON EXPENSE
$ PRODUCED PER $1
FYE 6/30/2009 $ 578,998,718.00 $ 32,897,800.58 $ 17.60
FYE 6/30/2010 $ 821,338,497.00 $ 31,086,529.19 $ 26.42
FYE 6/30/2011 $ 403,139,043.00 $ 30,085,979.28 $ 13.40
FYE 6/30/2012 $ 465,245,607.00 $ 30,085,979.28 $ 15.46
FYE 6/30/2013 $ 306,631,891.00 $ 32,663,556.09 $ 9.39
TOTAL $ 2,575,353,756.00 $ 156,819,844.42 $ 16.42
Removing outlyer years
2010 and 2013 $ 1,447,383,368.00 $ 93,069,759.14 $ 15.55
AUDIT STATISTICS CONT.Field Audit ProgramReturn on Expenditures, Fiscal Year 2013-2014
From Jenny TayLocation Direct Reg Admin Compl Adm Gen'l Adm/OH Total Audit Collections ROE
1.25% Al-Fld Aud $200,283.12 $32,367.06 $232,188.48 $94,453.78 $464,838.66 $1,070,833.08 $2.307.47% BR-Fld Aud 1,198,721.41 0.00 1,389,679.28 565,318.56 $2,588,400.69 11,481,434.74 4.444.51% LF-Fld Aud 722,839.69 99.58 837,988.99 340,892.13 $1,560,928.26 15,655,546.39 10.032.23% LC-Fld Aud 358,107.87 27,478.18 415,154.92 168,884.13 $800,740.97 5,453,548.58 6.811.83% Mo-Fld Aud 294,081.83 1,047.49 340,929.45 138,689.37 $636,058.76 1,579,526.16 2.488.77% NO-Fld Aud + Cov. 1,406,785.43 70,206.87 1,630,888.17 663,441.82 $3,107,880.47 9,578,940.41 3.084.63% Sh Fld Aud 742,725.91 9,792.54 861,043.11 350,270.49 $1,613,561.56 7,715,352.18 4.780.02% Th-Fld Aud 3,267.17 28.40 3,787.63 1,540.80 $7,083.21 7,459,964.42 1,053.19
Fld Aud Regions $4,926,812.43 $141,020.13 $5,711,660.02 $2,323,491.07 $10,779,492.58 $59,995,145.96 $5.57
4.57% Fld Aud Serv-Exc $732,468.59 $849,151.78 $345,433.13 $1,581,620.378.88% Fld Aud Serv 1,424,201.29 1,651,078.40 671,655.16 3,075,279.69 17,847,218.069.09% Fld Aud Serv-Dallas 1,458,334.89 1,690,649.52 687,752.61 3,148,984.41 153,851,936.42
23.93% Fld Aud Serv-Houston 3,839,032.55 4,450,595.40 1,810,492.68 8,289,627.95 131,495,288.860.79% Fld Aud Serv-LA 126,853.40 147,061.31 59,824.23 273,914.710.00% Fld Aud Serv-NY 0.00 0.00 0.00 0.000.07% Fld Aud Serv-SF 10,921.64 12,661.47 5,150.66 23,583.111.26% Fld Aud Serv-Tulsa 201,740.07 233,877.52 95,140.88 435,617.590.71% Fld Aud Serv Dist Atl 113,427.51 131,496.66 53,492.56 244,924.170.67% Fld Aud Serv-Austin 107,686.48 124,841.08 50,785.08 232,527.56
Fld Aud Serv- Total $8,014,666.42 $9,291,413.15 $3,779,726.98 $17,306,079.57 $303,194,443.34 $17.520.15% Fld Aud Serv-Chic 23,279.03 26,987.41 10,978.42 50,266.44 0.00 0.000.72% Fld Aud Serv-VA 115,949.65 134,420.58 54,682.00 250,370.23 0.00
$8,153,895.10 $9,452,821.14 $3,845,387.40 $17,606,716.24 $303,194,443.34 $17.22
81.53% Total Fld Aud $13,080,707.53 $15,164,481.16 $6,168,878.47 $28,386,208.82 $363,189,589.30
From Expenditures FY14
AUDIT STATISTICS CONT.
The last five (2009 – 2013) years of Field Audit compliance activity has generated the following findings:
– FIELD AUDIT• Number of field audits performed = 11,270;• Total Collections = $1,210,897,442.33• ROE = $7.72 collected for each $1 spent. • FYE 2014:
– Audit discoveries = $435,178,610.02– Audit Collections = $363,189,599.30
AUDIT STATISTICS CONT.Summary of Completed Field Audits
* Fiscal Years 2010 - 2014
# % AVG Days
B Corporate Corporation Income & Franchise 2,583 25.52% 223.97
Excise Excise - Alcohol 1 0.01% 780.00
Excise - Beer 2 0.02% 219.00
Excise - HZ Waste 1 0.01% 39.00
Excise - Insp/Supv 14 0.14% 164.93
Excise - Tobacco 27 0.27% 137.74
Excise - Trans/Comm 8 0.08% 96.00
Fuel Tax FT-Distrib/Export/Blender 1 0.01% 42.00
FT-Supplier 12 0.12% 125.92
IFTA IFTA 314 3.10% 83.32
Other Audit - Motor Vehicle Sales 6 0.06% 54.33
Audit - Natural Gas Franchise 13 0.13% 194.00
Sales Automobile Rental 27 0.27% 73.26
New Orleans Exhibition Hall 147 1.45% 109.23
NO Hotel/Motel (4 col) 40 0.40% 240.18
Sales 6,235 61.61% 150.64
Sales Prepaid Cell Phone 11 0.11% 50.09
Statewide Hotel/Motel 92 0.91% 146.99
Severance Severance - Gas 37 0.37% 194.97
Severance - Minerals 2 0.02% 119.50
Severance - Oil 82 0.81% 265.76
Severance - Timber 2 0.02% 41.50
Withholding Withholding 169 1.67% 112.01
Total 9,826 97.09%
I Ind. Income Individual Income 291 2.88% 34.26
Individual Income - Composite 3 0.03% 128.33
Total 294 2.91%
Total 10,120 100.00%
AUDIT STATISTICS CONT.Year Avg.# Agents $Collections
6/30/94 120.5 $ 70,269,0676/30/95 115.5 $ 78,095,2146/30/96 129.2 $ 67,284,7396/30/97 124.6 $ 67,272,4936/30/98 125.8 $ 71,141,8376/30/99 119.4 $ 63,941,0946/30/00 117.6 $ 96,637,5536/30/01 110.4 $ 72,707,7116/30/02 106.9 $235,214,9466/30/03 108.5 $101,416,2126/30/04 109.4 $104,382,6956/30/05 104.5 $106,217,6496.30/06 100.8 $131,476,8646/30/07 99.2 $138,741,3356/30/08 99.9 $193,310,5236/30/09 99.6 $174,683,0436/30/10 99.8 $640,855,8056/30/11 103 $178,370,9736/30/12 104.4 $117,868,6936/30/13 101.2 $ 99,118,9286/30/14 104 $363,189,589.30
AUDIT STATISTICS CONCLUSION
• FY Ending 6/30/15 – YTD thru 12/31/2014– Audits Completed: 817.0 – Audit Production: $154,385,219.57– Audit Collections: $80,877,096.89
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 areas– Each geographic area was managed by an Audit
Manager and Supervisors
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.
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.
COMPLIANCE DIVISION REORGANIZATIONS CONT.
• The Decision was made by the LDR Executive Team to re-organize both Divisions by “tax type”.
FIELD AUDIT DIVISION NEW STRUCTURE
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;
INCREASING COMPLIANCE STAFF
• Approximately 48 positions have been added to the Compliance Divisions of LDR including– Field 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.
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.
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!
INCREASING COMPLIANCE FIELD AUDIT INCOME TAX DIVISION
CIFT / PIT Compliance Division Revenue Tax Director - Kevin Richard
Assistant Director - Alex Folz Assistant Director - Susan Oliver
Admin Assistant 5 - Annette Jenkins Vacant - Houston - Supervisor Krystal Bolton - Houston - Supervisor
LaVette Clark Houston Brittany Ambrose Houston
Gabrielle Hearon Houston Monica Jordan Houston
Matthew Tran Houston Arthur Metoyer, Jr. Houston
Ariona Williams Houston Kendrick Smith Houston
Elise Thomas-Brown - Houston - Supervisor Lambrini Piskioulis - Dallas - Supervisor
Carl Beverly Houston Dan Jesolva Los Angeles
Merle Edwards Houston Melissa Richardson Austin
Vinitha George Houston Anel Dorhauer Dallas
Chris Thompson Houston Susan Starnes Atlanta
Loan Nguyen Shreveport
Miguel Mandujano - Dallas - Supervisor
Karryl Romain - Houston - Supervisor Raymond (Max) Dupree Atlanta
William Beard Houston Terry Young Dallas
Romekia Lethermon Houston Leslie Shreve Virginia
Miguel Saenz Houston Desmond Chatman Dallas
Lachey Thompson Houston
Kent Roberts - Lafayette - Supervisor Nanette Morgan - Baton Rouge - Supervisor
Mitch Dronet Lafayette Kalisha Abram Baton Rouge
Michael Ganier Lafayette Shirley Snowberger Monroe
Laura Perkins Lafayette
Wayne Lockhart - New Orleans - Supervisor
Annette Broadway Covington Billy Pittman - Revenue Tax Auditor Specialist Houston
DeCarla Helton New Orleans Marcus Gaudet - Revenue Tax Auditor Specialist (WAE) Baton Rouge
Rong Tu Ye New Orleans Tracy Smith New Orleans
INCREASING COMPLIANCE FIELD AUDIT SALES TAX DIVISION
LGST Compliance Division Revenue Tax Director - Darlene Allen Assistant Director - Janice Cordell
Assistant Director - Vendetta Lockley Assistant Director - Alex Osemwingie
Admin Assistant 5 - Sam Cade Angela Chambers - Houston - Supervisor Casey Shaw - Shreveport - Supervisor
Kristal Gonzales Houston Annette Kotynia AlexandriaMark Lankford Houston Ashley Carrington Monroe
Pamela Ridley Houston Larry Elioff Monroe
Kewanna Johnson Houston Shelby Huff Shreveport
Elizabeth Nornholm - Houston - Supervisor Kelicia Lewis - New Orleans - Supervisor
Briana Thomas Houston Javon Franklin New OrleansRita Henry Houston Jason King New Orleans
Ha Tran Houston Kevin Johnson New Orleans
Yale Rideau Houston Kirsten Penn New Orleans
Stacey Young Houston Misha Williams New Orleans
Noble Guillory - Houston - Supervisor Lynette Richardson - New Orleans - Supervisor
Christine Hoang Houston Charles Bennett New OrleansRichard Reese Houston Kimberly Robinson Thibodeaux
Miranda Tyson Houston Nadia Major New Orleans
Kimberly Wood Houston Ivory Augillard Thibodeaux
Quatressa Weary New Orleans
Vacant - Houston - Supervisor
Jewell Harris Houston Cory Landry - Lafayette - Supervisor
Jordane Gunnells Houston Jeremy Gilbert Lafayette
Destinee McKinney Lafayette
Grogory Broussard Lafayette
Thaddeus Varmall - Dallas - Supervisor Janis Carpenter Alexandria
Alphonse Johnson Dallas
Pam Gautreaux Dallas Ann Gaines - Lafayette - Supervisor
Pansy Kennedy Dallas Cristy Mumphrey Baton Rouge
Tom Burke Oklahoma Chandra Labrie Lafayette
Chanda Molaison Lake Charles
Deborah Irvin - Dallas - Supervisor Dana Doucet Lake Charles
Desmond Stewart Dallas Joan Nyanchoka Dallas Tammy Hinds - Baton Rouge - Supervisor
Marcus Davis (starts 1/20/15) Dallas Melanie Bingham Baton Rouge
Nicole Phillips Atlanta Neonetta Devall Baton Rouge
Rosetta Futrell Baton Rouge
Lakeysha Meaux - Shreveport - Supervisor Troy McGehee Baton Rouge
Stacie Cowden Shreveport DeLisa Lloyd New Orleans
Cynthia Noble Shreveport
Donald Sweeters Shreveport Revenue Tax Auditor Specialists
Brittney Sanders Monroe Anthea Jones Dallas
Brandi Stafford Baton Rouge
Sikandra Clark New Orleans
INCREASING COMPLIANCE FIELD AUDIT EXCISE TAX DIVISION
Field Audit Excise Tax Division
Revenue Tax Director - Clarence Lymon
Revenue Tax Assistant Director - Sandra Malveaux
Administrative Assistant 5 - Michelle Shaffer
Sebrena Stewart Dallas
Dina DeLeon - Revenue Tax Auditor Supervisor
VACANT SLOT Baton Rouge
George Gaiennie Houston
Avra Gauthier Houston
Alicia Grant Houston
Dudley Washington Houston
Vickey King Dallas
Mark Yim Dallas
Pedro Weems - Revenue Tax Auditor Supervisor
Cassandra Weatherford Alexandria
Ken Foster Shreveport
Sheryle Cooper Baton RougeOneida Colleen Taule Shreveport
Deirdre McDondald Baton Rouge
Raven Owens Monroe
Shondra Cutno - Revenue Tax Auditor Supervisor
Cindy Jordan New Orleans
Danny Reid Baton Rouge
Joshua Coryell Baton Rouge
Vicki Simmons Baton Rouge
Lesia Robertson Thibodaux
INCREASING COMPLIANCE FIELD AUDIT INTELLIGENCE TEAM
Audit Intelligence Team
Revenue Tax Director - Cynthia Pugh
Revenue Tax Assistant Director - Amy Landry
Administrative Assistant 5 - Joyce Ringo
Employee Title
Deborah Anderson Rev Tax Aud Spec
Debra Guillory Rev Tax Aud Spec
Ha Louis Rev Tax Aud Spec
Terra Taylor Rev Tax Aud Spec
Pamela Fair Auditor-Info Sys 3
Lynda Amond ClassWAE Rev Tax Spec 2
Vernita Nelson ClassWAE Rev Tax Spec 2
Liana Techow ClassWAE Rev Tax Spec 2
Barbara Davis ClassWAE Rev Tax Asst Dir
Deborah Underwood ClassWAE Rev Tax Spec Supvsr
INCREASING COMPLIANCE FIELD AUDIT REVIEW & APPEALS DIVISION
Audit Review and Appeals Division
Revenue Tax Director - Jay Frost
Revenue Tax Assistant Director CIFT - Leonore Heavey
Revenue Tax Assistant Director-Sales Tax - vacant
Employee Name Position # Title
Leonore Heavey Rev Tax Asst Dir
Charlene Blanchard Rev Tax Aud SpecAlana Jackson Rev Tax Aud Spec
Teshaun Phoenix Moore Rev Tax Aud Spec
Lena Williams Rev Tax Aud SpecLaura Miguez Rev Tax Aud Spec
Rebecca Berry Rev Tax Aud Spec
Vacant Rev Tax Asst Dir
Kimberly Bruscato Rev Tax Aud Spec
Arthur Champ Rev Tax Aud SpecCarmoleta Chapman Rev Tax Aud Spec
Mark Dwyer Rev Tax Aud Spec
Patricia Porter Rev Tax Aud SpecRickie Addison Rev Tax Aud Spec
Michelle Shaffer Admin Asst 5
Lousat Dubois Admin Coord 4
Tressa Butler Admin Coord 2
VACANT Student Worker
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.
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.
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
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.
CONTRACT AUDIT INITIATIVES CONT.
• Productive? Efficient?• The three contracts have resulted in 97
audits performed;• $485,158.08 in liabilities discovered and
collection in progress;• Total Audit Fees paid = $52,521.52• $9.24 collected for every $1 spent.
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.
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 Tax– Sales and Use Tax– Corporation Income and Franchise Tax– Severance Taxes, including Oil and Gas Severance Tax– Excise Taxes
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, and –has not been previously contacted by the
Department concerning their filing requirement
• is eligible for consideration of a voluntary disclosure agreement.
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.
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.
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.
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.
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.
VOLUNTARY DISCLOSURE AGREEMENT CONT.
• You may apply anonymously by completing form R-60010 (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.
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 and
• an 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.
VOLUNTARY DISCLOSURE AGREEMENT CONT.
• Mail the voluntary disclosure application to:• Louisiana Department of Revenue
Voluntary Disclosure Program – Field Audit Services DivisionPO Box 4936Baton Rouge, Louisiana 70821-4936
VOLUNTARY DISCLOSURE AGREEMENT CONT.
• Or deliver it to:• Louisiana Department of Revenue
LaSalle BuildingVoluntary Disclosure Program – Field Audit Services Division617 North Third St, Room 562Baton Rouge, Louisiana 70821-5431
• Applications may also be faxed to 225-219-2740 or e-mailed to [email protected].
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”
QUESTIONS?