- Office of State Auditor Suzanne M. Bump
Media Contact for Auditor Bump Testifies Before the Joint Committee on Revenue in Support of H.5 - The Revenue Accountability Act
Mike Wessler, Communications Director
Good morning Chairman Brady, Chairman Kaufman, and members of the Committee. I want to thank you for holding this hearing on H.5—An Act to Improve Oversight of State Government—or as we call it the Revenue Accountability act.
As State Auditor, I have an innate curiosity for how government works. I have a passion for understanding where government is succeeding, and where it is not. My job is to ask questions like:
Is the Department of Revenue properly remitting local option tax revenue to municipalities?
Are agencies that administer public assistance programs effectively confirming both applicant’s and program participant’s income eligibility?
Is DOR garnishing the wages and any tax refunds due to individuals who have a tax lien or are delinquent on their child support payments?
How effectively and efficiently is DOR performing its primary function of administering the collection of tax revenues?
Are individuals and corporations who are tax delinquent being held accountable?
Frustratingly though, these are questions that my staff and I cannot answer for you, or for the taxpayers of the Commonwealth, because we do not have access to the information that we need to answer those questions – data that can only be found in tax records. This is the problem that the Revenue Accountability Act will solve.
In addition to the questions already raised, one entity that my office is explicitly tasked with auditing is the Income Tax Division of the Department of Revenue. Under current law, my office can examine how many filing cabinets this Division has, and how it protects them from loss. We are however, unable to look inside those cabinets to see how the Division is using the data contained within to meet its mission.
We are limited in our ability to fulfill our statutory mandate to provide independent oversight of state agencies because we are unable to access tax record data for audit purposes.
There are currently 28 exemptions in law which allow entities to access this information, entities such as:
- The Department of Transitional Assistance;
- The Department of Veterans’ Services; and
- The Multi-Agency Illegal Tobacco Task Force.
In fact, even my office’s Bureau of Special Investigations can access certain tax return information to conduct investigations of alleged public benefit fraud, but our auditors cannot use it to analyze agency performance.
This is a critical gap in the Commonwealth’s accountability infrastructure. The bill before you today—the Revenue Accountability Act—will help to fill this gap.
Massachusetts is one of only five states that does not give their state auditing entity access to this information. These auditing entities have provided important oversight results for the residents of their states:
- A November 2015 audit of the Colorado Department of Revenue found significant errors in the Department’s collection of sales taxes, which the Colorado State Auditor’s Office estimates resulted in roughly $3.3 million in over-collections and $3.8 million in under-collections in a single year.
- A September 2015 Oregon audit found a poor approach to delinquent tax collection has resulted in significant lost revenue for the state, and a near doubling of the amount of delinquent debt over a six year period, from $1.7 billion in 2008 to nearly $3.2 billion in 2014.
These examples show the importance of independent oversight and accountability in this realm.
I recognize that the tax record data we are seeking is sensitive and every precaution must be taken to protect it from being inappropriately accessed, misused or improperly disclosed. In some instances, the data we need may be able to be de-identified, which provides significant taxpayer protection.
We take confidentiality seriously, and in this regard have implemented very stringent data access, use and protection policies consistent with both federal and state data protection standards and regularly conduct staff trainings to ensure these policies are being followed. In addition, under this bill the Auditor’s Office will be subject to penalties for disclosing confidential tax information, including up to a $1,000 fine and/or six months in jail along with a disqualification from serving in public office.
My office currently has access to other sensitive data, personal health care and payment information, information on services provided to children in state custody, and unemployment records. We understand the obligations that come with accessing this data and we don’t take these obligations lightly.
The inability to access tax return data is not simply a hypothetical hindrance, it presents a real challenge that currently prevents us from providing the level of accountability that the taxpayers expect and deserve from their government.
We recently released an audit of the Sex Offender Registry Board in which we found it did not have addresses for nearly 1,800 sex offenders, and was not using data sharing agreements it had in place with the Department of Transitional Assistance, and the Department of Revenue. By accessing DTA data, we were able to find 39 of these offenders on behalf of SORB. We had the tools and skill to do the same with Department of Revenue tax return data, however, because of this prohibition, we were unable to do so.
Additionally, we are currently in the final stages of an audit of the Health Connector Authority, which as you know helps individuals who meet all of its program eligibility requirements obtain health insurance. While my office’s report on the Authority will contain findings and recommendations which I believe will serve to improve the Authority’s operations, it would have been more beneficial to the Authority and the taxpayers of the Commonwealth if my audit staff had the ability to independently verify that individuals who are receiving benefits from the Authority met the income eligibility requirements to receive these benefits.
Bay State residents deserve to know the answer to these and other questions. They deserve to know if their government is operating as effectively as it should. They deserve to have an independent advocate providing accountability and striving to make government work better. The Revenue Accountability Act provides my team with tools to provide greater accountability in state government, and answer many of these questions. It is for that reason that I ask that you support the bill before you.