Tax collectors too aggressive?

State tax collectors have become more aggressive about pursuing uncollected revenue from individuals and businesses, a state official said.

Acting Commissioner Dan Salomone said the Revenue Department has seen a “dramatic shift” in recent years toward “compliance initiatives” that seek to return more revenue through audits and enforcement actions. He said the department has done so at the direction of the Legislature and the governor’s office.

“By and large, the department has shifted to a more aggressive stance on auditing and collecting,” Salomone said.

He and other revenue officials gave an overview of the department’s operations to members of the House State Government Finance Committee Feb. 1. No action was taken.

Beginning in the 2002-2003 fiscal biennium, the department has undertaken a series of tax compliance initiatives to capture uncollected revenues by boosting the department’s audit and collection staff. For example, the department spent

$9.7 million in fiscal years 2002-2003 and was able to return $97.2 million in revenue — a

10:1 return on investment.

Over several years, however, the ratio has decreased. In the current fiscal biennium, a $10.4 million compliance effort is projected to return only $41.5 million. Moreover, Salomone said some taxpayers have complained that the department is now being too heavy-handed.

“As we get relatively more aggressive in our compliance activity, we run the risk of pitting revenue goals against customer service,” he said.

Rep. King Banaian (R-St. Cloud) suggested the compliance initiatives might have “gone too far” in interfering with businesses ability to be productive. But Rep. Steve Simon (DFL-St. Louis Park) defended the practice, noting that many compliance actions are initiated by individuals and businesses claiming inappropriate deductions.