Presentation by Department of Revenue
COMMITTEE ON JOINT FINANCE
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12:59 PM -- Presentation by Ms. Roxy Huber, Executive Director for the Colorado Department of Revenue
Representative Judd, taking over the Chair, welcomed Ms. Roxy Huber to the Joint House and Senate Finance Committee meeting. Ms. Huber began by discussing the department's mission statement and noting that some divisions in the department may be affected by the upcoming budget reductions.
Ms. Huber began by discussing the progress on the Colorado Integrated Tax Architecture (CITA) project. She explained that CITA will replace its old cobalt tax computer system. The project is integral to all of the tax systems that the department administers. We are now entering phase II of the project that is the income tax phase of the system development. It is expected to be in place by the close of the year.
Ms. Huber continued by discussing the department's Taxpayer Services Division and noted that its website capabilities allow taxpayers to file taxes on-line. The taxpayer website has had over 3 million hits last year and is becoming very important to the department. Ms. Huber noted that the division's staff is working to meet the needs of all Colorado taxpayers. About 54 percent of all income tax returns are filed electronically and this process is helping the department more efficiently administer the state's income tax system.
Ms. Huber responded to a legislative concern about privatizing more of the department's auditing functions to collect more back tax revenue. Ms. Huber noted that there are many challenges to finding outside auditors that the department can trust. One problem is that these auditing firms make money on collecting back or late taxes so the concern is that these firms do not overstep their authority in the collection of taxes for the state.
The committee asked Ms. Huber about the number of dollars that are lost to New Mexico in vehicle sales tax revenue and whether the state can track this loss. Ms. Huber noted that it is difficult to tract revenue that is not paid into the state but there may be some compliance issues that the department may be able to look at to reduce tax leakage. The committee continued to discuss tax leakage issues and the areas of compliance that might be most effective. Ms. Huber commented that these tax shifts to other states are often more pronounced during economic downturns. But the real concern in terms of lost revenue is tied to collecting tax revenue from those businesses or people who are on the verge of bankruptcy. These tax obligations can often be delayed to the department. The committee continued to discuss some of the large companies that pay taxes to Colorado that have recently claimed bankruptcy. Ms. Huber responded by discussing the fact that the department will likely end up collecting tax revenue, but collections may be delayed.
Ms. Huber continued by discussing the status of the department theft that occurred in 2007. The department was able to recover 1.1 million that it lost through the theft but the trial has not yet concluded for the defendants. The committee inquired about the total loss of revenue to the state. Ms. Huber noted that the total amount of the theft was just under $12 million.
Ms. Huber continued to discuss the additional FTE that is working to increase the services that it provides through its Division of Motor Vehicles. She briefly noted that some of the IT upgrades that are being integrated into the database systems are working to more efficiently serve citizens of Colorado.
The committee closed the discussion by talking about the compliance issues tied to the "Real ID" process for issuing drivers licenses in the state. Ms. Huber discussed the workload of the division and noted that its offices handled 480,000 driver license issuances last year. The big challenge is that we are coming out of the 5-year renewal process and are now switching to the 10-year renewal process. The 10-year process has its problems because people change over time. Ms. Huber noted that on-line renewals are increasing slowly but can only be done when certain requirements for renewal apply. Ms. Huber closed by discussing how the division is trying to promote on-line renewals. On-line income tax renewals are much more popular because of the many software programs that assist people to file taxes. We are talking to counties about educating the public on how to use more of the division's motor vehicle on-line services.