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February 26, 2013

State revenue department moves to improve local tax distributions

(Continued)

INDIANAPOLIS —

Using information supplied by employers would be a better system, he argues, than what currently exists. The state pulls that information off the personal income tax forms that taxpayers are supposed to file with the state each year. 

The current system creates a long lag time between when the state collects the LOIT dollars and when it’s paid out to local governments. It also raises concerns about people, such undocumented workers, who don’t file a state tax return. The taxes those people have paid stay with the state.

The state revenue department contends that it would take both a change in the law and a massive upgrade in technology to put into place what Kauffman wants. 

Bob Dittmer, spokesman for the department, said in an email that the department “would like to have the capability to cross check individual returns with employer submitted data, however that is simply beyond our current capability.”

He noted that the state is moving toward more electronic filing, both by individual taxpayers and employers and that with the increase in electronic filing, the state may be able to put a better tracking system in place.

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