Taxation director says fewer audits result in higher revenue

CARSON CITY -- State Taxation Director William Chisel acknowledged Wednesday that the number of business audits performed by his staff has declined -- in part because of a drop in staff -- but the auditors are concentrating their work on companies where the return potentially is larger.

"The dollars (in unpaid taxes they find) are coming up," he said. "We are performing more complex audits. We are spending more time on them."

Chisel said the number of auditors who review whether businesses are paying the taxes they owe the state has dropped to 55, compared with 71 in 2009. He said he will have to analyze whether to request additional auditors when the Legislature meets next in 2013.

Chisel responded to criticism made by two former Taxation Department employees in Wednesday's Review-Journal who complained that the state is losing tens of millions of dollars a year because an inefficient computer accounting system prevents its staff from performing audits in a timely matter.

In its annual report released Jan. 15, the Taxation Department said 1.24 percent of all Nevada businesses were audited in the past fiscal year, down from 2.32 percent six years ago.

But Chisel, who began his job in September, said while the number of audits has declined, they have produced additional tax revenue for the state, up $1.2 million in the past year.

He said his staff "doesn't have significant problems" with the accounting system, which he said is "working fine."

"Some people have trouble with it," he said.

Chisel said 80 percent of his auditors have college degrees, but none is a certified public accountant.

Salaries range between $39,000 and $69,000 a year, depending on their experience.

Chisel is a CPA who formerly was a senior auditor for the Gaming Control Board and chief of the state Division of Internal Audits.

The two former employees were not critical of Chisel but of former Taxation Director Dino DiCianno.

He resigned in March, one day after telling legislators his staff was not auditing mining companies because they were not skilled in handling such businesses.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.

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Comments

Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.

1. nevada.style Feb. 17, 2012 | 9:06 a.m. Report Abuse

   deacon427 is the Tax IT Director. His comments are questionable. google "deacon427" and read his other stuff Mr. Chisel.

2. Lerxst Feb. 17, 2012 | 7:48 a.m. Report Abuse

   ... and from "i-am-retired" - Hi Dino DiCianno, that's you.
   
   iamretired wrote on September 01, 2011 09:21 AM: Yea the state has no money? How much in unpaid business tax is owed to the state, MR.VOGEL?

3. Lerxst Feb. 17, 2012 | 7:47 a.m. Report Abuse

   Oh then there's this one "DeaCON":
   
   This is the same man that Sandoval tasked with doing the internal audit of the department of taxation. Now, how ethically challenged is that? The things that our Governor did during the legislative session, and now this, show that he has absolutely no idea what he is doing. IT is NOT the department that is broke it is the tax system in general. Now could there be some streamlining of processes in the department, probably. Is the tax system old and worn out and has no basis with reality? YES! Did the governor have the opportunity to fix the problem in this legislative session? YES! Did he? NO! What did he do? He prepetuated the problem just like every other governor before him. People think he is a wonderkind or something, but I have new for you he is anything but that. The only good news if you can call it that is that we will only need to put up with Sandoval for a few more years and then he is gone. Let us say this once again. There needs to be a tax on services. The gaming tax needs to go to 10%. Exemptions to sales and use tax need to go. There is so much that needs to be done in NV and there is so much that could be done if our Governor and the legislature would get their collective heads out of their collective butts.

4. deacon427 Feb. 16, 2012 | 1:26 p.m. Report Abuse

   It seems like there are people responding to this that have intimate knowledge as to what is going on, just like the two former taxation employees that fueled this work of art. The fact that Ed Vogel even listened to former employees is a marvel and a wonder, but to make this even less significant is that you are talking about the past and not the future. The two former employees most likely do not have update knowledge of what is going on, which is evident from the response and information given by Mr. Chisel. Come on Ed, don't you have better thing to do then to listen to former employees that most likely have their collective heads up their collective you know-whats? Geez. From the sound of things it appears the taxation department is making headway and improvements in the areas in question, so leave it alone and let them work. In addition, everyone knows that no computer system is bulletproof the minute you put it in and usually needs a while to work out the bugs, so get over yourself on this one. Who knows maybe there is now a better system out there, but that was not known when a new system was needed. Ed, you need to get more information, not to mention right information, before you go printing an article. Wow, what are you Chief of exactly??? Dino Dicianno is long gone, and the new is here. My understanding is that the department has a lot of good people working for it, and to disparage them here like this is bush league, even for you. So stop.

5. Lerxst Feb. 16, 2012 | 8:48 a.m. Report Abuse

   http://www.nevadaobserver.com/Archive/040815/Featurestory.htm
   
   http://newsroom.accenture.com/
   /article_display.cfm?article_id=4292

6. RCRPOWER Feb. 16, 2012 | 8:31 a.m. Report Abuse

   I can't get this audit issue out of my mind. A previous report in the RJ stated that the state spent $40 million dollars on a new audit system. Really, who got paid off? Granted I don't know the details but $40 million? Just like with Wall Street regulators the state auditors are outmanned and out gunned. Low salaries and a dearth of highly skilled auditors are not the only problem. Just like the IRS which complains annually that they don't have enough boots on the ground so $350B goes uncollected the same type of problem exists here. Our current audit rate is around 2% so they try to skim the cream and everybody else flies under the radar. If we can’t afford to hire more people then contract out the audit and collections. I'm sure there is a scheme whereby more proficient private auditors would be willing to participate on a contractual basis if the money was right. Offer a minimal base pay with an emphasis on recovery, perhaps a 50% split. Once the audit rate gets up to 15 or 20% offer a tax penalty holiday. Lead, follow or get out of the way but do something.

7. ScottNevada Feb. 16, 2012 | 8:21 a.m. Report Abuse

   The skill set needed to do state tax audits for the most part is way below the skill set that a CPA with a five accounting degree has. And, the pay rate is well below what a competent CPA would work for (other than on a part time basis).

8. Lerxst Feb. 15, 2012 | 9:12 p.m. Report Abuse

   William Chisel is in a position to solve Dino's corruption. Look at the numbers. Now with Mr. Chisel chiseling away at the mining tax, we're up +$73 million. Can the State go back 5 years and audit the mines? That would bring in ~300-400 million.
   
   As to the new computer system. Google Accenture and Nevada Department of Taxation and you'll see the state did spend at least 24 to 40 million dollars. The fact is auditors are not as efficient (see the numbers). This is because Audit Workbench and Tax master and the UTS system has problems. The State should audit the Tax IT system using an independent auditing expert.

9. n7v.blogspot.com Feb. 15, 2012 | 5:29 p.m. Report Abuse

   BIG Government needs a small army of tax collectors to ensure funding for it.
   
   If we had small government in this state all those busybody bureaucrats would have to move to Sacramento.