The Indiana State Budget Agency recently released the revenue collections report for October. The overall collections for the fiscal year now stand 2.8% ($136 million) below projections; not good, but not critical at this juncture.
The troubling numbers for the revenue watchers are the corporate tax collections. They were down again this month and are now at 52% below the April revenue forecast projections. Nobody really knows how to fully explain the drop. While the corporate collections historically fluctuate widely from month to month and are the hardest to predict for many reasons (that are not directly related to predictable economic activity), the gap between projections and collection is extraordinary. Fortunately, corporate collections have never represented a big piece of the pie (only around 6%) when compared to sales (48%) and individual income (36%) tax collections. Still, the unforeseen drop accounts for $126 million of the $136-million-dollar shortfall.
The State Budget Agency has drilled down on the matter and is attributing it to a high volume of refunds. But what is triggering the refunds is not clear either. Sometimes refunds can cover a number of years. They could be tied to a recent settlement of numerous cases or result from changes in the law – lots of possible factors. Whatever they are attributable to, they probably don’t mean that corporate collections will stay down; they are likely to rebound over the balance of the fiscal year and smooth out the impact, but they are not likely to recover to the total of the original projections. Let’s hope this is just a temporary mysterious dip that is evened out over time.
For those interested, you can review all thenumbersand commentaryfrom the State Budget Agency.
The Indiana Department of Revenue (IDOR), and its counterparts across the country, deal in numbers — big numbers. At the end of April, the agency released some statistics about the 2010 tax season. Here’s a few to ponder:
More than 140,000 phone calls to IDOR during the tax season, including an average of 1,100 a day in the first two weeks of April. (The agency touts its on-hold times decreased from over four minutes to less than three minutes per call)
More than 1.6 million refunds in 2010 compared to about 1.5 million a year earlier. Average refund amount: $324 this year; $279 in 2009
The push for more electronic returns continues — and with good reason. It costs the state about $2.3 million to process one million paper returns, but just $150,000 to process more than two million electronic returns; accuracy is 99% for electronic returns and less than 80% for paper returns; and refunds directly into taxpayers’ accounts from electronic returns are issued in an average of three days, while the paper route takes between six and 12 weeks
In the "I didn’t know that category," IDOR says about 700,000 mailed returns come in after April 15. By the end of the calendar year, the total number of returns processed will be approximately 3.1 million.
See, I told you there were some big numbers involved. And just to make sure the agency was living up to its claims, I checked and my refund did show up within a week. Hats off to the tax men and women.