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State Error Keeps Millions In Taxes From Indiana Counties

The Indiana Department of Revenue's error caused more than $200 million to be withheld from counties across the state.

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Photo: 401K (Flickr)

The state says the error should not affect the automatic taxpayer refund.

Millions of dollars in income tax revenue has been withheld from counties because of another programming error at the state Department of Revenue, causing the head of the Department of Revenue to step down.

More than $200 million of Local Option Income Tax funds was supposed to be distributed to Indiana counties since January of 2011 but was incorrectly stored in the state’s General Fund. That comes after the state announced only four months ago more than $300 million in corporate tax revenue was mistakenly withheld from the General Fund.

Budget Director Adam Horst says a review of the revenue department was conducted after the corporate tax error and uncovered this latest mistake.

“The governor also directed me to continue the ongoing review by the Office of Management and Budget and to also to hire a firm to conduct a third-party, independent audit of the Department of Revenue,” he says.

Two senior officials at the Department of Revenue have left their jobs and Commissioner John Eckart offered his resignation. Eckart will stay on while the state finds a replacement. Horst says while the error is unfortunate, the state is acting quickly to rectify the situation by repaying counties what they’re owed.

“The good news from them from a budgetary perspective is they’re going to receive $206 million plus interest within the next few days,” he says.

Horst adds that taking the money out of the General Fund should not significantly alter the taxpayer refund expected at the end of this fiscal year.

Brandon Smith, IPBS

Brandon Smith, IPBS has previously worked as a reporter and anchor for KBIA Radio in Columbia, MO, and at WSPY Radio in Plano, IL as a show host, reporter, producer and anchor. Brandon graduated from the University of Missouri-Columbia with a Bachelor of Journalism in 2010, with minors in political science and history. He was born and raised in Chicago.

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