by Andrew Walden
After Hawai`i Free Press broke the story May 22 about the DoTax inability to account for the sudden and convenient discovery of $134M in April monthly tax revenues, DoTax June 3 announced that it would be hiring an outside auditor to review monthly tax revenue reports.
In the DoTax News Release announcing the audit, the most noteworthy point not previously revealed is: “since taking office six months ago, Tax Director Fred Pablo has reviewed the department’s operations and noticed unusual reporting in monthly tax revenue reports. Pablo immediately addressed these concerns by conducting and completing an internal investigation and analysis of the revenue reports.”
More questions for Pablo and his department to refuse to answer:
- What were the conclusions of this “internal investigation and analysis”?
- When was this “internal investigation and analysis” launched?
- Will you release a written report of its findings?
It doesn’t take a genius to figure out what happened. Every business in Hawaii knows that DoTax is infamous for its slow processing of GE Tax and other tax payments by businesses to the State. This makes it easy for the Revenue Accounting Branch to shape the monthly tax revenue reports in any way needed by the Administration simply by holding some deposits back or by pushing deposits up.
With Abercrombie pushing hard for tax increases, he needed a way to pressure the CoR to cut its revenue forecasts for the State and DoTax provided it. The lower CoR forecasts—which CoR Chair Paul Brewbaker specifically attributed to the low February monthly tax revenue report, helped Abercrombie pressure the legislature to hike taxes.
In spite of our repeated requests to DoTax Director Fred Pablo and to DoTax Media Liaison Mallory Fujitani, DoTax has never provided a copy of the News Release to Hawai`i Free Press. Now they have finally got around to posting it online.
Here it is: News Release
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TAX DEPARTMENT SEEKS INDEPENDENT REVIEW
HONOLULU - The Tax Department is hiring an independent auditor to review the department’s revenue reporting and accounting policies and procedures after identifying systemic problems in the composition of its reports.
The State Auditor, in a report released in December 2010, pointed to some major organizational problems within the Tax Department. In addition, since taking office six months ago, Tax Director Fred Pablo has reviewed the department’s operations and noticed unusual reporting in monthly tax revenue reports. Pablo immediately addressed these concerns by conducting and completing an internal investigation and analysis of the revenue reports.
“One of my immediate goals as director of the Tax Department was to review our operations and streamline processes to provide better services for taxpayers,” Pablo said. “In this process, we found several inconsistencies, including some concerns raised in the 2010 State Auditor’s report. We are taking a systematic approach in addressing these problems and working quickly to improve our operations.”
The department has issued a formal solicitation for professional services, requesting professional auditing firms to provide a letter of interest. Letters of interest are due on June 13, 2011, with the review expected to be completed by August 12, 2011. Among other responsibilities, the selected firm will be tasked with determining the accuracy of the department’s monthly Statement of Tax Operations, its policies and procedures and the Revenue Accounting Branch’s policies and procedures.
“The audit will help to validate that the assumptions used in preparing the revenue reports are sound and based on relevant information,” Pablo said. “Our department is in charge of the state’s revenue that funds services and programs for the people of Hawaii. As the guardian of taxpayers' money, we must ensure that proper safeguards are in place and that the revenue reporting system is accurate and understandable.”
The department is also working toward modernizing its operations as part of Pablo's overall strategic plan for the department, which intends to bring transparency to Department operations, provide taxpayers with better customer service, and create greater efficiencies in its processes.