A recent comment from a state official may have given the impression that all Maine needs to do to close the budget gap is go after uncollected taxes. Unfortunately for lawmakers and everyone else, it is not that easy

Charles Silsby, director of the Criminal Investigations Unit of Maine Revenue Services, told Mal Leary of Capitol News Service recently that the amount of uncollected state taxes would solve the state’s budget problems. “There is enough money out there [in uncollected taxes] to wipe out any deficit we would ever have, and then some,” he said in a news story. “We know most of the people who don’t file, we know who they are and where they are, but we just don’t have the resources to do anything about it.” Mr. Silsby added that collecting the missing money would require months of training for new investigators.

According to the director of MRS, Tony Neves, accounts receivable to the state currently stand at $165 million – $65 million in uncollected taxes and $100 million in penalties and interest – all of which he says has been identified and is being worked on. Were it all to roll in tomorrow, it would not quite close the gap in the current budget and wouldn’t touch the next biennium’s problem. The agency has added investigators on several occasions in recent years, he said, some of which are now in the field or at a desk; the newest are still in training.

No doubt there is more in uncollected taxes for the criminal division to chase down, but Mr. Neves says that if he had more resources they would more likely go to the civil audit division, where the state need not prove intent and where the burden of proof after an audit is on the taxpayer. That means the money is easier to get for the amount of effort put in. In criminal cases, the state must demonstrate in court that someone who failed to pay taxes did so intentionally and did not simply make a mistake.

As serious as any shortage of resources in MRS is the potential for backlog of tax cases in appellate court. In January 1999, the backlog there was about 450 cases; it now stands around 100. Any increase in the number of cases initiated by MRS would require additional resources for the court so residents are assured of a trial without prolonged delay. Nevertheless, the Legislature regularly examines the state’s system for collecting missing taxes; another examination while the state is going through each department looking for savings, as expected in January, couldn’t hurt.

There are two substantial reasons for this. The knowledge that a significant amount of taxes is not being collected means, first, that the people who are paying taxes may be paying more than necessary and, second, that in a sense these people are being played for chumps. Tax collection depends heavily on everyone who owes recognizing their duty to their fellow residents and sending in their checks. When taxpayers cheat, they are dumping on their neighbors costs for services – law enforcement, schools, roads, etc. – the errant taxpayer could be using. If they are not caught, the message to honest taxpayers is terrible.