State downplays computer errors, continued cries of CPAs, businesses
The Colorado Department of Revenue’s new computer system has been effective since parts of it have been rolled out over the past several years.
But effective at what depends on who is doing the talking.
To department officials, the new Colorado Integrated Tax Architecture has caught numerous errors in individual and business filings that have helped the state capture millions of dollars in unpaid taxes.
To tax preparers, the $54 million system routinely pumps out erroneous notices that are causing taxpayers to pay additional taxes and penalties they don’t really owe, and it’s costing accountants time and money to straighten out those errors.
Last month, several Grand Junction businesses told The Daily Sentinel they had received notices from the department that they were late in their sales tax payments when they actually weren’t.
Though the department concluded the businesses were right, those false notices are only the tip of the iceberg of ongoing problems with the new CITA system, local accountants say.
“This last year, we’ve gotten dozens and dozens of incorrect notices, and not just on sales taxes,” said Steve Stranger, a Grand Junction certified public accountant. “They’re not admitting to it, but they’ve got problems. It’s not a 100 percent error rate, but I’ll bet you it’s 80 to 90 percent errors. What scares me is people are just going ahead and paying those notices and penalties when they’re not due.”
Nonsense, said department spokesman Mark Couch.
While it’s true more notices are being sent, each time the department investigates an alleged problem, it almost always ends up being the tax preparers’ fault, he said.
Couch acknowledged that while department workers have made errors in entering information into the new system, it’s not the system that’s to blame.
In late January, for example, the department sent out 5,700 letters to numerous Colorado banks to garnish wages of people who owe back taxes. A few days later, however, the department sent another letter to the same banks telling them to disregard the garnishment orders, but it was too late in some cases.
Couch said that error was due to faulty information entered into it by department staff, but that incident is the exception, not the rule.
The new computer system, which is in the third year of a five-year rollout, has had its successes, too, he said. Because it works so much faster than the 40-year-old computers the department previously used, it has been able to intercept federal refunds going to taxpayers who collectively owed millions in back taxes to the state.
In the past two years, the department has captured more than $15 million from those federal refunds. That compares to only $300,000 in the four years prior to the new system.
Couch said that success points to what’s really happening.
“The most common errors are tax-preparation errors,” he said. “Some accountants use tax-preparation software that wasn’t submitting to the department the required documentation that we need, so that causes issues.”
Hogwash, local accountants say.
Grand Junction CPA Cathy Staten said if that were true, why would it take months to process documents tax preparers have sent in repeatedly, and only end up being dealt with after they’ve finally gotten a live person on the phone to address their issues?
“I personally had the experience of sending in two amended returns that were asking for refunds for clients that were simply ignored,” Staten said. “One was filed last April. Things that are just getting submitted in the ordinary course of business are not getting processed in a timely manner.”
She said it often takes hours, if not days, to get someone in the department’s call center. More often than not, the center’s automated system hangs up on callers before they can reach a real person. Repeated attempts to reach someone in the center by The Daily Sentinel had the same result.
Couch acknowledged the center has problems, too. Normally, it only has a dozen full-time workers, though a few others are added during tax time.
But don’t blame the department for that problem, either, Couch said. Blame the state’s budget woes, which have forced cuts to the state’s work force and put a strain on state services.
“Each person in the call center handles about 60 calls a day,” he said. “They’re kept pretty busy.”