🔒Taxes, jobs and data

Electronic tax filings save state millions

Participation exceeds 80% of filers

Processing payroll drastically reduced

Maine taxpayers are saving the state millions of dollars a year in the cost of processing various tax returns by embracing electronic filing for personal income tax returns and many business tax returns.

"We used to have to run a double shift, one at night and one during the day, and also work weekends from January to July," said Jerome Gerard, executive director of Maine Revenue Services. This year, he said, there was no night shift and no weekend shifts until the last week of the personal income tax filing season in April.

"That used to be close to $1.5 million for staff to handle paper filings," he said. "That was down to about $300,000 this year."

Gerard said there are other significant savings to the state when a return is filed electronically. For example, he said, the state is saving more than a $1 million a year in printing and postage costs as more Mainers file electronically.

Five years ago, only about a 20% of tax returns were filed electronically; last year that climbed to just over 80%. Part of the increase was the result of a change in rules requiring professional tax preparers to file electronically.

Gerard said the electronic filing percentage is even higher among some business categories. For example, the latest figures for sales tax filings indicate 88% are filed electronically; just over 10% are paper returns, with the rest filed by telephone.

"Of all the tax returns we require, about half are being filed electronically," he said. "We are looking at how to increase that."

The effort is drawing praise from members of the Legislature's Taxation Committee, who oversee the operations of Maine Revenue Services, but there are concerns about whether the state can move much further in its electronic filing efforts.

Rep. Gary Knight, R-Livermore Falls, co-chairman of the panel, said he applauds MRS for taking the initiative and saving taxpayers money, but committee members have expressed concerns about how much further the state can go. For example, the latest Federal Communications Commission figures indicate about four of every five Maine households have Internet access.

"I think we are going to be having paper returns for a while and we have to be careful to make sure taxpayers have a way to file returns," he said. "We can't go and make everyone file electronically; it's not going to work."

Rep. Seth Berry, D-Bowdoinham, the lead Democrat on the panel, said Knight is correct that lawmakers want to make sure no taxpayers are affected by a "digital divide" where they cannot access affordable Internet services.

"I live in a rural area and I have a lot of constituents that do not have access to even a DSL, let alone a fiber optic connection," he said. "Paper returns, traditional paper returns, will continue to be necessary. There is a point of diminishing returns in this arena."

Jobs pilot not likely in Maine

No source for administrative costs

Could boost manufacturing sector

Congress took an unprecedented step earlier this year authorizing a pilot program allowing use of unemployment benefits to subsidize the creation of full-time jobs, but it's unlikely Maine employers will be able to participate in the program.

"It's a question of affordability on the one hand because there is no federal money that comes with the program," said former Maine Labor Commissioner Robert Winglass, who resigned Aug. 8.

He said the state has no funds to use to administer a pilot program and it would be expensive to provide the monitoring required under the federal measure. Up to 10 states can be approved to participate in a pilot project that would allow funds normally used for unemployment benefits to subsidize employer-provided training or pay employers that hire the unemployed.

David Clough, state director of the National Federation of Independent Business, said he has no doubt such a program would draw support of employers and those looking for work.

"Certain businesses would be very interested in the program," he said.

Clough said if the pilot were focused on on-the-job training, it would draw support from employers. "We've got 50,000 people out of work in Maine and we should look at anything that might help get them back to work."

Peter Gore, vice president of the Maine Chamber of Commerce, agreed. He said jobs going unfilled in some sectors, like manufacturing, where training is crucial, and a pilot program could convince employers to hire more workers.

But, Gore said, employers would worry about using a pilot program that could end before the need was met. He said that would raise concerns about the ongoing cost to the unemployment trust fund and whether pilot participation could affect employer tax rates.

Finding fraud and mistakes

Delegation supports increased funding of PARIS

More investigators coming

Maine's congressional delegation is supporting increased federal funding to help Maine, and other states, take full advantage of the Public Assistance Reporting Information System operated by the federal government to help states detect fraud and mistakes in programs such as Medicaid and Medicare.

The voluntary program identifies tens of thousands of possible cases of fraud and errors. Maine does not have the staff to sift through the data. A major concern, said Scott Fitts, director of the Fraud, Investigation and Recovery Unit in the Maine Department of Health and Human Services, is determining the validity of the information.

He said there are several federal lists of individuals who might be receiving benefits in more than one state — the system works on the basis of Social Security numbers and other data submitted to the federal government for Medicaid, food stamps, welfare benefits, childcare benefits and workers' compensation — but his staff of nine investigators cannot pursue all the leads generated by PARIS. He said the Legislature added eight investigators and two support staff positions that start in January.

"If the states do not have the staff to handle all of this data, as I understand is the case in Maine, we should help with staff," said U.S. Sen. Olympia Snowe.

Sen. Susan Collins said the Medicare program has about $60 billion a year in improper payments and the Medicaid program has $22 billion.

"I believe that the federal government would actually save money by investing in better data collection, ensuring the integrity of the data and assisting the states in using the data," Collins said. She said while the major savings would be in Medicaid and Medicare programs, it would also yield savings in such programs as welfare payments and food stamps.

U.S. Rep. Mike Michaud said as Congress struggles to make budget cuts to decrease the federal deficit, reducing fraud and errors should be high on the list. He said it is clear modest investments by Congress could yield big savings.

U.S. Rep. Chellie Pingree agrees. She said with Congress looking at cutting needed programs, errors and fraud should be reduced or eliminated first.

"Frankly, there is nothing more frustrating than being unable to uncover some of the fraud and abuse in the system because you can't access the data, you can't utilize the data," she said.