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Indiana Revenue Commissioner Resigns After $206 Million Error

UPDATE: 4/13/2012 Governor Mitch Daniels named Mike Alley as the new commissioner of the Indiana Department of Revenue.

Indiana Revenue Department Commissioner John Eckart resigned after Indiana officials announced that the state accidentally kept $206 million that should have gone to local governments, according to courier-journal.com. 

A programming error in the report ". . . used to create the distribution formula for local option income tax revenue" caused the misallocation, which began in January 2011. According to Journalgazette, State Budget Director Adam Horst ". . . called the local option income tax system one of the most complex in state government and acknowledged an 'internal controls' problem in the department."

The gaffe comes on the heals of a previous error, revealed in December of 2011, when the Department announced it had mistakenly kept $320 million in corporate income tax. This first error prompted an internal audit of the Department, which lead to the discovery that the Department owed $206 million in back taxes to local jurisdictions.

In the wake of this mistake, Indiana Legislators are looking for a third-party auditor, and the Department will refund the money with interest to 91 of 92 counties in Indiana that have local income taxes.

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Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.