Department of Revenue has Overpaid Economic Development District More Than $6.9 Million Since 2004

The Louisiana Department of Revenue (LDR) has overpaid Algiers Economic Development District No. 1 more than $6.9 million in sales tax distributions since 2004, according to a report released today by Legislative Auditor Daryl Purpera.

The overpayment is the result of LDR using the wrong formula to calculate how much to pay the District every quarter. Instead of only using a portion of the sales tax revenue collected in the district, LDR used total sales tax collections in the calculation for determining how much was to be paid to the District.

“The (Cooperative Endeavor) Agreement between LDR and the District states that LDR shall calculate and distribute the ‘Monthly Pledged State Increment’ to the District every quarter, which is defined by the Agreement as the lesser of the ‘Monthly State Increment’ (MSI) or the ‘Monthly Local Increment,’” the report said. The MSI is equal to the excess of 1.25 cents (31.25 percent) of the 4-cent sales tax collections from taxpayers in the District over the monthly state base ($74,864 per the agreement).

Auditors recommended that LDR work with the District to establish a recoupment process to recover the overpayments and to ensure an adequate review is performed before making future distributions. However, LDR management did not concur with the finding and did not feel a corrective action plan is necessary.

The auditors also reported issues with the upgrade of the Delta tax information system and the implementation of the Scan Optics Tax Express revenue processing system, which resulted in the untimely deposit and posting of paper checks and errors in converted severance tax records; and ineffective controls over the refunding of certain severance tax overpayments.

For the second consecutive year, the auditors also reported issues with the implementation and monitoring of LaCarte purchasing card purchases and inadequate preparation of the Annual Fiscal Report.