Office of the Legislative Auditor - Financial Audit Division
Department of Revenue
Administration of Property and Sales Tax Rebates
Three Fiscal Years Ending June 30, 2000
The Department of Revenue incurred significant costs to administer the property tax rebates. Because the rebate was an integral part of the income tax process, determining the actual cost of administering the rebates was difficult and somewhat subjective. However, the department did not sufficiently document the methods and rationales it used to determine the actual costs of administering the rebates, or how it determined what expenditures to charge to the rebate appropriations. Without sufficient documentation, we cannot conclude with certainty that the department used the property tax rebate administrative appropriations to pay only for costs associated with the property tax rebates. The department maintains that the actual costs it incurred to administer each property tax rebate exceeded the administrative appropriations it received.
Generally, the Department of Revenue appropriately used its 1999 appropriation to administer the 1999 sales tax rebate. However, the department inappropriately charged $7,526 to the 1999 sales tax rebate that should have been charged to the 2000 sales tax rebate appropriation. While we were satisfied that certain of the administrative costs were appropriate charges to the sales tax rebate appropriation, the department could have done a better job in documenting the basis for those charges. Finally, the department should review its special expense policy and procedures to ensure compliance.
Financial Related Audit Reports address internal control weaknesses and noncompliance issues found during our audits of state departments and agencies. The scope of our work at the Department of Revenue focused on the administrative appropriations to the department for the 1997 and 1998 property tax rebate programs and the 1999 sales tax rebate program. The Laws of Minnesota for 2000, Chapter 490, Article 1, Section 3 (b) directed us, to determine whether the funds appropriated were expended consistent with the purpose of the appropriations.