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Indiana Revenue Director Resigns Over $205M Mistake

Last updated on Friday, April 6, 2012

(INDIANAPOLIS) - The head of Indiana’s Department of Revenue is resigning after state officials found that $205 million in local option income tax revenue was not distributed to counties.

John Eckart and two senior managers have stepped down after it was discovered that $205 million was improperly given to the state, instead of to the local units of government.

Officials said that a programming error in the Department of Revenue's annual County Statistics Report resulted in counties receiving approximately $13 million a month less than they should have since January 2011, RTV6's Norman Cox reported.

The error was discovered by the Office of Management and Budget, which has been engaged in an ongoing review of Department of Revenue reports, official said.

"On Tuesday afternoon, Gov. Daniels ordered that we disclose the error as fast as humanly possible after we could verify the numbers and ordered payment to the counties immediately with interest," said OMB Director Adam Horst.

The funds will be immediately distributed, with interest, to each of the 91 of Indiana's 92 counties that have local income taxes.

More: Money Break Down By County

Rhonda Cook with Indiana Association of Cities and Towns said a majority of the money would likely go to public safety.

"Because such a big portion of our budgets are for public safety expenses, often times in a city or town that could be 85 percent of our budget. While we hate to cut it there, we've had to," Cook said.

Marion County will receive an additional $33 million.

The mistake comes months after a $320 million surplus was found in a Department of Revenue account after corporate income taxes paid by electronic check were mistakenly put into a holding account and weren't credited to the General Fund.

Officials said the OMB will bring in an outside expert to complete an audit of the Department of Revenue's systems, processes and procedures.

But House Speaker Brian C. Bosma, R-Indianapolis, and Senate Pro Tem David Long, R-Fort Wayne, called for an independent audit of the department.

"We expect to work in cooperation with the Department of Revenue and the governor's office with the intent that a preliminary report be provided by early September to the State Budget Committee and legislative leaders with an update between the filing of the report and when the final audit is released," they said in a statement.

Eckart, who led the department for seven years, is expected to stay on during the transition.

"He believed it was best for the department. He understands and embraces the governor's model of accountability and believed it was best for the state and the department for him to move on," Horst said.

Horst said the mistake was likely made by not applying programming changes properly, and an outside audit is now being performed on the Revenue Department.

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