A special audit released Tuesday by State Auditor Tim Keller revealed New Mexico may have been underpaid millions in premium taxes from insurance providers doing business in the state.
New Mexico’s Office of the Superintendent of Insurance (OSI) is responsible for accurate and timely collection of the taxes from insurance providers. A sample of one-quarter of the total premium tax collected from 2010-15 revealed the state may have been underpaid at least $193 million just for those transactions. The total amount due to the state for all transactions is likely to be more.
“Given New Mexico’s budget shortfalls, it is critical for the state to competently collect the taxes it’s owed,” said Keller. “Unfortunately, this is another driver of our state’s budget woes. As time goes on, our state stands to lose out on even more money, adding to the millions that should be collected from insurance companies. We are overdue for the administration to seal these cracks that allowed millions of dollars in much needed revenue to slip through.”
The audit, conducted in conjunction with OSI at the request of the Legislative Finance Committee (LFC) was completed by the independent audit firm Clifton Larson Allen, LLP. It notes that OSI relied on the insurance companies to self-report but did not have a process for tracking which companies should have been reporting or for adequate verification of amounts paid.
“With such significant amounts of revenue involved, the honor system is a wholly inadequate approach to tax administration,” said Keller.
The complete audit report is available here: osanm.org/audit_reports/detail/10327.
