CHAPTER 226

FORMERLY

HOUSE BILL NO. 571

AN ACT AUTHORIZING THE EMPLOYMENT OF A RECOGNIZED FIRM OF BUSINESS CONSULTANTS TO ANALYZE THE OPERATIONS, PROCEDURES AND SYSTEMS OF THE DIVISION OF REVENUE OF THE DEPARTMENT OF FINANCE WITH THE VIEW TOWARDS ITS REORGANIZATION AND ESTABLISHMENT OF A MODERN, EFFECTIVE AND EFFICIENT OPERATION, THE EMPLOYMENT OF AN INDEPENDENT FIRM OF ACCOUNTANTS TO AUDIT THE DIVISION OF REVENUE BEGINNING WITH THE FISCAL YEAR ENDING JUNE 30, 1970, TO IDENTIFY RECOVERABLE DELINQUENT, UNPAID OR UNDISCLOSED TAXES, ESTABLISHING A LEGISLATIVE ADVISORY COMMITTEE, AND PROVIDING A SUPPLEMENTAL APPROPRIATION TO THE OFFICE OF THE GOVERNOR TO IMPLEMENT THE PROVISIONS OF THIS ACT.

WHEREAS, Senate Bill No. 390 of the 127th General Assembly, appearing as Chapter 141, Volume 59, Laws of Delaware, established the Delaware Tax Study Committee to evaluate the inequities in the State's existing tax structure, to propose reforms thereto, and to investigate other revenue sources; and

WHEREAS, the Delaware Tax Study Committee, composed of eminent and dedicated Delawareans entered upon and timely completed their charge with dedication and responsibility and submitted to the Governor and the General Assembly an interim report on October 15, 1973, and a final report on October 29, 1973; and

WHEREAS, the Delaware Tax Study Committee spent many hours in the Division of Revenue analyzing its systems, procedures and operations and concluded that the Division was in a state of "monumental disorganization", its records were a "state of utter confusion", its computer operation had "deteriorated into a massive foul-up which has never been corrected" and reported that millions of taxes may remain to be collected; and,

WHEREAS, as a result of its conclusions, the Delaware Tax Study Committee unanimously and strongly recommended to the Governor and the General Assembly that an "independent firm of auditors be immediately retained to promptly audit the Division of Revenue beginning with the fiscal year ending June 30, 1970" and concurrently urged that a "recognized firm of business consultants be retained to promptly analyze the monumental disorganization present in the Division of Revenue and its computer services, with the goal of reorganizing the Division and its procedures and setting up a modern, effective and efficient operation" and reestablish taxpayer "confidence in the integrity and management of the tax collecting agency."

WHEREAS, Senate Bill No. 390 of the 127th General Assembly, appearing as Chapter 141, Volume 59, Laws of Delaware, required the convening of a Special Session of the General Assembly by the President Pro Tempore and the Speaker of the House on or about October 30, 1973 to review the findings and recommendations of the Delaware Tax Study Committee and that Special Session has been convened today, November 27, 1973,

NOW, THEREFORE,

Be it enacted by the General Assembly of the State of Delaware:

Section 1. The sum of six hundred and sixty thousand dollars ($660,000) is hereby appropriated to the Office of the Governor for the purpose of carrying out the recommendation of the Delaware Tax Study Committee in retaining an independent firm of accountants to conduct a preliminary or spot audit of the Division of Revenue of the Department of Finance beginning with the fiscal year ending June 30, 1970, to determine the extent of delinquent, unpaid and undisclosed taxes so that the Governor can advise the General Assembly on whether a full scale audit is warranted, and retaining a recognized firm of business consultants to analyze the Division of Revenue with the goal toward its reorganization and establishment of a modern, effective and efficient operation similar, insofar as is possible, to that of the Internal Revenue Service of the Federal Government.

Section 2. The Governor, with the cooperation, assistance and advice of the Secretary of Finance and the independent auditors and business consultants, shall determine, within the limitations of the appropriation made herein, the order, priority, scope and extent of the spot audit and reorganization of the Division of Revenue.

Section 3. In the performance of the reorganization and spot audit, the consultants retained by the Governor shall have access to all records, documents, and papers, including all tax returns, in the possession, custody, or subject to the control of the Division of Revenue. Consultants, their agents and employees shall be subject to the provisions of Section 1241, Subchapter XI, Title 30, Delaware Code.

Section 4. The consulting firm or firms shall submit status reports to the Governor and to the members of the 127th General Assembly on the completion of each phase of the reorganization and spot audit of the Division of Revenue.

Section 5. There is hereby established a committee to provide advice and recommendations to the Governor from time to time as reports are forthcoming from the consulting and accounting firms. Following completion of the first phase of the reorganization of the Division of Revenue, all contracts for every subsequent phase shall be subject to committee approval. The Committee shall consist of five (5) members, two from the Senate appointed by the President Pro Tempore, one from each party; and two from the House of Representatives, appointed by the Speaker of the House, one from each party. The fifth member shall be the Secretary of Finance, who shall serve as chairman of funds in the General Fund of the State of Delaware not otherwise appropriated.

Section 7. Any money appropriated herein which is unexpended or unencumbered shall revert to the General Fund on June 30, 1975.

Approved November 29, 1973.