Herb Frierson said the biggest moonshine bust in the history of the Mississippi Alcoholic Beverage Control was in Hancock County, when ABC agents busted a man and his brother — for the second time — for making 60 barrels of moonshine.
The suspect had bought 500,000 pounds of sugar from Gulfport and Slidell, Louisiana, which made 57,000 gallons of moonshine. He sold it for $30 per gallon, meaning his whole operations would bring in $1.7 million, Frierson said.
“He doesn’t have a moonshine problem,” Frierson said. “He’s got a tax evasion problem.”
As the commissioner of the Department of Revenue, which oversees ABC, Frierson knows something about taxes and tax evasion too, and he spoke about those topics at the weekly meeting of the Columbus Rotary at Lion Hills Tuesday.
Frierson became commissioner in 2016, at which time Gov. Phil Bryant wanted to “change the image” of the Department of Revenue.
Part of the way they did that was by updating and changing software and computer systems, he said. The other major change was how they worked with businesses being audited and become more “user-friendly.”
“We asked our auditors to go back to the way they used to do it,” Frierson said. “If the audit supervisor agreed that (a business) had a good audit, to go back to that business person and make an offer from the commissioner to settle — pay the tax, he forgives the interest at half penalty. That has been well-received throughout the state. … The state needs to collect the tax. If it’s a bad, bad case of fraud or somebody who’s really getting over on us, then yeah, we probably need to get all the penalties, (but) most of the time, there’s a lot of honest mistakes made.”
About 96 percent of Mississippians pay their taxes accurately and on time, Frierson said, meaning his department works with the other 4 percent. Many of those people, he said, make honest mistakes.
He said the state auditors do their best to work with businesses to make sure taxes are filed correctly and said if businesses admit to filing incorrectly, the department can relax some of the penalties.
“If you think you’ve got a problem, we always have amnesty in Mississippi,” he said. “If you know you’ve got a bad tax problem and nobody’s caught you and it’s bugging you and you want to fix it, … call and ask us to come and straighten it out and we will not charge you any penalty or any interest. We may debate you what is tax or what is not tax, but there won’t be any penalties or interest involved. That’s just one of the other ways that we’re trying to change the image of the agency and increase compliance. That’s the No. 1 thing.”
Frierson also gave a breakdown of numbers: about 33 percent of the state’s general operating fund comes from income tax, 38 percent from sales tax, 11 percent from corporate tax, 4 percent from use tax (sales tax that comes from out of state) and 5 percent from insurance. The other 9 percent comes from other, smaller sources, he said.
The money brings in more than $8 billion total, about $3 billion of which is allocated to other funds, leaving $5.6 billion in state general funds.
Frierson said in total, the Department of Revenue collects about 95 percent of the taxes collected by the state.
Frierson also spoke briefly about fraudulent tax filers. It’s estimated the Department of Revenue loses about $15 million to fraudulent filers every year, Frierson said.
He said around tax season, when filers incorrectly identify themselves, they receive a letter asking them to contact the department and properly identify themselves.
“I got one of those letters the first year I was commissioner,” Frierson said. “I keep it in my office and show it to people when they come by.”
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