In the 43 states that have a state income tax, tax enforcement is done in close cooperation with the Internal Revenue Service (IRS) of the U.S. Department of Treasury. Because the budget of the IRS has been slashed, the number of federal audits and prosecutions have dropped dramatically leaving billions of federal and state tax dollars uncollected.
All attorneys general have the responsibility to protect their own state tax collection process. I would suggest that because the federal government isn't doing its job that state attorneys general must step up their tax prosecutions, even if it means taking over cases from a starved IRS.
No one wants this result, but the cuts to the IRS budget leave little choice. Subjecting taxpayers to separate state and federal audits wastes time and increases tax planning angst for all parties. But as happens in so many areas, if the federal government refuses to enforce the law, then the states have no option but to go it alone.
Jesse Eisinger and Paul Kiel, After Budget Cuts, the IRS’ Work Against Tax Cheats is Facing “Collapse,” Pro Publica, Oct. 1, 2018
Tanza Loudenback, What Americans pay in state income taxes, ranked from highest to lowest, Business Insider, Apr. 8, 2018
Internal Revenue Service: Tax Gap Estimates for Tax Years 2008-2010
Daniel Uria, New York tax department reviewing allegations of Trump family tax fraud, UPI Oct. 2, 2018