Austin Energy audit finds missing taxes, significant inconsistencies


AUSTIN (KXAN) – An independent audit of Austin Energy’s tax billing appears to show significant inconsistencies, including taxes failing to be included on bills, according to a copy of the audit obtained by KXAN on Monday.

Austin Energy initiated the audit after a KXAN investigation in September 2016 found the utility was incorrectly levying a metropolitan transit authority tax on customer bills in southern Williamson County. The utility later said 6,000 customers were affected by the wrongful tax, and it returned more than $300,000 to ratepayers.

The newly released audit performed by accounting firm Baker Tilly Virchow Krause, LLP shows taxes likely have been missing from many customer bills and the utility has not followed Texas Comptroller of Public Account guidelines in some cases. The inconsistencies seem especially pronounced in certain jurisdictions.

Austin Energy collects sales and use tax through its utility bills. There are 25 taxing jurisdictions or special purpose districts inside the utility’s territory. Auditors sampled 865 bills, out of a population of 441,401, from September of 2016. A percentage of the sample was pulled from each taxing jurisdiction or district.

Auditors found 258 out of 865 sample bills — or 30 percent — had missing taxes that should have been collected, and the amount of taxes collected for 89 out of 865 bills — 10 percent — did not agree with Comptroller guidance, among other findings.

“There were several inconsistencies and omissions of State and Local sales taxes collected by the customer care and billing system.”

In some districts, nearly every bill auditors sampled was incorrect. In a district labeled Travis 4, auditors discovered 56 out of 59 bills were missing taxes. In another district called Travis 6, they found 58 out of 59 bills were missing taxes, according to the audit.

“There were several inconsistencies and omissions of State and Local sales taxes collected by the customer care and billing system for the service area bills selected for testing,” according to the audit.

In a memo to the Mayor and City Council, Austin Energy General Manager Jackie Sargent said the “total amount of over-collection from the utility customers is nominal. The accountant noted there were only seven net overcharges to customers in the bills that were tested, all of which were less than $1 each.”

It is not clear how much tax money the utility failed to collect overall, or how long the billing problems have existed, since the audit was done on a sample within a single month period.

To improve its billing practices, the utility is considering using new software, retaining an advisory firm or developing new resources internally, the audit states.

Austin Energy spokesman Robert Cullick said it is not possible “to draw a general conclusion from the audit.”

“As a result of this you will see more people being assessed correctly, which will be a higher amount,” Cullick said, but “the findings aren’t applicable to the entire customer base.”

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