Bloomberg BNA Q&A with Director David Gregor, Delaware Division of Revenue


 

On Jan. 9, David Gregor became the new Director of Revenue for Delaware’s Division of Revenue.

In this interview, Mr. Gregor discusses his professional experiences that led to his appointment as Delaware’s new Director of Revenue, and his top priorities now that he has entered this new role. In addition, Mr. Gregor shares his views on the effectiveness of Delaware’s tax credits and incentives and on the collection of estate taxes. The interview also touches on Delaware’s unclaimed property practices and Mr. Gregor’s focus in this area.

Bloomberg BNA: What did you do before becoming Delaware's Director of Revenue?

Gregor: I’ve been with the state for my entire 29-year career.  For the last six and a half years, I served as the Deputy Secretary of Finance.  Since August of 2013, I have also served as the state Escheator overseeing the state’s unclaimed property program.  In addition to these duties, I have pretty much always had a hand in policy development and revenue forecasting.  Most notably, I directed the preparation of the state’s revenue estimates for the Delaware Economic and Financial Council (DEFAC) for about 19 years.

Bloomberg BNA: Now that you've become the Director of Revenue, what are the top priorities in your new role?

Gregor: They’re twofold.  First, with a new administration facing some significant fiscal challenges, I know that the Division of Revenue will be called on to work collaboratively with policymakers to help solve the budget puzzle.  Our core mission is providing the financial resources necessary to fund critical public services so, to the extent revenue policy is considered, we understand our responsibilities.

More generally, I’d like to continue to improve our customer focus.  I mean this in the broadest sense.  For example, how the Division of Revenue conducts its day-to-day operations is dictated in large measure by the content of our tax statute.  If that statute is unclear or outdated, then chances are some of our business practices are also ripe for improvement.  It’s possible then that a straightforward statutory update, which simplifies or modernizes tax administration, can have a meaningful bearing on operations.

A good example of this would be the Delaware Competes Act, which was adopted in 2016.  While the updates to the corporate income tax’s apportionment regime received most of the attention, the bulk of the bill was actually devoted to reducing the frequency of gross receipts tax and withholding filings for small employers.  And this is really the key point: better customer service doesn’t have to cost the state money.  If we’re smart, reducing the taxpayer’s cost of compliance can also help the Division live within its budget.

Bloomberg BNA: Are there any changes you'll be implementing right away that taxpayers (both businesses and individual taxpayers) should be aware of?

Gregor: I don’t think so.  I have only been on the job for about a week and, coming from a policy / forecasting background, I suppose I have a more methodical and inclusive approach.

Bloomberg BNA: Do you think Delaware’s tax credits and incentives are drawing businesses to the state or does more need to be done in this area?

Gregor: I think Delaware has struck a pretty good balance in this area.  Tax policy and incentives, specifically, are important aspects of state economic development portfolios, but they are just one tool in the toolbox.  Primary factors—like a quality workforce, sensible regulatory regimes, modern infrastructure and access to markets—need to be in place before tax incentives are really relevant in the location decision-making process.

Our recent economic development successes likely say more about Delaware’s overall business climate than they do about specific tax incentives.  Given the tight fiscal times we face, I think it’s clear too that most policymakers understand the risk of being too aggressive in this regard.  That is, offering tax incentives beyond that which necessary to influence the decision of a business that is on the fence about whether to locate in Delaware or another state. At some point, there is a real risk of rewarding behavior that would have occurred in the absence of the tax incentive.

Bloomberg BNA: During your tenure with the Division of Revenue, you have been credited with improving personal income tax processing methods and decreasing refund processing times by 30 percent. In your new role as Director, are there any additional changes to these methods you would like to implement to further improve efficiency?

Gregor: Nothing specific at this time.  As I mentioned earlier, I envision a process that considers our operation in the broadest sense.  Starting with the statute and working through our form design, web presence, and internal processing procedures, I’d like the Division to examine each for potential improvement.

Bloomberg BNA: Regarding Delaware's estate tax, Bloomberg BNA’s Leslie A. Pappas previously reported that Sen. Greg Lavelle (R) said the tax has “never collected near what was projected.”  Do you agree with this assessment? If so, are there any actions you would like to take to increase the amounts collected under the tax?

Gregor: As the person who was in charge of the revenue forecast, I have to say that the numbers bear out Sen. Lavelle’s conclusion.  At this point in time, I don’t have any specific actions in mind.   As with any tax, the first task is ensuring that taxpayers are in compliance with the statute.  Beyond that, any increase in amounts collected would be a policy decision that requires a statutory change and, obviously, that is not something the Division of Revenue can do on its own.

Bloomberg BNA: Collections from audits of unclaimed property are Delaware’s third largest revenue source. However, the constitutionality of Delaware’s unclaimed property practices have recently been called into question through litigation. What do you think will be the outcome of the current litigation?

Gregor: As a department, our policy is to refrain from commenting on ongoing litigation.

Bloomberg BNA: Are there any changes to Delaware’s unclaimed property practices that you would like to implement as Director of Revenue?

Gregor: I’d like to continue the progress that has been made since I was named as the Escheator in 2013.  In much the same way as I described above when discussing the Division of Revenue, the focus has been on finding ways that simplify both the customer’s experience and the administrator’s workload.  For example, by rethinking our processes and using better tools, the Office of Unclaimed Property has increased the amount of money returned to owners from about $20 million in FY 2013 to an annual average of about $100 million for FY 2014 to FY 2016. FY 2017 is on pace to set another record in this regard with total cash and securities returned likely to be in the range of $130 to $140 million.

Bloomberg BNA: What advice do you have for tax professionals practicing in Delaware?

Gregor: I look at tax professionals as being among our most important customers, and their level of satisfaction is one of the most reliable gauges of how well the Division of Revenue is doing its job.  Having said that, I’m really much more interested at this point in receiving advice than dispensing it.  I look forward to interacting with our tax professionals and learning how we can improve.

Interview by Jerry Gianakis