Report on Plans and Priorities 2014–15

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Program: Collections and returns compliance

Program description

The Collections and Returns Compliance Program is committed to protecting the integrity of Canada's tax laws and supporting taxpayer compliance with tax obligations by identifying, addressing, and preventing non-compliance, as well as ensuring tax debt is resolved on a timely basis. We undertake a range of activities to promote and enforce compliance with Canada's tax laws for filing, withholding, registering, and meeting debt obligations, including amounts collected or withheld in trust for the Government of Canada. This is achieved through educational campaigns, automated strategies, a national call centre, and field operations. These activities are carried out on behalf of the Federal Government, provinces, territories, and certain First Nations governments.

What we want to achieve

To protect and ensure the integrity of Canada's tax base by preventing debts from occurring, resolving outstanding debts in a timely manner, and by making sure filing and registration requirements are enforced and respected.

Strategic context

The majority of Canadian taxpayers support Canada's self-assessment system by filing their taxes on time and paying their taxes in full: in 2012-2013, 95% of individual taxpayers paid their taxes on time. These results should be celebrated and speak well of our tax administration and Canadians' participation in the self-assessment system. However, there will always be a small minority who are non-compliant for various reasons. Our success in ensuring that taxpayers register, file and pay their tax debt, and that employers remit source deductions, depends on a mix of service and compliance measures. We have invested significantly in state-of-the-art predictive analytics solutions and a dedicated research capacity to better understand compliance challenges and design strategies to respond as efficiently and promptly as possible. Our analytics capacity allows us to expand the use of automated approaches, like reminder messages, that provide tailored help to taxpayers at a low cost.

We are reducing red tape and improving service to Canadians by reaching out early to taxpayers and reminding them of upcoming payments due or, for new GST/HST registrants, to file returns. We are improving our online information about the tax debt collections process to make it easier for debtors to approach the CRA to enter repayment discussions.

When the CRA identifies missing revenue from aggressive tax planning and international activities, we follow up with effective and up-to-date tools and strategies. Through international benchmarking and collaboration, and information exchange based on tax treaties, we can address emerging international compliance risks.

Integrity continues to be a priority. A continued strong focus on quality will be complemented by new approaches to file selection in key programs, to ensure the CRA can learn from its decisions and continually improve results.

Trust accounts - compliance

Employers are obliged to collect and remit money considered to be held in trust for their employees to the Government of Canada. Our role as tax administrators is to protect the integrity of this source deduction system.

The efficient collection of personal income tax revenue through source deductions represents one of the greatest strengths of the Canadian tax system. Employers are responsible for calculating and remitting the required contributions to their employee's individual Canada Pension Plan and employment insurance accounts. We support trust account compliance by working with employers to make sure they understand their obligations. This is done by providing employers with the information they need in our publications and innovative online information products, like our Payroll Information for a New Small Business Webinar series. We enforce trust compliance through payroll account reviews and exams and employer compliance audits.

The CRA is improving the information systems it uses to control and track trust account compliance activities. This system enhancement and migration project is a multi-year initiative to modernize and integrate the management of payroll compliance activities with the collection activities of other business lines. In addition, we are completing the renewal of the Employer Compliance Audit Program (ECA). This renewal initiative is improving our risk assessment capacity and will set national strategic objectives for the program.

For the source deductions system to function well, employees must be able to trust employers are properly calculating the amounts to be held at source and faithfully remitting these amounts on their behalf. Our support, oversight, and enforcement activities ensure the integrity of this system.

Over the planning period, the CRA will:

• improve our internal quality assurance processes
• expand our use of the Automated Dialling Announcement Device to remind new registrants and employers of their filing and remitting obligations
• develop tools and risk management techniques to improve workload management and optimize compliance

Non-filer - compliance

The CRA identifies non-filers mainly through the use of automated systems that match information received against information filed. When non-filers are identified, the Non-filer Program uses a number of strategies to promote and enforce compliance, including the use of automated letters requesting taxpayers to file, call centre contact, field calls, and in some cases even prosecution.

The CRA is improving the efficiency of the Non-filer Program by developing its capacity to identify taxpayer segments at risk through the expanded use of advanced analytics and the development of more refined risk models. As well, the program is expanding its use of the Debt Management Call Centre (DMCC) to resolve low-risk, low-complexity files not requiring an in-depth review or face-to-face contact. The expanded use of debt management call centre agents to address high volume, low-risk accounts will allow the program to generate savings by quickly processing high volumes of accounts that can originate from any region of the country.

Over the planning period, the CRA will:

• expand the integration of its non-filer workload into the Debt Management Call Centre
• move forward with the Non-filer Renewal Initiative to improve workload management resource utilization and processes
• implement new non-filer risk assessment models to better identify specific segments and individual files of highest risk

Collections - tax and government programs

CRA investments in compliance research, business analytics, and the infrastructure required to support the use of advanced workload automation allow us to intervene more effectively and earlier in the accounts receivable life-cycle. We use predictive analytics to evaluate, refine, and enhance our debt collections approaches in an ongoing fashion. This ability to more precisely identify and segregate workloads helps us implement tailored approaches that are more efficient and effective.

Our graduated approach can range from a simple automated phone call to remind taxpayers of their filing or payment obligations to more intensive interventions like face-to-face interviews and legal actions. The CRA is deploying innovative technological solutions to improve our case file management and implement new telephony solutions to improve compliance and increase efficiencies.

We are using research and analytics to guide the steady and incremental improvement of our Collections Program. However, we recognize there are opportunities to do even better. As a result of a recent Office of the Auditor General (OAG) recommendation, we conducted a comprehensive review of how we incorporate research findings into our debt management strategies. We will use the results of this study to create a new framework for the use of research findings in future collection program planning and reporting processes.

The level of outstanding debt is often influenced by factors beyond the control of the CRA, such as economic downturns, changes in tax policy, or the inflows of debts resulting from the resolution of tax disputes before the courts. The job of the Collections Program is to identify trends and mitigate the risks they represent. This is done by adapting and tailoring our strategies, responsibly managing the debt levels, and increasing the efficiency and timeliness of our collections actions.

The CRA is also taking steps to deal more effectively with aged debt affected by the legal limitation on the collection of tax debt. We have started to develop a permanent automated solution to address limitation periods for tax debts. This system solution will be developed during the planning period.

Over the planning period, the CRA will:

• support the launch of a new electronic pre-authorized debit payment option
• work with financial institutions to reduce barriers and increase electronic payment take up
• respond to an OAG recommendation by formalizing a framework for incorporating research findings into our planning and reporting process
• improve our ability to identify and take action in workload segments requiring special attention, such as Aggressive Tax Planning and Underground Economy files

Conclusion

The CRA's Collections and Returns Compliance Program continues to evolve into more data and analytics driven activities, positioning itself to adopt and improve on the best practices developed in the private and public sectors. The CRA will reduce red tape and improve service to Canadians by introducing innovative solutions to help taxpayers avoid compliance issues, and allowing CRA officers to focus on those who truly do not intend to comply. Our investment in business analytics and research will continue to yield results through better focusing of early interventions and expansion of automated, tailored communications with taxpayers.

Strategic outcome: Taxpayers meet their obligations and Canada's revenue base is protected

We use the following expected results and performance indicators to assess whether we are meeting our overall strategic outcome.

Program: Collections and returns compliance

Sub-program: Trust accounts – compliance

Sub-program: Non-filer – compliance

Sub-program: Collections – tax and government programs

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