Debt Management Call Center Evaluation

Final Report

Corporate Audit and Evaluation Branch
Program Evaluation Division
June 2010


Executive Summary

This report presents the findings of the Debt Management Call Centre (DMCC) evaluation. The purpose of this evaluation was to assess the ability of DMCC to achieve its mandate, assess the DMCC contribution to compliance and to identify opportunities for improvement which would assist DMCC in achieving program objectives.

An internal audit was originally planned to be conducted in fiscal year 2010-2011; however, Taxpayer Services and Debt Management Branch (TSDMB) management requested that Corporate Audit and Evaluation Branch (CAEB) undertake both an internal audit and an evaluation of the DMCC in 2009-2010. By undertaking both an audit and evaluation at the same time CAEB was able to provide a more comprehensive review of the DMCC, including assessments of both program management and internal controls (audit) and program effectiveness (evaluation). A separate report has been prepared on the results of the internal audit.

The TSDMB is responsible for this program. Other branches within the Canada Revenue Agency (CRA) play a significant role in supporting TSDMB in achieving its objectives. This includes activities such as payment and return processing, communications and technology platforms.

For this evaluation, we undertook a trend analysis on the total volume of DMCC activities for the 2008-2009 year and analyzed a statistically valid sample of taxpayer accounts where arrangements were made for payment, returns and/or both for the T1, T2 and Goods and Services Tax/Harmonized Sales Tax (GST/HST) revenue lines. Through CRA interviews and an examination of CRA policies, procedures and performance reports, and DMCC complaints, and literature research, we gathered information from DMCC and TSDMB and other tax jurisdictions.

The 2008-2009 Protocol Agreement outlines the objectives, mandates, partners, roles, responsibilities and performances measures the DMCC. This agreement was met for 2008-2009.

We completed a trend analysis of the total volume of DMCC activities for 2008-2009 which revealed that DMCC does a considerable amount of work that may not be directly attributable to either an arrangement or referral[footnote1]. We recognize that these other DMCC actions do provide a benefit to the CRA as a whole in that they assist in resolving taxpayer enquiries at the earliest point of contact with the CRA. The unanswered question is whether these actions are within the responsibility of DMCC or whether they would be better served through activities in other areas of the CRA such as general enquiries or business window.

Our data analysis revealed that DMCC arrangements contribute to compliance. We found that arrangements on T1 accounts were successful in 64% of cases, T2 84% and GST/HST 60%; however, differences were identified in the method of payment to resolve non-compliance. While the majority of T1 were resolved by taxpayer submitted payments from their ongoing financial resources, 54% of the successful T2 arrangements and 42% of the GST/HST arrangements were the result of credit transfers within the taxpayers account. Although this did successfully resolve the accounts for a period of time there is potential that the result is a temporary resolution and may not have a positive effect on overall long term compliance. Arrangements for overdue GST/HST returns were successful in 85% of cases however 23% of these contacts were to clients that had already filed the outstanding return. During the course of the evaluation, documentation was provided by TSDMB to indicate that enhancements have been made to the Revenue Enforcement Management Information Tracking System (REMITS) which will reduce the potential for DMCC contact with taxpayers who have resolved non-compliance related to unfilled returns. No comparison could be made to other tax administrations as our literature research revealed that this type of analysis and research had not been undertaken. Furthermore we noted that information related to CRA collection policies and procedures are not easily accessible and that opportunities exist for DMCC to enhance client awareness of their tax filing and remitting obligations.

TSDMB introduced a new organization structure on April 1, 2008 which included the new Debt Management Research and Analytics Directorate (DMRAD) to pursue a more global analysis of program data. This is intended to bring together analytics, research and the use of the Integrated Revenue Collections (IRC) data environment to manage front-end activities. We agree that these new analytics and research initiatives should provide valuable information to TSDMB to identify and adjust the program to improve DMCC performance. This evaluation identified other opportunities to improve program effectiveness and to change the behaviour of non-compliant taxpayers. We therefore recommend that TSDMB, as part of their analytics and research plans, should explore:

Introduction

In June 2009, the Canada Revenue Agency (CRA) Management Audit and Evaluation Committee approved the evaluation framework for the Debt Management Call Centre (DMCC) Evaluation. The framework identified the following three issues for the evaluation:

  1. To what extent is the DMCC achieving its mandate?
  2. To what extent has the DMCC contributed to achieving compliance?
  3. Are there alternatives or modifications to current program delivery that will assist the DMCC in achieving its mandate?

It should be noted that an internal audit was originally planned to be conducted in fiscal year 2010-2011; however, Taxpayer Services and Debt Management Branch (TSDMB) management requested that Corporate Audit and Evaluation Branch (CAEB) undertake both an internal audit and an evaluation of the DMCC in 2009 - 2010. By undertaking both an audit and evaluation at the same time CAEB was able to provide a more comprehensive review of the DMCC, including assessments of both program management and internal controls (audit) and program effectiveness (evaluation). This report summarizes the evaluation findings and recommendations. A separate report has been prepared on the results of the internal audit.

Background

The TSDMB is responsible for returns compliance and the collection of all outstanding taxes, levies, duties, and non-tax accounts administered by the CRA.

The CRA collections continuum is comprised of strategies ranging from the use of lower cost front-end actions such as routine automated letters and/or telephone contact made through the DMCC, to more complex enforcement activities which represent a higher cost to the CRA such as issuing requirements to pay, demands to file, and conducting seizure and sale activities. More complex enforcement actions are carried out by collection and compliance staff located in National Collection Pools, National Compliance Inventory Centres, and/or Tax Services Offices (TSOs). According to the CRA Annual Report to Parliament for 2008-2009 (Annual Report), the Agency resolved approximately $35.1 billion of tax unpaid at time of assessment. Approximately $17.5 billion of this amount was resolved by “automated and DMCC strategies”. TSDMB estimates that the DMCC actions resulted in total payment arrangements of more than $1.5 billion.

According to the CRA Annual Report to Parliament 2008-2009, Accounts Receivable and Returns Compliance spending totalled $724 million of which $498 million was for net program expenditures and $226 million was allocated for Program activity for internal services. For the same period, TSDMB's Full Time Equivalents (FTEs) totalled 10,472 of which 9,539 were located in regional field offices. For 2008-2009, the DMCC had a total operating budget of approximately $11 million and 216 FTEs.

Cumulative taxpayer debt including penalties and interest owed to the CRA was $24.4 billion. According to the TSDMB, of the $24.4 billion outstanding, $3.8 billion is categorized as low to medium risk, $18.1 billion is high risk, $1.5 billion is an established GST/HST receivable from the Ministry of Revenue Quebec, and $1.0 billion represents other receivables. The Annual Report acknowledges that Canada, along with other tax administrations around the world, is experiencing marked increases in tax debt inventories. Between 2007-2008 and 2008-2009, total accounts receivable increased by 5.2% ($1.2 billion).

In April 2008, the TSDMB underwent an organizational realignment which resulted in the DMCC being placed under the direction of the newly formed Debt Management Research and Analytics Directorate (DMRAD). DMRAD hosts the Front-end Operations that are responsible for the prevention and detection of taxpayer's non-compliance with filing and remitting obligations, and the early resolution or diversion of compliance and collections accounts (cases) prior to their entry into the resource intensive workflows of Debt Management (DM) programs. DMRAD responsibilities include modernizing core business functions by developing and implementing the Integrated Revenue Collections (IRC) technology platform in order to enhance its ability to analyze taxpayer behaviour, report on debt components, and assess risk.

Using a predictive dialler, the DMCC initiates outbound calls identified by a front-end case management system - the Revenue Enforcement Management Information Tracking System (REMITS). The DMCC also answers inbound calls resulting from several sources including DMCC outbound calls, and taxpayers who are responding to a notice of assessment form, or an automated collection letter issued by the REMITS system. REMITS is the primary workload management tool used by the DMCC. The main responsibility of the DMCC is to communicate with:

TSDMB's vision is that by increasing its focus on front-end operations, through the use of enhanced data and technology, and through leveraging capacity in the DMCC, the TSDMB will be able to resolve a greater number of these accounts earlier in the collections continuum, thereby reducing the number of accounts that require a more costly and time intensive series of actions. This approach will free-up collection officers in the other levels of the collections continuum to focus on more complex and high risk accounts that require more in-depth collections interventions.

For the 2008-2009 fiscal year, the mandate and business objectives for the DMCC were outlined in a Protocol Agreement established between the DMCC, the Ontario Region, and the TSDMB. The Protocol Agreement for Fiscal Year 2008-2009 also clarified roles and responsibilities between the parties, and provided workload objectives for the call centre. Specific workload objectives for program deliverables are provided with an indication that the deliverables will be reviewed annually.

Evaluation Methodology

For this evaluation study, we used the following methodologies:

Limitations and Constraints

REMITS is the current operating platform for the workload management of DMCC activities however it does not provide information to measure the outcome of DMCC arrangements. To determine what extent the DMCC has contributed to achieving compliance, we extracted a statistically valid sample[footnote2] of accounts from REMITS to draw samples[footnote3] of distinct accounts where arrangements were processed for the T1, T2 and GST/HST revenue lines for the months of April and July 2008. Both months were selected to ensure a typical representation of workload as well as to allow sufficient time for the resolution of accounts to occur based on DMCC arrangement parameters made by agents (maximum of 12 months according to DMCC procedures). We then initiated a case file review of the accounts using CRA administrative data from REMITS, Random Access Personal Information Database (RAPID), Standardized Accounting (SA) and GST/HST systems to measure the success of arrangements made and to ensure the integrity of our results.

Findings from the Evaluation

2008-2009 Protocol agreement met

The 2008-2009 Protocol Agreement forms the basis of measurement of the DMCC. The Protocol Agreement outlines the objectives, mandates, partners, roles and responsibilities, and indicates the measures that will be used to assess DMCC performance towards the goal of improving overall compliance and reducing the level of accounts receivable. This agreement is signed by the Director, Ottawa Technology Centre, Assistant Director, DMCC, Regional Director of Programs, Ontario Region and Director, Front-End Operations, Research and Analytics Division, TSDMB. An analysis of TSDMB performance reports reveals that the 2008-2009 Protocol Agreement has been met according to the agreed upon performance definitions. Results achieved are included in Table 1.

Table 1 - Debt Management Call Centre Protocol Agreement

Debt Management Call Centre Protocol Agreement [footnote4]
2008-2009 Performance Against Targets
Breakdown Actual Performance Target Variance
Protocol Agreement      
Resolution rate (arranged vs. referred to TSO) 92.5% 75% 23.33%
Service Level (80/60) inbound calls 85.1% 80% 6.37%
Accessibility for inbound calls 96.9% 95% 2.04%
Direct / Indirect (outbound / inbound) 65 / 35 60 / 40 N/A
Direct / Indirect (collection letter workload) 65 / 35 68 / 32 N/A
Teletrace for T1, T2 & GST (accounts/hour) 8.9 6.0 48.33%
Program Budget      
Program Allocation $10,792,848 $10,651,000 1.33%
Program O&M $442,818 $366,000 20.99%
Program Totals $11,235,666 $11,017,000 1.98%
Accounts Arranged      
T1 Collection 278,248 275,885 0.86%
T2 Collection 34,760 24,616 41.21%
T1 Installment 10,529 8,000 31.61%
GST Collection 51,837 30,583 69.50%
GST Compliance 217,603 170,356 27.73%
Totals 592,977 509,440 16.40%
Dollars Arranged      
T1 Collection $1,167,825,597 N/A N/A
T2 Collection $237,985,623 N/A N/A
GST Collection $119,326,057 N/A N/A
Totals $1,525,137,277 N/A N/A

DMCC activities extend beyond arrangements and referrals

In the current DMCC program environment, the focus of performance measurement is directed towards those accounts that meet the status of arranged or referred but does not take into consideration total volume of all activities undertaken. As part of our evaluation we undertook a trend analysis of 2008-2009 program data which included all activities undertaken by DMCC agents by distinct account. A global analysis of the entire DMCC workload for 2008-2009 revealed that DMCC agents had worked 839,970 distinct accounts for the T1 revenue line and had an overall yearly average arrangement and referral rate of 31% and 4% respectively. For the T2 revenue line, the DMCC agents worked 66,992 distinct accounts and 513,651 distinct accounts for the GST/HST revenue lines with an overall yearly average arrangement rate of 47% and 48% with referral rates of 2% and 3% respectively. This explains why the DMCC rate of arrangements and referrals is lower than the calculation that is used within the 2008-2009 Protocol Agreement which is based on a ratio (75:25) of the number of arrangements to referrals made and does not include all accounts worked (Table 2[footnote5]).

Table 2 – DMCC Arrangement Rate for Revenue Lines by All Accounts Worked at DMCC for Fiscal Year 2008-2009 (Distinct accounts)

This chart depicts the global analysis of the DMCC workload for 2008-2009. Preceding paragraph to the table explains the trend identified. Excerpt from the DMCC report:

A global analysis of the entire DMCC workload for 2008-2009 revealed that DMCC agents had worked 839,970 distinct accounts for the T1 revenue line and had an overall yearly average arrangement and referral rate of 31% and 4% respectively. For the T2 revenue line, the DMCC agents worked 66,992 distinct accounts and 513,651 distinct accounts for the GST/HST revenue lines with an overall yearly average arrangement rate of 47% and 48% with referral rates of 2% and 3% respectively.

This chart depicts the global analysis of the DMCC workload for 2008-2009

This analysis also revealed that DMCC does a considerable amount of work that may not be directly attributable to either an arrangement or referral. The work not related to arrangements and referrals is tracked to some degree as DMCC agents use various disposition codes when recording taxpayer contacts to indicate the nature of the particular contact event. When entered into REMITS these codes form part of the permanent taxpayer record. Currently there are 48 disposition codes of which 14 are related to arrangements and referrals. The other disposition codes track activities such as general enquiries related to issuance of remittance forms and change of account information. The systematic recording of these DMCC activities can provide a foundation or starting point from which to benchmark future DMCC activities for management decision-making. We recognize that these other DMCC actions do provide a benefit to the CRA as a whole in that they assist in resolving taxpayer enquiries at the earliest point of contact with the CRA. The unanswered question is whether these actions are within the responsibility of DMCC or whether they are better served through activities in other areas of the CRA such as general enquiries or business window. An ongoing process to monitor and analyze characteristics of the total portfolio of all disposition code activities used by DMCC will provide additional insight into direct vs. indirect collection activities and may provide benefit to the management of the collections workload.

DMCC arrangements contribute to compliance

A primary goal of collectors is to resolve the current non-compliance and to help the taxpayer remain current in the future. The CRA takes a “softer” approach when applying initial collection actions to first time non-compliers and may permit them additional time to resolve their delinquency prior to taking stronger collection actions. This is accomplished with a mutually agreed upon arrangement with the taxpayer. However, if the taxpayer fails to resolve the delinquency in the appropriate timeframe they are subject to the same collection actions as repeat or habitual non-compliers. Our literature research indicates that this approach is consistent with other Tax Agencies[footnote6].

To better understand the nature of arrangements made at the DMCC and to measure their success, we extracted a statistically valid sample[footnote7] of distinct accounts arranged for the months of April and July 2008. We then initiated a case file review of the accounts using REMITS, RAPID, SA and GST/HST systems to ensure the integrity of our results. Our definitions[footnote8] for the success, partial success and/or unsuccessful of an arrangement are as follows:

From this analysis we identified that DMCC arrangements contribute to compliance (Table 3). Our literature research of other jurisdictions revealed that no measurement or analysis of arrangement success rates, from a tax call centre environment, had been undertaken to allow for a comparison with other tax administrations.

Table 3 – Overview of Percentage of Resolved Arrangements by Revenue Line

Results of DMCC Arrangements T1 (%) GST/HST Collection (%) GST/HST Return Compliance (%) T2 (%)
April July April July April July April July
Successful 65 64 60 60 92 85 80 84
Partially Successful 23 26 11 10 1 3 13 10
Unsuccessful 12 10 29 30 7 12 7 6

Differences identified between personal income tax (T1) and business revenue lines (T2 and GST/HST) to resolve filing and/or remitting non-compliance

To better understand what may be contributing to a successful arrangement, an analysis was undertaken of a statistically valid sample[footnote9] of T1, T2 and GST/HST accounts arranged by the DMCC in July 2008[footnote10]. Our analysis revealed that there are several different ways that an account can be successfully resolved. From a financial perspective, non-compliant accounts are resolved primarily by one of the following methods:

  1. A cash payment by the client including items such as bank remittances, post-dated cheques, pre-authorized payments, etc.
  2. Application of an available credit on the account to the arrears balance such as a credit assessment/reassessment, transfer of a misallocated payment to the arrears balance or transfer of some other type of credit to the arrears balance. Application of an available credit that requires an action to be completed by a DMCC agent is referred to as an administrative action.
  3. A combination of 1 and 2 above.

Our data analysis and case file review revealed that the three different revenues (T1, T2 and GST/HST) have distinguishable differences in the method used by taxpayers to resolve non-compliance. T1 taxpayer accounts are most often resolved as a result of payments made by the taxpayer rather than by transfers within the account. Taxpayers offering arrangements on T1 accounts are taking the payments from their ongoing financial resources. These payments were identified as the most common source of funds in 89% of the successfully arranged T1 accounts in the month of July 2008 (Table 4).

Table 4 – T1: July Collection Results

Unsuccessful: 10%; Partially successful: 26%; Successful: 64%; Successful by DMCC: 89%; Successful by ADM actions: 11%

Arrangements made on T2 and GST/HST accounts are often more complex in that there may be a combination of payments and transfers used to resolve the accounts (method 2 and 3). We identified that many of the accounts in these revenue lines had existing money available when contacted by a DMCC agent. The funds on these accounts were either in the form of previously paid installment payments[footnote11] or other pre-existing credits and were used to resolve arrears (Tables 5 and 6). Although this did successfully resolve the accounts for a period of time there is potential that the result is a temporary resolution and may not have a positive effect on overall long term compliance. Agents should make taxpayers aware of the potential implications in situations where installment payments are used to resolve non-compliance. The use of installment credits may create a deficiency with current installment obligations which could result in additional interest charges. This has the potential to prematurely return the account to DMCC or other levels of the collections continuum.

Table 5 – T2: July Collection Results

Unsuccessful: 6%; Partially successful: 10%; Successful: 84%; Successful by DMCC: 46%; Successful by ADM actions: 54

Table 6 – GST/HST: July Collection Results

Unsuccessful: 30%; Partially successful: 10%; Successful: 60%; Successful by DMCC: 58%; Successful by ADM actions: 42

The DMCC is also responsible for compliance activities with respect to the filing of outstanding GST/HST returns. The timely addressing of non-filed tax returns ensures taxpayers are aware that the CRA is conscious of the non-filed situation and will take action if the taxpayer does not fulfil their tax obligation to file and remit a payment if due. It also provides the CRA with the opportunity to inform the taxpayer. This has a strong potential to reduce the possibility of a taxpayer being subject to additional collection measures or incurring any additional and potentially unnecessary interest and penalty charges for non-filed returns in the future. Our data analysis and case review revealed that DMCC agents are successfully resolving issues of overdue returns with taxpayers in 85% of the cases. Further analysis revealed that in 23% of these successful cases, DMCC agents had contacted compliant taxpayers for overdue returns when the returns had already been filed (Table 7). Additional analysis is required to determine if system logic or timeframe adjustments for the issuance of non-compliant notices is needed to reduce non-compliant notifications being generated to compliant taxpayers. During the course of the evaluation, documentation was provided by TSDMB to indicate that enhancements have been made to the Remits system which will reduce the potential for DMCC contact with taxpayers who have resolved non-compliance related to unfilled returns.

Table 7 – GST/HST: July Return Compliance Results

Unsuccessful: 12%; Partially successful: 3%; Successful: 85%; Successful by DMCC: 77%; Successful by ADM actions: 23%

As noted in the Debt Management Call Centre Internal Audit Report, there is a need to strengthen performance measurement for the DMCC. All levels of the collections continuum contribute to compliance but we found that performance is measured differently within the DMCC compared to other levels of the collections continuum. DMCC performance indicators include the number of arrangements and referrals made which are considered “resolved” accounts. In contrast, performance indicators at the other levels define “resolved” as the number of accounts actually paid and the number of returns actually received. The remaining levels also keep track of total intake and work-in-progress. The difference in performance measurement among different levels of the collections continuum does not diminish the overall contribution or value of any level of the delivery model; however more could be done to measure the effectiveness of the DMCC. Recognizing that REMITS cannot provide information to measure the outcome of DMCC arrangements, one option for improving DMCC performance measurement would involve periodic measurement of the arranged accounts to determine the actual dollars collected and number of returns actually filed as a percentage of arrangements made. The measurement of dollars collected, number of accounts paid and returns filed provides for a more consistent and direct comparison to other levels of the collections continuum. In addition this exercise will provide DMCC with a benchmark estimate of amounts collected as a percentage of arrangements made. The comparison of results from similar performance measurement indicators at each level of the collections continuum could contribute to improved workload management and decision making.

Opportunities exist for DMCC to enhance client awareness of their tax filing and remitting obligations.

The knowledge required to collect returns and debts is considerable. Although the goal of the program is to resolve accounts through an arrangement with the taxpayer based on capacity to pay and within pre-established parameters, there is an inherent responsibility that DMCC agents be fair and transparent about collection procedures and activities in their dealings with taxpayer. Informing taxpayers of their responsibility to resolve their tax arrears or returns in conjunction with outlining the steps in the collections continuum gives the taxpayer the necessary information they require to make an informed decision for their particular circumstance, at that point in time. In situations when legal warning should be given it is critical that the phrasing reflect elements of the key message, with appropriate tone and that it be provided as an educational component of that particular contact with the taxpayer.

Interviews with DMCC team leaders revealed that agents may be hesitant to provide legal warnings on a consistent basis as they do not have a good understanding of the overall collection continuum and depending on the reaction of their contact with the taxpayer they may or may not provide a legal warning. While it may be challenging at times for an agent to convey the legal warning message, additional focus should be placed on this task complemented with appropriate training and ongoing support when a mutually agreed upon arrangement has been made between the taxpayer and the CRA. The process of informing the taxpayer on their tax responsibilities and CRA collections procedures combined with consistency in its delivery across all levels of the collections continuum may further strengthen the integrity of the CRA by treating people fairly and applying the law consistently.

Information on CRA collections continuum is not easily accessible

There is a need to ensure that all activities within the collections continuum provide clear and consistent messages to taxpayers, particularly as they relate to any perceived or proposed legal actions. This understanding must also be consistent among agents and officers working at all tiers of the collections continuum. Information outlining the CRA's collection procedures is not easily available on the CRA website. While information circular 98-1R3 does provide a detailed description of Collections Policies its content may not be easily understood by taxpayers. A simplified document should be more easily accessible to taxpayers.

Research of other tax administrations[footnote12] revealed that clear and concise information related to debtor responsibilities and opportunities to arrange payment, along with additional measures that could be initiated to resolve unpaid accounts, is readily available and written in plain language with further instructions on how to obtain additional information if required. The provision of easily accessible information communicates transparency in the collections continuum process. Furthermore it enables newly informed taxpayers to make appropriate personal and business decisions to resolve their tax affairs in an effective and timely manner. More particularly, in those situations where taxpayers make a conscious decision to avoid payment of their debts, they are more likely to be aware of the financial and legal impact of making such a decision. A simplified, plain language document should be easily accessible to taxpayers. It would provide greater transparency in the collections process, illustrate the potential consequences of non-compliance and encourage contact. Any gains in this area could lead to increased voluntary compliance through a reduction in uninformed non-compliance activity.

Analytics and research are being refined to better understand program performance for all levels of the collections continuum

Work related to the collection of accounts is vast due to the complexity of the workload. Debtors have many characteristics beyond revenue type and business activity, from the small business owner to large corporations or senior citizens on fixed income and beyond. Differences between collection files are inherently difficult to profile based on availability of current internal information and performance management tools. They are further complicated by uncontrolled external factors such as the economic climate.

On April 1, 2008, TSDMB introduced a new organization structure which included the new Debt Management Research and Analytics Directorate (DMRAD) to pursue a more global analysis of Collections program data. This is intended to bring together analytics, research and the use of the IRC data environment to manage front-end activities. The objective was to develop and implement a risk-based debt management analysis system with the initial focus being on the front-end. DMRAD indicates that it will further develop the research and analytics environment by expanding capacity to conduct research and by acquiring and building business intelligence. To achieve this, a national program delivery model[footnote13] was developed which outlines the direction that will be taken. The current focus includes:

With respect to DMCC, DMRAD indicates that it plans to undertake additional studies, to assess initiatives related to ability to pay, broken arrangements, retention periods, minor balance thresholds and payment arrangement parameters.

We agree that these new analytics and research initiatives should provide valuable information to TSDMB to identify and adjust the program to improve DMCC performance. This evaluation, however, identified other opportunities to improve program effectiveness to achieve compliance and to change the behaviour of non-compliant taxpayers.

Recommendation:

TSDMB, as part of their analytics and research plans, should explore:

Conclusion

This evaluation concluded that the DMCC achieved its mandate with respect to the 2008-2009 Protocol Agreement and that the arrangements made by the DMCC have contributed to compliance. With respect to potential alternatives or modifications to program delivery, the evaluation made a number of recommendations to improve program effectiveness.

The collections continuum is not just a TSDMB responsibility. TSDMB can achieve limited success on its own in dealing with the non-compliance challenge and will need the support of other branches to implement the recommendations in this report. This includes activities such as payment and return processing, communication and technology platforms. Some recommendations could be implemented now while others would need to be phased in over time.

Management Response

The Corporate Audit and Evaluation Branch provided a report to the Front-End Operations Division (FEOD) containing a list of recommendations based on an evaluation of the Debt Management Call Centre (DMCC). As FEOD is responsible for providing operational support to the DMCC, on behalf of Front-end programs, it developed the following action plan which contains a suite of actions and strategies designed to address those recommendations. This plan also includes the opinions and views of the DMCC.

With respect to issues outlined concerning quality assurance, an action plan has been developed to continuously assess and evaluate the DMCC's contribution into the debt management continuum and thereby ensure that the quality of work is maintained within this environment. Quality controls will provide opportunities to improve processes and avoid repeating errors. A periodic review of these quality assurance activities will help to ensure that measures taken are effective.

Recommendation #1 Action/Milestones/Timelines
Enhanced training to DMCC agents to improve their understanding of their mandate relative to other levels of the collections continuum

Action:

Update training package for agents to better reflect and promote awareness of how DMCC fits within Debt Management continuum.

Milestones:

  • FY 2010-2011- Conduct review, update and deliver training package in conjunction with DMCC.
Recommendation #2 Action/Milestones/Timelines
Analyzing DMCC dispositions codes to gain insight into direct vs. indirect collection activities to support workload management and decision making

Action:

Integrated Voice Response (IVR) system implemented in April 2009 for inbound calls to address direct and indirect collection activities. Self serve options and non-collection calls were redirected through the IVR.
Analyze DMCC dispositions codes to gain insight into the various collection activities.

Milestone:

  • FY 2010-2011 - Review and determine the use of disposition codes around the workloads conducted by DMCC.
  • FY 2010-2011 –Align disposition codes with performance indicators to report on effectiveness and efficiency of activities carried out by DMCC.
  • FY 2010-2011 – Perform analysis of activities performed by the DMCC and develops recommendations on activities that are core to the DMCC and those that are not and develop an action plan to deal with recommendations.
  • FY 2011-2012 – Develop a procedure to track results attributable to DMCC actions.
Recommendation #3 Action/Milestones/Timelines
Enhancing accessibility to CRA Collections procedures, in conjunction with outlining the steps in the collections continuum, to inform taxpayers of their legal obligations to file and remit on time.

Action:

Collaborate with multiple partners to identify opportunities to enhance taxpayer communication regarding their legal obligation to file and remit and Agency collections policies.

Milestone:

  • FY 2010-2011 - Identify opportunities to enhance communication as it relates to informing taxpayers of their filing and remitting obligations

For example:

  • Review and provide feedback on key forms and publications as it relates to informing taxpayers of their filing and remitting obligations.
  • Review results of Payment Usability Test conducted in March 2010 to determine opportunities for improvement to debt management related content on the Agency website.
Recommendation #4 Action/Milestones/Timelines
Providing information to DMCC agents to assist them in informing taxpayers of their filing and remitting obligations

Action:

Update training package for agents to better reflect and promote awareness of how DMCC fits within Debt Management continuum and to assist the agents in informing taxpayers of their filing and remitting obligations.

Milestone:

  • FY 2010-2011 – Conduct review, update, and deliver training package in conjunction with DMCC
Recommendation #5 Action/Milestones/Timelines
Conducting a periodic review of the arranged accounts to determine their success.

Action:

Develop a monitoring strategy to evaluate the success of DMCC arrangements.

Interim solutions:

  • FY 2010-2011 – Prepare an approach to manage and study arranged accounts (for all business lines) – similar to approach taken by CAEB.

Milestones:

  • FY 2010-2011 – Develop and prototype business intelligence based operational reporting system as a means to assess DMCC's contribution to the collections continuum.
  • The ability for the program to action this item is funding dependant.

Footnotes

[Footnote 1]
Currently there are 48 disposition codes of which 14 are related to arrangements and referrals.
[Footnote 2]
95% confidence level and 5% error rate
[Footnote 3]
Sample size: T1 = 359, T2 = 331, GST/HST = 360
[Footnote 4]
Protocol agreement performance report provided by TSDMB.
[Footnote 5]
Referrals were not depicted in Table 2 as they are below 5% for all revenue lines
[Footnote 6]
CGI report, Short Term/Tactical Best Practices around Tax Collection (May 2007)
[Footnote 7]
95% confidence level and 5% error rate
[Footnote 8]
Allowances have been made for small residual balances that reflect accumulated interest
[Footnote 9]
95% confidence level and 5% error rate
[Footnote 10]
Analysis was also undertaken for April 2008 with similar results having been achieved.
[Footnote 11]
In situations where a business or individual client has been required to make instalment payments throughout the year, credits may be available within the account at the time of contact by a DMCC agent. In accordance with the CRA transfer policy, DMCC agents may transfers credits within the same corporation account or between related corporation accounts when circumstances meet established guidelines. Application of an available instalment credit that requires an action to be completed by a DMCC agent is referred to as an administrative action.
[Footnote 12]
Internal Revenue Service of the United States of America and information from Canadian provincial government websites
[Footnote 13]
Debt Management Program Delivery Model Action Plan, TSDMB, September 2008, page 8.

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