Ombudsman Update - Alive and Well (2014)
The Office of the Taxpayers’ Ombudsman (OTO) provided the systemic examination report, Alive and Well, to the Minister of National Revenue in February 2014.Footnote 1 This report was produced as a result of our examination into instances where the Canada Revenue Agency (CRA) was erroneously declaring people as deceased. In one instance reported in the media in February 2012, the error was due to an incorrect code placed on a person’s file. This resulted in their Canada child tax benefitFootnote 2 payments being stopped. Following this story, the former Minister of National Revenue, the Honourable Gail Shea, requested we investigate the issue to determine how these types of errors happen and how they could be prevented in the future.
To understand the issue, we analyzed the origins of the errors, the impact on people and how the CRA addressed the errors. We also looked at how the CRA captured and shared data, as well as the frequency of instances where people were incorrectly coded as deceased. Additionally, because the CRA implemented changes during our examination, we looked at and reported on those changes. Our findings revealed that errors can occur due to:
- a CRA employee entering incorrect information on a file;
- individuals or their representatives entering incorrect information on income tax and benefit returns; and
- errors in the information provided by outside sources that report dates of death to the CRA, such as from Employment and Social Development Canada (ESDC).
For those instances where a CRA employee enters an incorrect date of death, we found the error was due to:
- the employee keying the wrong social insurance number (SIN) into the system when making an update;
- the employee entering the date of death on the wrong account while consulting various related documents (for example, as an administrative error while referring to multiple dates listed on the power of attorney, death certificate, etc.); or
- the employee was managing two separate computer systems on parallel screens (for example, having two separate accounts open and entering a deceased code on the wrong account).
For those instances where an individual or their representative entered incorrect information on an income tax and benefit return, we found:
- a spouse may have inadvertently entered their own SIN on the deceased person’s income tax and benefit return; or
- the wrong SIN was entered (for example, some numbers reversed in error).
Our examination found the CRA has an internal target of 48 hours to correct information. When we reviewed how the CRA responded to these types of errors, we found it initiated action to ensure the deceased coding was corrected within this time period. These actions depended on whether the information conflicted with ESDC’s Social Insurance Registry and/or whether the person declared deceased was a benefit recipient. However, we learned the CRA did not have a follow-up procedure to make sure documents it requested, to confirm the information, were sent to the CRA and matched to the person’s account.
We learned that, prior to 2012, the CRA was unable to capture statistical data, including data related to the nature and source of errors. In February 2012, the CRA began to track certain codes that indicated a date of death had been listed in error. For the purpose of our report, the CRA conducted a manual sampling of accounts and concluded the rate of error for “death information” between 2007 and 2013 was less than 1%.
At the time, we also noted the frequency of the errors appeared to coincide with an increase in participation in, and growth in the number of, various benefit programs.Footnote 3 We discovered that in 2007, 0.23% of errors made by the CRA were on accounts where the person was a benefit recipient. In 2013, that number had increased to 62.60%.
During the course of our examination, the CRA implemented changes to minimize the risk of further incidents occurring. Some of these changes included: updating its computer system; tracking date of death codes listed in error on its internal systems; updating internal procedures so date of death and deceased codes were sent to the CRA’s headquarters for removal; and updating the T1 income tax and benefit return starting in the 2013 tax year, as it was believed the placement and wording of the area used to indicate a date of death was confusing and being used incorrectly. The CRA has since advised our Office further changes will be made to the 2019 tax return for increased clarity.
Our report stressed that the CRA has a responsibility to ensure people have all the necessary information and tools to prevent human error when filling out forms.
To address the findings, the Taxpayers’ Ombudsman recommended that the CRA:
- Ensure that the forms upon which the date of a death is to be entered are clear, easy to understand, and less likely to cause errors.
- Consider following up with the person or persons, who have reported a taxpayer’s date of death by telephone and are responsible for submitting documentation to substantiate the date of death, to ensure it is provided and matched to the deceased taxpayer’s account.
- Continue to gather statistics on the number of taxpayers coded deceased in error and analyze trends in causation, as well as increases or decreases in the number of errors made.
- Gather and analyze statistics on the length of time it takes to correct the coding errors and assess performance with respect to its internal program target of 48 hours.
- Continually review and update procedures to reduce the potential for human error by CRA employees and ensure that those procedures are communicated to relevant staff and management.
- Continue to work with partners in other government departments and provincial ministries to identify sources of errors and ways to minimize the transmission of incorrect information, and to ensure effective communication of corrective actions in those cases where errors do occur.
- Validate the findings from the analysis of trends in errors and implement further changes to procedures or provide further training where required, both for errors committed internally by the CRA and received from external sources.
- Put in place and monitor control measures to ensure that when errors do occur, they are detected and corrected as rapidly as possible.
The Minister accepted all recommendations and the CRA provided us with an action plan in response to the recommendations. The plan outlined the measures the CRA intended to implement to address the recommendations and whether some of them had already been addressed.
Since the report Alive and Well was published in 2014, we have noted several media accounts of people reporting they were declared deceased in error. For example, a January 2016 article highlighted the story of a woman who said she was declared deceased after calling the CRA about setting up direct deposit. The impact was that her SIN was listed as not valid and her student loan application was put on hold. Three weeks after advising the CRA about the error, she was still not confident the issued had been addressed.Footnote 4
In April 2018 it was reported that another person had been declared deceased by the CRA after calling the CRA for advice about what to do after his spouse had passed away. After speaking with the CRA, he filed his spouse’s final income tax and benefit return as directed. However, he was the one who ended up being declared deceased.Footnote 5
In March 20, 2019, a 44-year old person in Québec was declared deceased by the CRA. They did not realize they were declared deceased until they received a letter from the CRA addressed to the “Estate of the late…” Through an internet search they identified the potential cause of the error when they noticed someone with the same name had passed away. They were left with questions about whether their passport was still valid and whether they would be able to pass through United States customs when crossing the border and what the tax impact would be on their company.Footnote
Since our report, the CRA has updated its manuals and procedures to ensure people are better served in situations where a death has been listed in error. These updates direct employees to:
- address issues immediately;
- advise CRA headquarters whenever a date of death has been listed in error;
- check the affected account to see if benefit payments have been stopped in error, so payments can be re-instated if necessary;
- document contact details of the caller when a date of death is received by telephone (for example, by call centre agents); and
- document that they have requested a Will and death certificate when a caller has advised a person is deceased.
The CRA advised us of other changes:
- Call centre agents are given access to one system only with which to update a date of death (as opposed to two systems previously). The CRA anticipates this should reduce errors made by switching back and forth between systems.
- Regular reminders have been sent to CRA employees who update the date of death and monitoring occurs on a regular basis.
- Additional training and peer support is in place to ensure the correct individual is coded as deceased.
- Updates to system rules (business logic) require a specific date of death before a person can be updated as deceased. Previously, someone could be coded as deceased prior to the specific date of death being provided to the CRA.
- Updates to system rules (business logic) require a diary note be entered if a date of death is entered. If a diary note is not entered, the date of death cannot be saved to the system.
Bill C-247, the Main Point of Contact with the Government of Canada in case of Death Act was given Royal assent on June 18, 2015.Footnote 7 This law makes ESDC “the main point of contact with the Government of Canada in respect of matters relating to the death of a Canadian citizen or resident that pertain to the use of that person’s social insurance number, so that no person is required to communicate directly with all persons to whom information about that deceased citizen or resident may be made available under subsection 28.2(5) or subsection 35(1) of the Department of Employment and Social Development Act.”Footnote 8 Details communicated to ESDC are then conveyed to other areas (including the CRA).
The CRA stated in its update on the actions taken in response to the Taxpayers’ Ombudsman’s recommendations that “[t]his legislation potentially eliminates the possibility of the CRA coding taxpayers as deceased in error.” However, under Canada’s self-assessing tax system, legal representatives filing the final income tax and benefit return for the year of death still have a section on the return to fill, stating the deceased person’s date of death.
The CRA also advised it was collaborating with various stakeholders to ensure the number of errors is reduced and the process to correct errors is more efficient. The CRA advised us:
- It is working with ESDC to ensure the timely processing of forms used to communicate when a date of death is coded in error; and
- It is a co-chair of a steering committee (along with ESDC) that would help provide direction, guidance and oversight across federal departments to simplify and standardize processes and the collection of information related to the notification of death.
- As of February 2019, certified EFILE tax software contains pop-up messages to warn tax preparers of the consequences when a date of death is provided in error.
- A message was sent to all CRA registered electronic filers via an electronic message system reminding them of the importance of reporting the date of death information correctly, and the repercussions when erroneous dates of death have been entered.
The CRA informed our office there has been a 50% decrease in error rates since our report was published in 2014. Lastly, the CRA stated it continues to monitor and track errors on a monthly basis, and regular analysis is conducted to look for trends in errors.
The key issue in the initial Alive and Well examination was the fact the CRA had erroneously declared some individuals as deceased. The Taxpayers’ Ombudsman was asked by the Minister of National Revenue to investigate the cause of the errors and how the CRA could prevent these types of errors in the future. We discovered there were various reasons why a person might be declared deceased in error.
The Taxpayers’ Ombudsman finds the CRA is taking appropriate steps to address the issue of erroneously declaring people as deceased as well as recommendations in the Alive and Well report. The Ombudsman will continue to monitor for complaints relating to this issue.
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