Assessing the Need for Taxpayer Advocacy

Strengthening Contract Management in Idaho

Assessing the Need for Taxpayer Advocacy

Office of Performance Evaluations Idaho Legislature

Follow-up report 16-06F March 2016

Promoting confidence and accountability in state government

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Office of Performance Evaluations

Rakesh Mohan Director

Joint Legislative Oversight Committee 2015–2016

Created in 1994, the legislative Office of Performance Evaluations (OPE) operates under the authority of Idaho Code §§ 67-457 through 67-464. Its mission is to promote confidence and accountability in state government through professional and independent assessment of state programs and policies. The OPE work is guided by professional evaluation and auditing standards.

The eight-member, bipartisan Joint Legislative Oversight Committee (JLOC) selects evaluation topics; OPE staff conduct the evaluations. Reports are released in a public meeting of the committee. The findings, conclusions, and recommendations in OPE reports are not intended to reflect the views of the Oversight Committee or its individual members.

Cliff Bayer Cherie Buckner-Webb

Maxine Bell Gayle Batt Elaine Smith John Rusche

Senators

Representatives

Steve Vick

Senator Cliff Bayer (R) and Representative John Rusche (D)cochair the committee.

Michelle Stennett

Assessing the Need for Taxpayer Advocacy

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Overview of evaluation

We released the report Assessing the Need for Taxpayer Advocacy in December 2013 to address concerns that the collection processes of the Idaho State Tax Commission were too harsh and rigid. At that time, legislators questioned whether a taxpayer advocacy office would better balance the collection efforts of the commission with the livelihood of Idaho taxpayers.

Our initial evaluation plan included an analysis of commission data in relation to the hiring of additional compliance staff as part of a 2010 compliance initiative. We found that although the commission maintained detailed information of individual taxpayer accounts, it did not have readily accessible, historical data that would have allowed for an analysis on a statewide level.

Although unable to conduct analyses that would have helped inform policymakers’ decision of whether Idaho needed taxpayer advocacy, we were able to provide organizational and procedural options if policymakers decided to pursue taxpayer advocacy.

We also provided three recommendations to the commission to improve data management and communications between the commission and taxpayers. This follow-up report assesses the implementation status of the recommendations and gives an update on availability of commission data.

Follow-up report

954 W. Jefferson St. Boise, ID 83702 Ph. 208.332.1470 legislature.idaho.gov/ope/

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We appreciate the assistance we received from the Idaho State Tax Commission. Hannah Crumrine and Lance McCleve conducted the study. Tony Grange conducted the quality control review. Margaret Campbell copy edited and desktop published the report.

We assessed the status of recommendations within three categories:

Complete: Measurable steps have been taken to meet the intent, or an approach that diverged from the recommendation has been taken to meet the intent.

In process: Measurable steps have been taken that begins to meet the intent.

No change: No measureable steps have been taken to meet the intent.

Assessment of status

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Improve communication about taxpayer rights The commission adheres to Chapter 40 of Title 63 in Idaho Code, also known as the Taxpayers’ Bill of Rights. This law serves as the foundation in helping taxpayers understand not only their rights, but also the roles and responsibilities of the commission and the taxpayer throughout the collection process. However, rather than explicitly identify taxpayer rights, statute outlines expectations for the professional conduct of commission staff. Our 2013 report found that Idaho was different from many states in its bill of right framework.

In addition to Idaho Code, we reviewed commission publications outlining taxpayer rights. We found that the publications were unclear, incomplete, and inconsistent in communicating taxpayer rights and responsibilities. Neither the bill of rights nor relevant publications were readily accessible on the commission’s website.

Recommendation: The Idaho State Tax Commission should revise its publications to differentiate between rights, responsibilities, and processes. As part of those efforts, the commission should develop a standalone Taxpayer Bill of Rights publication that presents the rights in a consistent format directed to the taxpayer.

Status: Complete

The commission has not revised its older publications to address this issue. However, in February 2015 the commission issued a news release informing taxpayers about its recently published Idaho Taxpayer Rights brochure. The brochure clearly describes taxpayer rights and identifies rights found in different sections of Idaho law and commission rules and policies.

Although the commission did not revise its publications, the new taxpayer rights brochure meets the intent of the recommendation by comprehensively explaining taxpayer rights as well as commission rules and policies. The brochure also lists additional resource documents.

Idaho Code § 63-40 helps protect taxpayer rights by ensuring fair and courteous treatment throughout the tax collection process.

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Recommendation: The Idaho State Tax Commission should post the Taxpayer Bill of Rights and relevant publications directly on its website. The commission should also develop a webpage dedicated to taxpayer rights and responsibilities with links to all relevant documents.

Status: Complete

After receiving an advanced draft of our 2013 report, the commission created a taxpayer rights webpage before we released the report. The webpage provides direct links to the Taxpayers’ Bill of Rights found in Idaho Code § 63-40, information about public records requests, Audits–Your Rights and Responsibilities, and the new Idaho Taxpayer Rights brochure.

Improve data management During our initial evaluation, we learned the commission had not tracked many data elements in a way that allowed for statewide reporting. In addition, the commission had not systematically tracked or analyzed taxpayer complaints. The commission had indicated that many of these data limitations would be resolved as the commission upgraded its data system, which was scheduled to be completed in 2015.

Assessing the Need for Taxpayer Advocacy

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We also found in our initial evaluation that tax professionals and commission staff had differed in their views about the need for taxpayer advocacy, the extent to which the commission balanced the needs of taxpayers against its collection responsibilities, and how well the commission fulfilled the role of a taxpayer advocate. Our recommendation was intended to provide the commission with an incremental, manageable way to work more effectively with the tax community regardless of whether policymakers determined Idaho could benefit from taxpayer advocacy.

Recommendation: The Idaho State Tax Commission should take steps to improve its current data management in advance of the GenTax upgrade and use that data to help guide agency decisions, including decisions on the new staff training program.

Status: Complete.

Following the release of our 2013 report, the commission hired its first principal research analyst to the commission’s executive leadership team. The analyst helps ensure data and research are considered in commission decision making.

The commission’s 2015–2019 strategic plan identified a new goal to “expand and enhance how the agency thinks about, maintains, and uses data to inform internal and external decision making.” The plan listed four objectives for achieving the goal, two of which helped address concerns identified in our 2013 report:

1. Create and provide performance dashboards with leading and lagging key performance indicators to improve data-informed decisions.

According to the commission, it has created many of the planned performance dashboards. The 2016–2020 strategic plan indicated that the commission will have all dashboards completed by June 2017, but the commission plans to develop division performance measures and a performance review schedule by June 2016. Performance measures will be included in individual division business plans to help determine operational efficiencies and successful outcomes.

2. Institute an agency research agenda to support data-informed decision making for commissioners, staff, and external stakeholders.

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The research business plan was recently updated in October 2015. The plan provides a mission and vision statement and lists the scope of work. Specific tasks and performance measures are organized by five goals that align with the commission’s 2016–2020 strategic plan. Available resources, task owners, expected completion dates, and current status are also accounted for in the plan.

Oversight Committee request for an analysis of additional commission data To assess the need for taxpayer advocacy in our 2013 evaluation, we had planned analyses that would look at the relationship among specific variables (number of complaints, total garnishments and liens, appeals, etc.) and the commission’s hiring of additional compliance staff. From those analyses, we hoped to learn more about whether a disproportionate increase in complaints or appeals had occurred after the hiring of new staff as part of the 2010 compliance initiative. However, several months into the evaluation, we identified significant data limitations that prevented us from conducting the analyses as planned.

At the release of the 2013 report, the Oversight Committee discussed whether data would be available to determine the need for taxpayer advocacy. At the same meeting, one of the commissioners confirmed that the commission would never be able to collect the data needed for previous years.

Still interested in assessing the need for taxpayer advocacy, the committee moved to include any conclusive data from the commission in a follow-up report with our analysis of that data. In December 2013, the commission estimated it would begin collecting data using its soon-to-be-updated data system in about one year.

The roll out of the updated data system took place between September 2014 and February 2015. The updated system offers the commission data enhancements and capabilities previously unavailable to staff and taxpayers. The system capabilities focus on tracking taxpayer debts and assets, fraud prevention, staff performance, and the allocation of staff resources.

Assessing the Need for Taxpayer Advocacy

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Historical, statewide data is unavailable to conclusively assess the need for taxpayer advocacy.

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In our follow-up review, we found that although the commission had improved its overall data management strategies, it continued to maintain limited information about taxpayer complaints and statewide historical data. Necessary data is still unavailable to conclusively assess the need for taxpayer advocacy.

Documenting taxpayer complaints

In the 2013 evaluation, we had found that the commission did not have a system to track taxpayer complaints. We also reported that the Taxpayer Services Unit had recently begun tracking calls it received to understand the types of issues relevant to taxpayers. At that time, the commission had identified 80 different categories of calls.

Taxpayer Services continues to track approximately 89 categories and provides weekly reports to various executive, management, and supervisory staff. According to the commission, it uses the call log information to increase commission awareness of taxpayer issues, inform taxpayer education and instructional materials, guide website functionality and usability, and enhance customer service.

The tracking system has the potential to help the commission define and categorize taxpayer complaints; however, the system has limitations. For example, only one category may be assigned per call preventing the commission from capturing multiple or related taxpayer complaints. Additionally, the call log does not track resolution time and outcomes. Aware of these limitations, the commission has been researching tools and processes used by other states to track taxpayer issues.

In September 2015 a new customer service workgroup held its first meeting. One of the commission’s customer service goals is to improve its system for tracking complaints and creating reports. The workgroup completed its initial information gathering in March 2016 and is working on a business case analysis to determine the best strategy for tracking complaints. According to the commission, it hopes to have better defined complaint data by fall 2016 with the ability to create reports shortly thereafter.

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Tracking garnishment, lien, and appeal data

In the 2013 evaluation, we found that the commission had not collected garnishment or lien data and had limited appeal data. This lack of data meant that there was no statewide historical information on the total number of appeals filed, the average timeframe for resolving appeals, the average garnishment rate, or the total dollar amount collected annually.

According to the commission, it began collecting garnishment data in fall 2013 and lien data in fall 2014. The commission also reported that it had improved the collection of appeal data in summer 2015 by migrating data from a separate data system to the new updated system, which made tracking dates, actions, and decisions easier over the lifecycle of an appeal. However, when working with the commission to collect appeal data for a separate evaluation that we conducted, the commission was unable to accurately report the number of administrative hearings to resolve appeals and instead provided an estimate. According to the commission, this accuracy problem was because data were entered inconsistently in the old data system.

2013

New garnishment

data

New lien data

2015

Improved appeal

data

2014

Exhibit 1

The commission is now tracking data that were unavailable when we conducted the 2013 evaluation.

Assessing the Need for Taxpayer Advocacy

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Strengthening Contract Management in Idaho

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Reports are available from the OPE website at www.legislature.idaho.gov/ope/ Office of Performance Evaluations ♦ PO Box 83720 ♦ Boise, ID 83720-0055 ♦ Phone: (208) 332-1470

Reports of the Office of Performance Evaluations, 2013–present Publication numbers ending with “F” are follow-up reports from previous evaluations.

Pub. # Report title Date released

13-01 Workforce Issues Affecting Public School Teachers January 2013

13-02 Strengthening Contract Management in Idaho January 2013

13-03 State Employee Compensation and Turnover January 2013

13-04 Policy Differences Between Charter and Traditional Schools March 2013

13-05F Coordination and Delivery of Senior Services in Idaho March 2013

13-06 Guide to Comparing Business Tax Policies June 2013

13-07F Lottery Operations and Charitable Gaming June 2013

13-08F Governance of EMS Agencies in Idaho June 2013

13-09F Equity in Higher Education Funding June 2013

13-10F Reducing Barriers to Postsecondary Education June 2013

13-11 Assessing the Need for Taxpayer Advocacy December 2013

13-12 The Department of Health and Welfare’s Management of Appropriated Funds December 2013

14-01 Confinement of Juvenile Offenders February 2014

14-02 Financial Costs of the Death Penalty March 2014

14-03 Challenges and Approaches to Meeting Water Quality Standards July 2014

14-04F Strengthening Contract Management in Idaho July 2014

15-01 Use of Salary Savings to Fund Employee Compensation January 2015

15-02 The State’s Use of Legal Services February 2015

15-03 The K-12 Longitudinal Data System (ISEE) February 2015

15-04 Idaho’s Instructional Management System (Schoolnet) Offers Lessons for Future IT Projects

March 2015

15-05 Application of the Holiday Leave Policy March 2015

15-06 Distribution of State General Fund Dollars to Public Health Districts December 2015

15-07F State Employee Compensation and Turnover December 2015

16-01 Design of the Idaho Behavioral Health Program January 2016

16-02 Risk of Bias in Administrative Hearings February 2016

16-03F Confinement of Juvenile Offenders February 2016

16-04F The State’s Use of Legal Services March 2016

16-05F Challenges and Approaches to Meeting Water Quality Standards March 2016

16-06F Assessing the Need for Taxpayer Advocacy March 2016

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