Office of the Chief Financial Officer
Executive Summary for In Progress Reports
Report No. OIO-12-1-02-OTR: Audit of the Office of Tax and Revenue Customer Service Administration’s Process for Adjusting Taxpayer Accounts, dated May 29, 2013.
Chief Risk Officer’s Risk Assessment
Because the OCFO places a premium on customer service in its role as a public service organization, it allows its Customer Service Administration (CSA) a broad, though limited, set of rights to adjust taxpayer accounts. This necessarily introduces a High level of risk for the customer service function. Therefore, the Inherent Risk associated with the customer service function is classified as High and particular emphasis is placed on OIO’s recommendations.
OIO provided eleven recommendations and four have been implemented in an effort to strengthen internal controls.
- The Customer Service Administration will continue to monitor any adjustments made to accounts that appear to exceed the statutory refund dates using the Adjustment Report. However, additional controls lie within the Refund Control Unit, which performs additional due diligence on all refunds for accounts that exceed statutory refund dates.
- As a part of the overall Internal Controls Program launched by the Office of the Chief Risk Officer, CSA managers periodically review samples of transactions for corrections and appropriate documentation. These reviews are performed on a transaction and processing basis. When the documentation does not meet the policies and standards, corrective action is taken, including any necessary retraining.
- A correspondence database to maintain taxpayer correspondence to support adjustments has been created and is located on a shared drive. The ability to scan documentation received from taxpayers to support adjustments will reside in both the Modernized Integrated Tax System and the Customer Relationship Management System (CRMS).
- The system requirements for the new Modernized Integrated Tax System (MITS) contain requirements for the capability of inputting documents from the taxpayers to support adjustments and to document all of the correspondence received from taxpayers. The system is required to be compatible with the Correspondence Trackng System (CTS) or a like system.
Six of the recommendations are considered In Progress.
- CSA is taking steps to collect improper payment of $1,631 from a taxpayer; however it will not collect penalty and interest as the overpayment was an OTR error.
- CSA is developing written policies and procedures for the processing of refunds that may have exceeded the statutory refund date. These policies and procedures will include the baseline documentation requirements for supporting these types of transactions and outlining approvals that are required for these types of transactions. The revised policies and procedures will be issued to the staff by August 1, 2013.
- CSA is developing written policies, procedures and standards for the baseline documentation for all CSA transactions. For large dollar automated refunds, these policies will supplement the requirements written in the Refund Directive. The revised policies and procedures will be issued to the staff by August 1, 2013.
- CSA, in its rewrite of policies and procedures, will require that all approvals for transactions be included in the ITS Notes application for the taxpayer's account.
- Policies and procedures will be drafted to establish clear guidelines for handling complex and high risk tax returns where a change in tax liability is requested. General Counsel, the Compliance Administration (CA) and Customer Service Administration directors will meet and prepare a draft for review by September 9, 2013. These policies and procedures will be finalized by October 31, 2013.
- CSA is in the process of developing comprehensive training requirements for its staff. The program outline will be completed by September 30, 2013, and will be implemented during FY14, with consideration for budget limitations. In the interim, training is being given to employees as the need becomes evident or there is a change to duties and responsibilities. CSA will consider establishing subject matter experts, although it should be a rare occasion when a CSA employee needs to consult one. We expect CSA employees to address most of the questions and issues presented to them by taxpayers. The most complex and high risk issues need to be referred to one of the experts in CA or the General Counsel's Office.
One recommendation will not be implemented.
- CSA will not develop a report that identifies all changed tax year accounts preceding the current tax year by four or more years. The requirement for this report is included in the requirements for the Modernized Integrated Tax System. It is not feasible to develop this report within time and cost constraints.
To view the full report, click OTR Audit of the Office of Tax and Revenue Customer Service Administration's Process for Adjusting Taxpayer Accounts.