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OIO - OTR Out of Statute Refunds Executive Summary

Office of the Chief Financial Officer

Executive Summary for In Progress Reports

As of November 30, 2012


Original Report

Report No. 11-02-25-OTR: Proactive Integrity Survey on the out of Statute Refunds at the Office of Tax and Revenue (OTR), dated August 6, 2012.


Current Status

In Progress.   OTR’s Tax Systems Group (TSG) has prioritized the IT-based recommendations, and business process owners have determined timely completion dates for its non-IT recommendations.  No issues have been identified.


Chief Risk Officer’s Risk Assessment

The Inherent Risk associated with Out of Statute refunds is High as this has been proven to be a root cause for fraud.  In OTR’s efforts to continually strengthen internal controls, especially controls associated with fraud risk, Corrective Action Plans were developed for all recommendations, though one was an alternative of the original recommendation.   OIO considered the alternative, as well as the others, to be responsive.


Overview of Recommendations

OIO offered four recommendations.  One has been fully implemented. 


  • OTR has instituted a manual review of out of statute refunds using a risk-based approach.  Though the system controls to prevent an out of statute refund are available, taxpayers often have valid reasons for adjustments to prior-year returns; therefore, systematically preventing these refunds is not a prudent business decision.  The risk-based approach weighs more heavily risks associated with older returns.


Two recommendations are still In Progress.  The first of these is in the Technology Services Group (TSG) prioritization queue.  Across the OCFO, and especially OTR, there are a variety of technology needs.  TSG has a bi-weekly meeting to prioritize OTR’s needs.  The meeting is attended by the OTR Board of Directors, as well as the Office of the Chief Risk Officer (OCRO) and the Office of the Chief Information Officer (OCIO). 

  • To assure that out of statute refund credits in ITS taxpayer accounts are identified and written off to avoid human errors or unauthorized refunds, the automated credit write-off program is being redeveloped.  TSG has scheduled this to be completed by 06/01/13.
  • OTR is developing a reporting mechanism allowing for review of credit carry-forwards similar to the refund review.


One recommendation will not be implemented.  Limiting the period during which a modification may be made was considered and found to be unreasonable; taxpayers may require modification during various



periods of time.  OTR relies on its other controls to mitigate risks associated with older returns, including the manual risk-based review. OIO found this alternative to be responsive. 


To view the full report, Click : OTR out of Statute Refunds Full Report