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United States: The high level indicators used by the IRS to measure its performance are set out in its strategic plan. These and specific targets set in for a number of these are set out hereunder: 2

Sources: IRS Strategic Plan (2009-13) and CIS survey response.

Reporting revenue body performance

Research conducted for the preparation of this series entailed examination of many revenue bodies’ annual performance reports, with particular attention given to identifying innovations, emerging practices concerning the reporting of “outcomes” as opposed to “outputs”, and related issues of accountability and transparency. This section provides examples observed of exemplary and/or innovative reporting by revenue bodies taking account of issues raised earlier in this chapter.

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Reporting outcomes against strategic goals and objectives

As noted earlier in this chapter, many revenue bodies have taken steps to formulate and publish strategic planning documents that set out, among other things, their high level goals and objectives for the period covered by the plan (normally three to five years), and the measures indicators they intend to use to gauge their progress. However, in practice there is not always a complete and clear alignment of these stated aspirations and the information provided in their annual performance reports. There are however, a number of good examples that have been identified and these are discussed briefly hereunder, with illustrative samples of the reporting set out in Boxes 3.3 to 3.10.

United States Internal Revenue Service: The IRS’s Strategic Plan for 2009 to 2013 identifies a small number of strategic goals for the period covered by the plan and sets out the long term measures to be used to assess its progress. In addition, a more comprehensive set of operational measures and targets are set in respect of each goal that can be used to assess and monitor in-year progress. Since the plan’s formulation, the IRS’s Oversight Board has been tracking progress on its long term measures and related goals and sharing that information with stakeholders via a series of graphs on its website. In addition, the information is also contained in its Annual Report to Congress, along with related commentary on the progress being made. (See example in Box 3.3 from the IRS oversight Board’s 2012 Annual Report.)

United Kingdom HMRC: Over recent years, the UK HMRC has introduced a practice of providing comprehensive reporting of its compliance-related performance outcomes. This initiative takes two forms: 1) a comprehensive set of tables (by tax type and/or taxpayer segment) presented in its annual performance report setting out a time series of estimated tax gaps for the respective categories of tax/taxpayer; and 2) a separate more detailed report detailing its overall approach to measuring tax compliance along with a composite picture of the estimated aggregate tax gap and for specific taxes and segments of taxpayers (over multiple years). The example reporting in Box 3.4 is from HMRCs Measuring Tax Gaps 2012.

The Canada Revenue Agency (CRA) provides a comprehensive performance report card on its key measures of taxpayers’ compliance and services that sets a high standard for other national revenue bodies to achieve. Key tax-related elements of this reporting are reproduced hereunder. (NB: There is also similar reporting in relation to administration of benefits programs). The examples at Boxes 3.5 and 3.7 are from the CRA’s 2010-11 Annual Report.

Australia: The ATO has comprehensive set of service standards that state its commitment to the community in terms of the time they can expect when dealing with it under normal circumstances. The ATO and the taxpayer may negotiate an extended timeframe. Performance standards are published on the website and performance is reported annually in its annual report. The information displayed at Box 3.6 is from the ATO’s 2011 Annual Report.

Ireland’s Revenue annual report notes that it aims to provide services to compliant taxpayers that are efficient, speedy and cost effective and that it has set out Customer Service Standards by which it will be measured. These standards were set in 2009. In 2011, Revenue maintained a high level of service delivery, for most key service areas, in the face of increasing customer service expectations and a reduction in Revenue resources. The information displayed in Box 3.8 is taken from Ireland Revenue’s 2011 Annual Report.

Spain: The Spanish Tax Agency’s annual report notes that it regards public opinion

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research findings as important to its decision-making. Accordingly, public opinion and perceptions of services are gauged through regular studies carried out by public institutions not connected to the Tax Agency (e.g. the Sociological Research Centre and the Institute for Fiscal Studies). Results are published in the Agency’s annual report. The Tax Agency also uses its website to survey the opinions of the people who have used its electronic Personal Income Tax filing service. The example in Box 3.9 is taken from Spain’s 2011 and prior year Annual Reports.

The Netherlands Tax and Customs Administration (NTCA) is another revenue body that places value on gathering feedback and opinions-“segment” by “segment” of clients. As reported in its 2011 Management Report, the NTCA conducts an annual Tax Monitor survey to review the perceptions individuals and enterprises have of the tax authorities and their assessment of the actions of the Tax and Customs Authorities. The Tax Monitor encompasses a survey of 4 300 persons divided between six target groups, namely private individuals, persons entitled to benefits, entrepreneurs, Customs clients, tax service providers and benefit intermediaries. In addition, in 2011 a client monitor was conducted amongst both Medium-Sized Businesses and Very Large Businesses. 84% of the respondents from the Very Large Businesses who came into contact with horizontal monitoring had a favourable to very favourable perception of horizontal monitoring developments. 80% of the respondents from the MediumSized Businesses who came into contact with horizontal monitoring had a favourable to very favourable perception of these developments. The Medium-Sized Businesses monitor was conducted for the second time in 2011. The scores for compliance, client satisfaction and the speed of processes were than higher than those in 2009.

The NTCA’s general performance was awarded an average score of 6.5 in the 2011 Tax Monitor, the same score as in the preceding year. The respondents were satisfied with the service provided by the website and the Tax districts’ front desks, as well as with the clear answers provided to letters and notices of objection. The respondents were less satisfied with the speed at which notices of objection are processed. Private individuals are satisfied with the use of pre-completed returns in the return process. Private individuals are less satisfied with the speed at which amendments to benefits are processed and with the treatment of income tax returns. Entrepreneurs are satisfied with the returns process and the performance of the Customs processes.

New Zealand Inland Revenue (IR)’s annual report notes that measuring customer satisfaction helps it understand how effective customers think it is in delivering timely and appropriate services. IR adopts a “customer segment” and “channel by channel” approach for gathering the feedback it relies on and publishes its results. The information displayed in Box 3.10 is taken from its 2010-11 annual report.

Summary observations

As will be evident from the preceding commentary, many revenue bodies have taken steps to increase the focus of their planning and performance evaluation towards the “outcomes” to be achieved from their administration, in particular concerning taxpayers’ compliance.

For some revenue bodies, this has included the use of: 1) direct and indirect measures of taxpayers’ compliance across the major risk types; 2) measures that reflect the quality of services delivered to taxpayers and tax professionals; 3) reductions in taxpayers’ compliance burden; and 4) measures reflecting the level of taxpayer satisfaction with, and confidence in, the revenue body. Where applicable, some revenue bodies have devised “outcomesfocused” measures for their non-tax functions (e.g. the payment of benefits and customs

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administration). In many cases, formal targets have also been set for improved “outcomes” (and outputs) as a means of setting the direction for improved performance and for use by the revenue body to gauge overall progress towards its stated goals and objectives.

Box 3.3. United States: Monitoring progress towards strategic goals

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Box 3.3. United States: Monitoring progress towards strategic goals (continued)

Source: IRS Oversight Board Annual Report to Congress 2011.

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Box 3.4. United Kingdom HMRC’s reporting of tax compliance (in aggregate and by selected taxpayer segments)

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Box 3.5. Canada: Reporting outcomes re taxpayers’ compliance

Filing and registration non-compliance

Table note 1: These estimates use the number of businesses who file timely returns as a proxy for registrants. The population of businesses includes some small businesses which are not required to register as part of the calculation. As a result, the estimate may understate the proportion of businesses who actually register to collect GST/HST.

Table note 2: Almost all of taxable corporations used for this calculation filed their returns within 5 years, either voluntarily or as a result of our non-filer work.

Reporting compliance

In 2010-11, we estimated that 17.6% of claims or deductions made by individuals on key tax credits and deductions not subject to third-party reporting were non-compliant, meaning they were disallowed following a review. The increase may be attributed, among other factors, to the change in deductions and credits that were reviewed in each program year.

Table note 1: It should be noted that this type of non-compliance is found in a relatively small segment of the population of individual taxpayers.

One of our pre-assessment review programs is the Confidence Validity Program. Through this program, various deductions and credits on returns are reviewed and corrected before a notice of assessment is issued. During 2010-2011, we identified an average of USD 472 of additional tax assessed per review, for a total of USD 162 million in taxes additionally assessed. This represents a decrease of 5% over the previous year. The variance is attributed to our review strategies which adjust the volume of each deduction and credit reviewed each year. While the Confidence Validity Program corrects returns before the Notice of Assessment is issued, our Processing Review Program selects files for review after the assessment notice (and any refunds) have been issued. The program promotes compliance and helps to maintain confidence in the fairness of our programs through increased education, effective risk-scoring systems, and a balanced approach to our file selection process. In 2010-11, this program identified and assessed USD 232 million in additional taxes, an increase of 15% over the previous year.

Our T1 Matching Program compares information on an individual’s tax return with information provided by third-party sources, such as employers or financial institutions. In 2010-11, this program identified and addressed additional tax assessments of almost USD 600 million.

Remittance non-compliance

Source: CRA Annual report 2010-11.

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Box 3.6. Australia: Reporting performance outcomes re service delivery

Source: ATO Commissioner’s Annual Report 2011.

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Box 3.7. Canada: Reporting performance outcomes re taxpayer services

Source: 2010-11 CRA Annual Report.

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Box 3.8. Ireland: Reporting performance outcomes re service delivery

Customer service standards and results

*Results for 2010 only covered the period April to December.

**This calculation includes all Registered VAT Repayments, a portion of which will be ROS claims. We are unable to split them by source at this time but their inclusion is in line with prior years.

Source: Revenue Annual Report 2011, page 26.

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Box 3.9. Spain: Reporting outcomes re perceptions of services and competence

Source: Spanish Tax Agency’s annual reports (up to memoria 2011).

Box 3.10. New Zealand: Reporting re perceptions of services and competence

Customer satisfaction – summary of results

Source: New Zealand Inland Revenue Annual Report 2011.

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