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Inter-American Center of Tax Administrations - CIAT Strategies Aimed at Improving the Quality of the Service Submitted by Douglas O’Donnell 46th CIAT GENERAL ASSEMBLY Assistant Deputy Commissioner (International) Large Business and International Internal Revenue Service United States of America

Summary The Internal Revenue Service’s (IRS)1985 filing season crisis quickly created an interest in monitoring processes for quality and in looking at the IRS’ work from the taxpayers’, the White House’s and the Congress’ points of view. The IRS immediately became involved with the Total Quality movement, created plans and began to implement quality initiatives. Before the IRS had a chance to fully implement the changes, however, the Congress’ National Commission on Restructuring the IRS began looking at the IRS’ customer service and so did the White House’s National Performance Review. TECHNICAL OF THE 46TH GENERAL ASSEMBLY Early on in this story, the RESOLUTION IRS learned how important it is to be proactive and rigorous when assessing your organization’s performance because, if you wait for others to do this, they will be much harsher. The crisis of 1985 paved the way for the White House’s “IMPROVING THE PERFORMANCE THECongress’ TAX ADMINISTRATION: EVASIONon National Performance Review (NPR) OF and National Commission CONTROL AND TAXPAYER ASSISTANCE” Restructuring the IRS. Both focused on the quality of customer service and other practices at the IRS during the 1990’s. The reviews were rigorous even though the IRS was simultaneously working to implement quality initiatives on its own. Politics played a role in the National Commission’s study and culminated in the Senate Finance Committee hearings of late 1997 followed by the passage of the IRS Restructuring and Reform Act of 1998 (RRA 98). In the background, and at times working at cross purposes with quality customer service, was the passage of the Government Performance and Results Act of 1993 (GPRA).

GPRA required federal agencies to establish and report on measures of performance in support of their mission. At that time, the focus of the IRS mission was on the efficient collection of taxes. Consequently, the GPRA measures focused primarily on dollars assessed and collected. Modern organizational design encourages a structure to support the organization’s goals and to meet the needs of its customers. The organizational structure was set up for the convenience of the organization itself with a focus on geography and internal processes. This situation made it more difficult to implement the IRS’ early attempts at quality initiatives. The RRA 98 legislation required two key structural changes: rewriting the mission statement to reflect a focus on the customer and reorganizing the entire agency around customer (taxpayer) groups with Santiago, Chile similar needs. April 23 – 24, 2012


RESOLUTION OF THE 46TH CIAT GENERAL ASSEMBLY “IMPROVING THE PERFORMANCE OF THE TAX ADMINISTRATION: EVASION CONTROL AND TAXPAYER ASSISTANCE� The Tax Administrations of the CIAT member countries and associated members attending the 46th CIAT General Assembly in Santiago, Chile Chile, April 23rd, 2012

WHEREAS, That under the present economic and financial conditions of countries, it is more important for our organizations to increase the efficiency and effectiveness levels in relation to two of its essential functions: control and the taxpayer assistance. That the information technologies are an important support for the TAs in all the areas of their work, especially in programs oriented to intensify and refine the control actions and to increase and improve taxpayer services. It is important not only to have more services and assistance to taxpayers, but to measure their quality in order to improve them, adjusting to the needs of the society, and the tax administration trying to achieve a higher level of excellence, efficiency and effectiveness. That it is necessary and important to know in a technical and accurate as possible through the application of reliable methodologies for measuring the levels of tax evasion that negatively impact the tax collection in a country, especially regarding the two taxes which represent the greatest importance for its tax collecting capacity and tax base, such as personal and corporate income tax and the VAT. THE GENERAL ASSEMBLY RESOLVES, To recommend the Tax Administrations of its member countries to work on improving the taxpayer assistance services and in the design, implementation and/or evaluation of effective control strategies that will lead not only to determine the levels of evasion in relation mainly to the income tax and the VAT, but to fight in a determining and specialized form the activities and individuals that undermine collection of States.

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FIRST: Defining and implementing TICs that improve the internal processes and facilitate the taxpayer’s compliance 1. Developing and/or using the tools and advantages offered by Internet to improve the Tax Administration processes and the services offered to the taxpayers, facilitating compliance of their obligations and respecting their rights. 2. Developing and/or using information technology for the systematization, processing and use of information obtain from the taxpayer and third parties so as to allow in a reliable and specific form to detect possible sources of non-compliance. 3. Implementing software programs for effective information exchange at national and international level that will facilitate the effective processing of information as a source of investigation and analysis to the control processes. SECOND: Implementing mechanisms for measuring the quality of services provided to the taxpayer and designing and executing strategies oriented to improve them. 1. Identifying and applying methodologies for measuring the quality services provided to the taxpayer. 2. Developing effective actions to taxpayers located in remote geographic locations or of difficult access. 3. Creating and executing strategic plans specially oriented to improve the quality of services having as reference the results of the quality evaluation. THIRD: Improving the effectiveness and the results of the control programs. 1. Determining through the application of reliable methodologies for measuring the levels of tax evasion especially in relation to the Income Tax and the Value Added Tax. 2. Performing technical studies and analyses that will allow establishing the levels of sectorial evasion in order to design and to apply specific programs for high risk groups of taxpayers. 3. Designing and executing control plans based on true, current and reliable information that redounds not only in greater collections but in a greater tax fairness and administrative efficiency. --------------------------------------------

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