DRS: With Tax Day at hand, agency shifts approach

With Tax Day at hand, agency shifts approach
Article published in Hartford Business Journal April 8, 2013


{Commissioner Sullivan} Not long ago, Governor Malloy asked some of his department heads to report on innovative efforts to cut costs and improve service. Behind him on a screen was a message that distinguishes this administration: "If we always do what we've always done, we will always get what we always got."

All across state government, work is underway to improve agency performance, control costs, and engage employees. Whether you believe the answer is more or less government, this is an opportunity to focus on better government.

Few state functions may seem as impervious to change as tax collection. Yet the Department of Revenue Services (DRS) is on the cutting edge of improving how state government performs. We are leaner (one-third fewer employees, fewer managers and fewer bureaus) and flatter than ever before. We have taken to heart Governor Malloy's challenge to engage more with the public and our employees, be strategic, and manage for accountability.

Like any business, our agency has accounts receivable. At DRS, these accounts are tax deficiencies that remain owed and unpaid. When Governor Malloy appointed me as commissioner, the agency's net taxes receivables totaled over $400 million. In the past, these accounts would eventually be deemed uncollectible. Then, after awhile, collection would be suspended and the amounts due simply written off.

Instead, our new strategic vision challenged us to work smarter. We took a calculated risk in a very businesslike way. The old tax enforcement mindset wasn't working. By chasing every last dollar of every last account, hyper-vigilance too often ended up empty-handed. So, instead, we targeted our collections. We put together a cross-agency task force and identified opportunities for settlement. In the end, we cut this bad debt nearly in half increasing state revenue without increasing taxes.

However, a one-time solution to a perennial problem is never a good answer. Our further added innovation is automated scoring system that analyzes delinquent taxpayers and targets collections. We can identify taxpayers in trouble earlier and intervene before the problem gets too big. We can more effectively clamp down on repeated scofflaws. Our new strategy focuses us on those deficiencies with the greatest probability of enforcement or when settlement is best. This is a real break with business as usual.

But it goes much further than improving on traditional tax collection. We need to be a more activist agency. When the owner of a major hedge fund decided to move personally, we got involved and made sure that at least the business and its employees stayed in Connecticut. When the nation's biggest on-line retailer refused to collect and remit sales taxes like any other business in the state, we wouldn't just take no for an answer. Now, Amazon has agreed to collect sales taxes beginning before the big sales season next November and the company will invest at least $50 million for a new fulfillment center here in Connecticut with at least 300 new jobs.

Lean initiatives are making other big differences in how we do our work, connect with taxpayers and add value to state government. We eliminated one regional office but added walk-in taxpayer services at all the rest a net savings with increased service. We added on-line virtual audits, expanded electronic filing and payment, ended annual income tax mass mailings, created on-line self-service payment plans and upgraded call center services. With debit cards replacing paper checks for most income tax refunds, we improved security, significantly increased direct deposits, and cut costs.

We are listening more to taxpayers who we need to see as our "customers." We are also listening to our employees. At DRS, an active "Bright Ideas" program implements employee initiatives that improve efficiency and effectiveness like the addition of a free website translator service for taxpayers whose primary language is other than English.

We are also beginning to make needed front-end improvements in taxpayer registration while working with other state agencies on a one-stop web portal for businesses. We have added powerful fraud prevention tools. We will soon add more of an "outside in" point of view with an advisory group and editorial review panel to improve taxpayer communications. We are also revising tax penalties to give more of the benefit of the doubt to taxpayers who make good faith efforts and have good records of compliance.

Driving all of this is an energizing shift from an agency divided into too many little bureaucratic boxes to a standard of cross-agency teamwork and project management as our new normal.

Above all, our mission pushes us beyond just collecting taxes. We are adding value by working with other agencies all across state government. We also welcome the opportunity to make tax policy not just taxes an important part of Governor Malloy's efforts to reshape the fiscal and economic future of the state.

All this at DRS? Yes, but it's not your father's tax department anymore.

Kevin Sullivan is commissioner of the Department of Revenue Services.

Content Last Modified on 5/3/2013 12:01:53 PM