Canada Revenue Agency gives itself an A for service; auditors disagree

The Canada Revenue Agency has been giving itself an A in its report card on service to taxpayers — but a new audit suggests the grading scheme was rigged.

Last fall, the agency said it was doing a stellar job in responding to written requests from taxpayers for GST and HST rulings and interpretations.

Since 2006, officials have promised to get responses out within 45 days at least 80 per cent of the time. And in a recent annual performance report to Parliament, the agency said it met the 45-day deadline 93 per cent of the time.

But that claim has withered under the scrutiny of internal auditors, who did their own independent grading — and gave the agency an anemic 74 per cent, well below the minimum standard.

The auditors found that the agency had been excluding from the calculation all written requests that arrive at Ottawa headquarters, counting only those handled by nine regional offices, from Halifax to Vancouver.

Including the weaker performance at headquarters drags down performance by 15 percentage points.

The agency also started the clock ticking on responses to written requests only when the questions were entered into its computer system, not when the request was actually received by an office.

Using proper date-stamping, the auditors found performance was pulled down by another four percentage points.

“Clients who look at the standard for GST-HST written enquiries would likely assume that it applies to all requests received, regardless of where they are processed, and that it is measured from the time that it is received by the agency,” says the newly released audit, dated January this year.

The agency issued almost 3,700 GST and HST rulings and interpretations in the last fiscal year, and just over a fifth came from headquarters.

The audit report called on the agency to use “date received” rather than “date inputted” in calculating its service levels, which officials have been doing since January this year.

But management has rejected a second recommendation, that headquarters’ performance always be included in the calculation.

“The rulings and interpretations issued by headquarters … are of a highly technical nature and are often precedent and-or policy-setting,” agency spokesman Noel Carisse said in an email response to questions.

“Some of the issues deal with present legislative anomalies which require a significant amount of time to resolve.”

The agency last week published an amendment to its service standards to make clear that highly technical rulings and interpretations — that is, those typically issued by headquarters — will not be included when calculating performance.

In the meantime, officials will by December this year develop an internal timeliness measure for rulings from the Ottawa head office.

Carisse noted the agency saw a surge in enquiries as Ontario and British Columbia converted their provincial sales tax to the HST last year.

“We are now starting to see a decrease in the number of requests for HST-related enquiries as registrants become more familiar with their responsibilities and entitlements under the new regime,” he said.

The agency also answers almost 100,000 telephone enquiries each year about GST and HST — but does not properly review the quality or accuracy of those responses, says the audit.

Management officials say a survey to review the accuracy of telephone responses was killed in 2004 to save money. Carisse says the agency is looking at ways to revive quality control for regional offices over the next year.

The audit did not examine dozens of other service standards at the Canada Revenue Agency, raising questions about whether the publicly posted grades for those are accurate.