Summary of Major Initiatives and Related Progress
Since 2006 TAX’s telework program has been and continues to be the Commonwealth’s model for successful telework program implementation. In 2006, Governor Tim Kaine issued an Executive Order establishing the Office of Telework Promotion and Broadband Assistance. The goal of this executive order for all state agencies was to have at least 20% of their workforces teleworking by 2010. Today, TAX exceeds this goal by nearly 40%. Currently, 59% of the workforce, or approximately 643 employees, participate in the program. About 46% of these employees telecommute one day per week while 54% work from home daily.
In order to study the long-term effects of full-time telecommuting, 14 Customer Services and Data Capture employees were sent home to work in November 2006. These studies showed that employees working from home are more productive and thus more valuable to the agency. After the agency studied a series of 10 groups deployed in 2007, TAX further ascertained that increased productivity occurred for one-day-per-week telecommuters as well. Today, more than 643 employees telecommute at least one day per week.
The Department of Taxation’s telecommuting population continued to evolve. After the first expansion in 2007, 25% of TAX’s workforce was home-based and 32% were one-day-per-week telecommuters. At this point, the agency decided to continue aggressively expanding the initiative, but in a new way – by home basing even more employees. Since January 2008, the agency has home-based over 100 additional members of its staff. As of the end of September 2009, 13 more will be working from home full-time.
TAX has seen increasing benefits from the program since inception. Not only has the productivity and morale of employees increased while at home, but the savings to the agency has become significant. For example, savings to the agency are not limited to the reduction in office space and parking needs. Cheaper phone line and Internet rates are estimated to save TAX about $10,000 annually.
Teleworking also enables TAX to be more prepared for an emergency. In the event of a pandemic flu outbreak, power outage, or other emergency, TAX will still be able to function, as the majority of personnel will be able work from home. TAX validated its projected emergency preparedness on October 31, 2008 when its 2220 West Broad Street site experienced a major power outage. All of the office computers in the Customer Service Contact Center went down as a result of this outage. However, as projected in emergency situations, the customer service levels were maintained due to the large population of home-based workers able to answer incoming calls.
Improved air quality, reduced energy usage and less traffic congestion are also benefits attributed to teleworking. On the August 3, 2009 Statewide Telework Day alone, TAX employees saved an estimated $14,512 and 19,289 pounds of pollutants. Annually, teleworking saves employees more than 45,000 gallons of fuel. Not only are these benefits for the employees, but also for Virginia’s citizens and the state’s transportation budget.
TAX’s telework program won the 2008 Digital Government Achievement Award. TAX’s plan was recognized for its achievements in ease of access and efficiency of internal delivery of services. Later that year, TAX also won the 2008 Governor’s Technology Award for the best public sector telework initiative.
As a key component of our workforce development strategy, TAX endeavored to change our approach to how we utilize entry level operational staff, specifically those who support the agency’s error resolution, customer service, collections, and office/desk audit functions. Instead of recruiting workers to learn a specific tax type or operational area, we wanted to develop a more flexible worker who would possess a broader and deeper knowledge of tax operations and tax administration.
These knowledgeable and competent employees would provide better one-stop service to customers and they could be easily reassigned as needed to core areas of the agency requiring minimal additional training. To achieve this vision, a TAX Academy program was established which, after a year, has already proven its value to the agency.
TAX Academy is a comprehensive program that includes both instructor-led classroom sessions and independent self-study courses, utilizes technology to support learning and provides hands-on, real world practice of job tasks for four core roles in the agency: Error Resolver, Customer Service Representative, Collection Representative and Tax Examiner. Upon completion of this program, the employee, having come to the agency with no prior tax knowledge, should be able to proficiently and competently perform the core duties of all four of these positions.
The group has already proven its value to the agency as a flexible workforce. The on-the-job rotation into the Collections area was scheduled for a two-to-four week period but, due to the revenue needs of the Commonwealth, was extended to three months until additional collections staff could be hired and trained.
The TAX Academy group easily transitioned into the collections role and, because of their experience in learning other core areas of TAX, was also able to resolve other account issues that the typical collection representative did not have the knowledge to address. This reduced additional future contacts by the taxpayer. During their Collections assignment, they handled over 20,000 calls. Because of the call volume, they were even asked to handle business collections calls during their last month of assignment and they were able to learn the new requirements and respond quickly to meet this need.
Since this is only the first group of TAX Academy employees, the agency will be analyzing the process and results of the first class when it has ended and using those lessons learned in designing future classes.
One of the Tax Commissioner’s three most important initiatives, TAXi, went live in September of 2007.
TAXi, TAX’s new agency intranet, is an important tool that has completely changed and revitalized the way TAX communicates, as well as significantly reduced the amount of paper used by employees, making the agency both more efficient and more environmentally-conscientious.
For example, the agency’s old newsletter, Vision, which helped to spread the news about improvements and innovations throughout the agency and help employees get to know about one another’s work, came out monthly when it was printed on paper.
Now, TNN (TAXi News Network), a site on TAXi, is updated at least weekly, enabling the agency to hear about important happenings sooner, and making the agency’s environmental impact much smaller, as a newsletter no longer has to be printed out and distributed to every TAX employee.
Additionally, internal forms and reports can now be shared digitally through the intranet, and can now even be filled out and submitted online rather than being printed and returned.
Discussion boards on TAXi facilitate discussion without the pitfalls employees generally face with long e-mail chains, such as forgetting to archive important information, or leaving someone off an e-mail list who needed specific information. Discussion boards are searchable, so information that has been shared is easier to find.
Each area of TAX has its own page, and when an employee needs to find information or documentation from another area, all she has to do is open TAXi and find that area’s page.
Finally, a “People Search” function enables employees to quickly find the phone number or office location of someone else in the agency with whom they need to consult. They can also review that employee’s telework schedule, and the phone number at which that employee can be immediately reached if teleworking.
TAXi has made agency communication so much more efficient that it is now an integral part of the work lives of TAX’s employees.
Future Visioning Initiative
As the state agency charged with the stewardship of the funds of the Commonwealth, TAX’s ultimate goals are the effective collection of revenue and increasing voluntary TAX compliance among both individuals and businesses. But TAX has many other goals as well. In 2007, the agency focused on how it might change course to adapt more quickly and effectively to the growing needs and demands of its customers, as well as in implementing new tax-related legislation enacted each year by the General Assembly. TAX’s “Future Visioning Initiative” was the result. Visioning was designed to be an organic process involving a group of people from all over the agency who work together to identify needs and real-life solutions.
The four major concepts the Visioning teams have been working are: 1) increasing e-interactions between the agency and its customer bases, 2) making the agency more multi-lingual in its interfaces with the public, 3) initiating school-outreach opportunities to educate students about TAX, and 4) employee satisfaction. In the summer of 2009, a small “Vision in Motion” team was formed to help with keeping the ideas flowing and the implementation of concrete ideas on track.
Here are some of the projects that have been or are being implemented:
o A new team formed to produce videos to promote electronic filing, Virginia’s sales tax holidays, and other topics. Phil Mousepower, a hand-puppet mouse, became the spokesman, and the videos were posted on TAX’s YouTube account. The agency also created Facebook and Twitter accounts to broaden its communication opportunities.
o The agency Implemented a new Web Upload system that lets taxpayers and tax professionals efficiently upload multiple sales tax and employee withholding tax returns in bulk.
o TAX implemented a new Live Chat service that lets individual and business taxpayers chat online in real time with TAX customer service reps.
o Any taxpayer can subscribe to an E-Subscription service whereby they will receive regular e-mail communications – such as reminders, updates or changes – about the tax types that interest them.
• Multi-lingual Communications
o TAX produced and distributed a Spanish version of an existing brochure informing small businesses about all available electronic services, and implemented a Google translation tool that makes its Web site multi-lingual. Site information can now be instantly translated into seven languages: Spanish, Korean, French, Korean, German, Italian, and Japanese.
• School Outreach
o TAX participated in MegaGenesis, a large education fair in Newport News.
o TAX Connections, a new page available through the agency’s Web site, was posted to help educate students about the various taxes the agency administers.
• Employee Satisfaction
The team initiated a new Intranet site all about the people of TAX. The People Matter – Positively TAX site seeks to accentuate the positive aspects of working for the agency and features information on benefits, employee interviews, an employee forum, community service opportunities, and more.
Compliance: New Programs, Initiatives and Record Revenues
During the last three years, TAX’s Compliance operations has set new revenue records, introduced new initiatives, and expanded other programs.
Prior to FY2007, the agency’s annual compliance results surpassed $400 million only once, in FY2005. Since FY2007, compliance revenue has never been below $400 million. Most notably, in FY2008, TAX’s compliance collections hit a record level, exceeding the half billion dollar mark. Large one-time collections exceeded $35 million that year and contributed to the record-high revenue levels.
During the past three years, TAX has seen many audit achievements and programs:
• Field Audit surpassed $70 million in collections only once between FY2000 and FY2006. The average annual revenue for this seven-year period was below $60 million. For fiscal years 2007 through 2009, however, Field Audit collections exceeded $70 million each year, with the three-year average reaching over $73 million.
• In FY2007, TAX introduced two new desk audit programs.
o One initiative focused on reducing the number of inflated refunds issued by the agency due to fraud or overstated deductions. Since inception, this program has generated over $9 million in denied refunds and payments.
o The second project works to bring into compliance non-resident business owners in Virginia who have a tax liability to the Commonwealth due to income generated in Virginia. This program has collected nearly $6 million since FY2007.
• In addition to new programs, other “discovery-type” projects have been expanded. These programs involve employer withholding and individual audits and have seen significant revenue growth over the past three years. For the three-year period ending in FY2006, these projects resulted in $8 million in collected revenue. For the subsequent three years, ending in FY2009, these programs have collected over $33 million in revenue, an increase of over 300%.
Some of the revenue growth discussed previously is due to the Compliance Initiative introduced in FY2009. Because of the Commonwealth’s revenue shortfall, the General Assembly authorized TAX to implement a plan that would increase revenue by adding auditors, examiners, collectors, and other positions to the agency. Of the 55 new positions, 44 were in Compliance. Revenue projections anticipated these additional positions would generate just over $80 million by the end of FY2012. Because of the time required to hire and train staff, however, the revenue projections identified only $1.3 million in new revenue for FY2009. Because the hiring process was expedited, TAX estimates its audit operations were able to realize over $5 million in additional revenue in FY2009.
Court Debt Collection Office
The Court Debt Collection Office (CDCO) was established after the General Assembly discovered that millions of dollars in state and local revenue owed to Virginia’s courts remained uncollected. The new CDCO was charged with collecting these delinquent court fines and fees without spending state funds. Since its inception in 1995, Court Debt has collected over $350 million in state and local revenue.
CDCO currently represents 253 of Virginia's 327 courts and collects approximately one-half of the courts’ debt. Commonwealth Attorneys hold the decision of whether their locality will participate in the CDCO program. Court Debt’s success is attributable to many factors, including an automated collection system, an automated telephone system, and a staff of trained collectors and court liaisons. The staff of 29 includes many visually-impaired workers who are employed through a partnership with Virginia Industries for the Blind. The CDCO program is supported entirely by its 17% contingent fee, which is the lowest in the state. The collection success has provided general fund deposits, special fund deposits and locality deposits exceeding $291 million. Over the last four fiscal years CDCO has raised its average collections to $35 million per year.
Delinquent Debtor Program
In May 2006, TAX followed the example of 17 other states and began using the Internet as a cost-efficient collection tool. The agency began publishing the names of businesses with unresolved tax liabilities that had not responded to several attempts to collect this money. Eleven businesses were listed initially and more have been added.
As of August 1, 2009, TAX had collected $2.4 million using its Delinquent Debtors site, which is accessible from its Internet home page.
Before the agency takes the step of posting the delinquent business, the business is given opportunities to voluntarily settle its liabilities. A certified letter, with return receipt requested, is provided with the final opportunity. This cost, approximately $5, is the only cost involved with the program. All information provided on this site is public information resulting from a memorandum of lien being recorded in the clerk's office of one or more circuit courts in Virginia. Businesses are removed from the list once they resolve their liabilities or file bankruptcy.
Commissioner’s Advisory Group
Beginning in the summer of 2007, certain members of the public, tax and finance professionals, educators, merchant groups, attorneys, local officials and others have provided the Tax Commissioner with a valuable quarterly snapshot of how they perceive the agency.
Roughly patterned after the advisory council the IRS began in 1953, the Commissioner’s Advisory Group (CAG) is a forum for the exchanging of information on tax-administration issues. CAG members are encouraged to suggest changes and improvements to current and proposed operational programs and procedures that affect taxpayers and tax professionals.
CAG, which has convened every three months since July 2007, is comprised of nine permanent organizations, along with other individuals or representatives from organizations that are appointed for three-year terms. The permanent organizations represented are the Virginia Bar Association, the Virginia Society of CPAs, the Virginia Association of Enrolled Agents, the Virginia Association of Commissioners of the Revenue, the Virginia Treasurers Association, the Virginia Association of Counties, the Virginia Municipal League, and the Tax Executives Institute. Three-year appointees can be individual taxpayers, retired legislators, or can come from statewide industry or trade associations, or academic institutions.
TAX develops agendas for each meeting based on issues suggested by members, who are encouraged to solicit topics from their constituents. Some issues have included customer service, compliance, factors regarding non-compliance, and appeals.
Consolidation of Agency
Since 1989, TAX’s central office staff in Richmond – which today numbers about 585 full-time classified employees – has been physically divided. Since that time, TAX’s Commissioners have shared the common vision of bringing TAX’s central office employees in Richmond back together.
While housing the Richmond staff in one building is not feasible due to the growth of operations and the size of the equipment TAX now uses to streamline the business of tax processing, marked progress has been made to consolidate Richmond’s four locations to three and hopefully two buildings by 2012.
Following action by the 2008 General Assembly and considerable planning by TAX and the Department of General Services, the consolidation began in August 2009. Several TAX units and departments moved downtown to Main Street Centre, leaving leased space that was inadequate at 3600 West Broad Street.
The Virginia Legislature not only allocated funds for the Department of General Services to purchase Main Street Centre, which occurred October 1, 2008, it also set aside $17 million to raze the 2220 facility and build a new structure on the site for a Tax Processing and Customer Service Walk-up Center on Broad Street.
TAX Team Assists State Board of Elections, Wins Teamwork Award
A seven-member group representing TAX won the Virginia Public Service Week Governor’s Award for Teamwork. This prestigious statewide honor was the result of fast work, technical knowledge and true cooperation.
When the State Board of Elections sent out a distress call last Election Day – its busiest day of the year – TAX’s people and technology responded quickly and helped save the day.
At 10 a.m. November 4, 2008, TAX received an urgent call from the State Board of Elections (SBE) saying its phone system was completely down on their busiest day of the year.
Within 90 minutes, TAX had everything set up and 10 SBE employees were at TAX’s Contact Center receiving phone calls from voters. Six more workers soon joined them.
Once everything was tested and working properly, TAX let SBE know they could send additional phone representatives. Two TAX employees stayed at the Contact Center until 7:30 p.m. to assist them.
In an e-mail the next day, DHRM Director Sara Wilson thanked TAX for its extraordinary effort on Election Day. In part, the e-mail read:
“When I called the Tax Department about using the call center, they were terrific! … [HR Director] Karen [Doty] stepped in and helped make it happen. And the TAX IT and call center staff were extremely responsive. Thank you for all your help. You made me proud to be a state employee with the teamwork and can-do spirit that the agencies exhibited yesterday!”
Electronic Filing Progress
The number of taxpayers filing their Virginia returns electronically has steadily grown since the service first became available in 2001.
In 2001, 15% of taxpayers filed online. That number grew to 22% in 2002, 29% in 2003, 35% in 2004, 39% in 2005, 45% in 2006, 49% in 2007, 54% in 2008, and it is approximately 65% in 2009.
TAX has worked hard to raise awareness of the importance and benefits of filing tax returns electronically. Each year the agency extols the virtues of e-filing on its Web site and in a series of news releases. In 2007, TAX also teamed with many public libraries around the state in presenting “How to File your Tax Returns Electronically” seminars. The same year it ran locally-produced television commercials about e-filing. In 2009, TAX filmed, produced and posted three YouTube videos about electronic filing in an effort to get its message to a broader audience.
In 2003, the Governor proposed and the Virginia General Assembly enacted Virginia Code § 58.1-1840.1 establishing a one-time Virginia Tax Amnesty Program for the purpose of improving voluntary taxpayer compliance and increasing and accelerating collections of certain taxes owed to the Commonwealth.
The 2009 General Assembly amended § 58.1-1840.1 to once again authorize a tax amnesty, this time during FY2010. It is anticipated that this year’s Virginia Tax Amnesty Program will bring in approximately $48 million in revenue.
During the amnesty period in 2003, all eligible taxpayers could satisfy tax debts by paying the entire tax and half of the accrued interest. Eligible taxpayers could be forgiven payment on the other half of the accrued interest and all penalties assessed to date. At the same time, an additional penalty of 20% on the outstanding balance of tax would be imposed upon any Amnesty-eligible debts not satisfied during the limited Amnesty window. The 2009 legislation allows for similar treatment of back taxes owed to the Commonwealth, and for the imposition of a 20% penalty on the outstanding balance of tax on all unsatisfied, Amnesty-eligible liabilities.
By any measure, the 2003 Amnesty campaign exceeded expectations. The final tally on Amnesty revenue was nearly double the target of $48.5 million. Among the most outstanding results achieved by the project was the processing of a huge flood of tax returns and payments mailed on the final day of Amnesty in just two weeks. This rapid clean-up of Amnesty cases allowed audit and collections programs to resume normal activity just two weeks after the campaign closed. Timely commencement of normal compliance programs was critical in avoiding a counterproductive post-Amnesty dip in compliance revenue.
The success of the 2003 campaign and the quick resumption of normal operations are a point of pride with TAX, and the agency anticipates similar success in the implementation of the 2009 program.
Sales Tax Holidays
Since 2006, TAX has successfully implemented three new Virginia Sales Tax Holidays enacted by the General Assembly. A team of agency employees from Policy Development, Public Relations, Customer Services, Compliance, Processing and other departments strategically planned and carried out the implementations. Policy Development, working with interested parties, developed guidelines, tax-exempt product lists and frequently asked questions for taxpayers and dealers; Public Relations coordinated informational campaigns to alert the media and citizens; Processing helped alert dealers of the new holidays; and Customer Services trained its reps so they could respond to the questions about the holidays.
The first holiday, approved by the 2006 General Assembly, exempted the sales tax on certain back-to-school supplies, clothing and footwear. It occurred in early August 2006. In 2007, the General Assembly approved two more Sales Tax Holidays, for hurricane preparedness supplies and for EnergyStar-qualified products. The first EnergyStar holiday occurred in October 2007, while the initial holiday for hurricane preparedness occurred in May 2008. Certain WaterSense products were added to the EnergyStar holiday in 2008.
Digital Media Fee
TAX implemented and began administering the new Digital Media Fee in July 2009. The fee requires businesses that provide lodging facilities in Virginia to collect a 10% Digital Media Fee on the cost charged to guests for the in-room purchase or rental of digital media. The fee, which became effective July 1, 2009, was enacted by the 2009 General Assembly.
The fee is charged for media services offered via an in-room television for a separate charge, and must be collected by any facility that offers temporary lodging; i.e., guest rooms rented out for continuous occupancy for fewer than 90 days. The fee is imposed in addition to all other taxes and fees that may be imposed on charges for temporary lodging, such as the Retail Sales and Use Tax.
“Digital media” refers to any audio-visual work provided through the in-room television in any guest room in any temporary lodging for a separate charge, including but not limited to, any motion picture, television or audio programming, or game, regardless if it is transmitted in an analog or digital format.
After administrative costs are subtracted, 50% of the revenues generated from the fee will be deposited into the General Fund, and the other 50% of the revenues will be deposited into the Governor’s Motion Picture Opportunity Fund. The revenues deposited into the Governor’s Motion Picture Opportunity Fund will be used for film incentive programs established by the Virginia Film Office.
Image Cash Letter, Remit Migration, and Remote Deposit Capture
Between October 2007 and October 2008, TAX implemented three new initiatives that have allowed the agency to save the Commonwealth more than $1 million. These new technologies serve as a hallmark of the innovation, efficiency and cost savings toward which the Department of Taxation continually strives.
• First, the agency implemented the Image Cash Letter process.
Under the old remittance system, after checks were processed for uploading into the system, those checks then had to be encoded and endorsed, secured in locked containers and sent to Wachovia Bank using a courier service.
Under the new remittance processing system, the scanned image of the check is sent to Wachovia electronically, which eliminates all four of those steps. Now, the actual paper checks are retained briefly to ensure problem-free receipt by Wachovia, and then destroyed.
Due to the elimination of encoding and endorsing, check processing can continue later into the day, enabling more checks to be processed and sent to Wachovia. TAX estimated a savings of $34,000 a year in processing costs, remittance supplies, and check courier costs. The Department of the Treasury estimated a savings of $88,000 per year in combined fee savings and accelerated earnings.
The fee savings are a result of the reduced clearing fees charged by Wachovia as a result of receiving the image of the checks electronically, rather than in paper form. The accelerated earnings are a result of being able to process more checks daily, which means more money is deposited earlier.
• Secondly, TAX implemented the Remit Migration Project.
Previously, checks were run through separate check scanners. The Remit Migration Project made it possible for those checks to run through the very same scanners that process other correspondence, which meant that TAX would not have to replace the outdated check scanners when they were beyond repair. This cost avoidance alone saved the Commonwealth $1 million. This new process is additionally expected to save the Commonwealth at least $100,000 a year in operational costs.
• Lastly, the agency implemented the Remote Deposit Capture process.
Before this initiative, checks coming into TAX’s Norfolk District Office had to be mailed to Richmond for processing. With the implementation of this program, checks can be scanned and sent electronically to Wachovia for deposit. In addition to eliminating postage costs, this also allows funds to be deposited two days earlier, resulting in additional interest earnings for the Commonwealth.
Danville Remote Telework Initiative
After its success in sending many employees home to work either one day a week or full time, TAX took on another project in 2007 that embraced two of Governor Tim Kaine’s key objectives: 1) to continue sending Virginians home to work, and 2) to bring state jobs to one of the Commonwealth’s economically-distressed areas. The Danville/Martinsville region was chosen because it had one of the highest unemployment rates in Virginia. TAX also believed it could find highly qualified people to help the agency.
During the summer, TAX advertised for part-time customer service reps in the region and received an overwhelming response when 700 people filled out online applications for 25 customer service rep positions. TAX then held a job fair in Danville, which was attended by over 400 of the applicants. All of the new employees who were hired had at least a four-year degree. They are year-round employees who work 30 hours per week. New College Institute in Martinsville provided free space to train the new employees for 12 weeks. During the 2008 filing season the new CSRs performed admirably: 72% above the standard metric for responding to correspondence, and 32% above the metric for handling phone calls.
In a second phase of hiring in the Danville/Martinsville region during the winter, TAX hired 30 seasonal data-entry employees to assist during the agency’s busy filing season, mid-February through mid-June 2008.
Southeastern Association of Tax Administrators Conference
From July 13 through July 16, 2008, TAX hosted the annual Southeastern Association of Tax Administrators conference in Williamsburg. The conference brought more than 600 people from 12 Southeastern states to the Williamsburg area, substantially boosting tourism in that area over the four-day period. Many conference attendees brought spouses and children, who spent their trip shopping at local outlet malls, visiting Busch Gardens, exploring historic areas in Jamestown, Yorktown and Williamsburg, and playing golf at Kingsmill Resorts, helping contribute to the economic development of Virginia’s Historic Triangle.