Yes, I suspected that.
Evidence of meeting #7 for Public Accounts in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
Evidence of meeting #7 for Public Accounts in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
In 1997, we set up an integrated risk management system. It does have some weaknesses, but that year, in 1997, we established our call centre to try to collect the accounts we received more quickly.
Second, the OAG mentioned in the report that we have established labour pools, whereby all new accounts were given priority processing rather than being sent to collectors throughout the country, because the collection potential is greater in the case of young debts.
In the case of old accounts, often taxpayers are temporarily unable to pay or circumstances are such that the debt cannot be written off under the Financial Administration Act. If we were in the private sector, a number of these debts would not have a high collection potential, but we are talking about cases where the taxpayer has not died. The debt exists, and often we have to work over long periods of time. We provide a type of credit counselling for taxpayers. The fact that the debt is old does not mean that it cannot be recovered. It is often active, but it may take several years before you can collect the balance. So there are a number of factors that come into play.
Our objective is to reduce the age of accounts as much as possible and to collect most of them as soon as we get them. We do not want to exacerbate the problem.
Liberal
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
Thank you, Mr. Chair.
Maybe I'll start off by looking at some of the other things that the revenue department might collect for the government, simply for clarification.
Do you do student loan collections? Do you employ the same methods for collecting student loans as you do for regular tax violators?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
Since August 1 of last year, the government transferred the collection of overpaid CPP payments and overpaid EI payments and also the collection of student loans to the Canada Revenue Agency. There was a wholesale transfer of staff resources and the existing powers that were within HRDC to collect those existing debts. So CPP and EI have tax collection powers that are very similar to the ones in the tax department, where we can take administrative garnishees and things of that nature and offsets.
When it comes to student loans, that's like a private sector debt. We have to seek judgments and apply judgments in court, and we need court judgments to do garnishees and things of that nature.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
Frauds against the Government of Canada, like the most recent one, the sponsorship thing that's working through the courts--and I think we are starting to get some convictions and debts owing--once the determination has been made that Mr. G, or whoever it might be, has taken millions of dollars from the Government of Canada illegally, would that be turned over to your agency for collection?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
That's not a student loan, CPP, or whatever, and it's not a tax either. Unless there's a tax component to it.... We would handle the tax component, but the actual recovery of issues that go to court like that, where there are lawsuits and things of that nature, has nothing to do with taxes.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
During the last election campaign, I ran into an individual who used to work for one of the credit agencies. He is unemployed now, and he'd spent 20 years working in that area. He said that Canada's privacy laws had virtually eliminated his job at the agency he worked for.
Do you find that Canada's privacy laws restrict your ability to track down the debtors and collect your money?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
I wouldn't say that. I think the privacy laws are there to protect the privacy of individuals. What we do have is access to a fabulous amount of information within the tax department. Quite often debtors are also recipients of GSTC credits or CTB credits, so we know where they live. We send a cheque to them every month, so we can use the tax information system to track people down.
We have good success with our own tracing. If somebody is employed, we have access to the last year's T4. We can find out where the employer is located. We can use a lot of this information; it is ours.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
When you are collecting money from tax debtors, does the money your department collects have priority over child support payments in the system? I had a file in my office once, and my recollection is that the tax department actually had priority over those moneys from child support. Do you know if that's the case?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
I know we have a lot of agreements with child support agencies that file with us looking to intercept tax refunds. Generally speaking, when we apply for tax debts, our garnishees trump other creditors for tax money. When we use our tax authority, we can go to the bank account or accounts receivable. I think our priority is better than those of child support agencies.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
The government in Canada comes ahead of the children in need of child support. If that's the case, I probably take issue with it. In my view, that one should have a priority over the government in Canada.
The report says the riskiest files aren't given priority, or should be given priority. Auditor General, am I to assume, when you refer to giving priority to the riskiest files, that these would be people who may have the ability to pay a good deal of the debt and who may have large holdings and assets, but are risks because they could move offshore or leave the country, thus escaping the ability of the tax department to access their assets? What were you thinking of when you were talking about riskiest files?
Auditor General, Office of the Auditor General of Canada
In part, that could be one element of riskier files. We were thinking more, though, of files on people or businesses declaring insolvency--going bankrupt. The agency should take quicker action to identify those files and should try to do collection activities faster on them.
The agency has several methods of collection, and one of the important things is to make sure the account goes into the right stream so that collection activities are the most effective. They need better information on that.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
Does the department agree with the Auditor General that we have to do a better job in this area?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
We agree that when you look at the best-performing private sector collection organizations, they make extensive use of data mining, data warehouses, and risk profiling. They capture data associated with the circumstances around the existence of an account; then they can design more strategic ways and approaches to deal with these issues.
As an example, if somebody went bankrupt once or twice and we ended up writing off those accounts, then if that name resurfaced again, it should probably jump to the head of the queue somewhere. Those are the challenges we have in terms of the design of our legacy systems; they were not built to do that.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
What's the limitation period on a tax debt? Is there such a thing, or is that a lifetime project? Does it go right to the grave?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
It's 10 years. It's 10 years since the Markevich case. However, you have to bear in mind that the 10 years could be extended, based on various types of circumstances such as judgments, recognition by the taxpayers, a lien on our part, and things of that nature. If we do nothing to a debt for 10 years, then I think the statutes of limitation would kick in, but if the taxpayer does certain things and if we do certain things, that 10 years could be extended. If we take a mortgage on it, then a lien would provide an extension to that 10 years.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
There was reference to best collection practices. You apparently canvassed the private sector. Maybe it was provinces or some other government somewhere else, maybe it was Russia or something, I don't know. Who were some of these people you canvassed for best practices?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
We do look at other countries. All countries are involved. These systems and approaches should be evergreen. We shouldn't put them in and then not--
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
What is a best practice?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
I think the best practice is using data warehouses, doing data mining, and doing risk profiling, and then designing collection strategies that may be different from one taxpayer to the next, because the circumstances of those debts are really different from one taxpayer to the next.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much, Mr. Fitzpatrick.
Mr. Christopherson, you have eight minutes.