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1 This document was prepared by the United Nations Secretariat (Public Finance and Private Sector Development Branch, Division for Public Economics and Public Administration, Department of Economic and Social Affairs.

UNITED NATIONS ST----------------------------------------------------------------------------------------

SecretariatDistribution: Limited

ST/SG/2000/L.46 September 2000

Original: English----------------------------------------------------------------------------------------------------------------------

Ad Hoc Expert Group Meeting on Strategiesfor Improving Resource Mobilization in DevelopingCountries and Countries with Economies in TransitionMontreal, 2 - 6 October 2000

Organized by the United Nations in cooperation withAssociation de Planification Fiscale et Financière (APFF)

Agenda Item #3: Efficiency and Effectivenessof Revenue Administration

1. Taxpayers Education and Assistance2. Management of Human Resources3. Management Information Systems1

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Table of Contents

Paragraphs Page

1. Taxpayers Education and Assistance

Introduction 1 to 3 179Taxpayer education 4 to 12 182Taxpayer information 13 to 15 187Taxpayer assistance 16 to 20 188Taxpayer education in the United States 21 191Taxpayer education and assistance in Italy 22 to 28 194Taxpayer=s rights 29 to 30 199Conclusion 31 201

2. Management of Human Resources 32 to 67 202

Introduction 32 to 34 202Personnel Management 35 to 39 202Recruitment 40 to 46 205Motivation 47 to 52 207Training 53 to 56 210

3. Management Information Systems 57 to 67 212

Management Information Systems 57 to 65 212Management Information Systems in 66 to 67 216

US Tax Administration

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1 Silvani, Carlos and Catherine Baer (1997): "Designing a Tax Administration Reform Strategy: Experiences and Guidelines:" IMF Working Paper WP/97/30.

2 Le Baube, Robert A. and Charles L. Vehorn (1992): "Assisting Taxpayers in Meeting

1. TAXPAYERS EDUCATION AND ASSISTANCE

Introduction

1. The relationship between the tax administration and taxpayers, or its quality is imposed as a crucial element for the correct operation of the tax administration, as well as for an optimum tax collection which is necessary for the State to function and render its services. Currently, the relationship existing between the State and the taxpayer is objectively of an authoritarian nature. The tax administration=s commitment is to change the image of authoritarianism for another of an ambitious kind: that of an authority. The fundamental element of success of this administrative action is to achieve and preserve its credibility before the taxpayers. The assistance which the tax administration should and may offer significantly contributes to achieve this objective.

2. Good taxpayer services and well-designed and targeted publicity campaigns are crucial elements in encouraging taxpayers to comply voluntarily with the tax legislation. To facilitate voluntary compliance, the tax administration should provide taxpayers with consistent, impartial, courteous, and prompt service. In many developing countries and countries with economies in transition, relatively simple measures, such as, providing taxpayers with tax return forms, eliminating fees for receipt of tax payments by the banks, a common practice in some Eastern European countries, and establishing taxpayer assistance counters in easily accessible locations in the tax administration would significantly improve taxpayer services.1 Effective taxpayer services will include such programmes as developing clear forms and instructions, providing points of contact to the public so that people can request and secure information about their tax obligations, and developing educational programmes to inform existing and potential taxpayers. A primary objective of taxpayer services is to inform the public of their duties and responsibilities under the tax laws in a way that is easily comprehensible by even the less educated taxpayers. Thus, it is essential that tax administrators conduct different types of information campaigns for different types of taxpayers (e.g. accountants, special trade associations, the general public) to disseminate information on judicial decisions, rulings, regulations, and other notifications to foster a higher level of compliance and minimize misunderstandings of the tax laws and regulations.2 In certain Eastern European countries which

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Their Obligations" in "Improving Tax Administration in Developing Countries," ed. by Richard M. Bird and Milka Casanegra de Jantscher (International Monetary Fund, Washington, D.C.).

3 Executive Secretary of Commonwealth Association of Tax Administrators (CATA) in a

have launched a reform without having effective taxpayer information and service campaigns, taxpayers have misunderstood new taxes and procedures, which has hindered the reform process.

3. Publicity campaigns through the radio, TV and newspapers informing the public of the results of the tax administration=s efforts, including, for example, the increase in the number of registered taxpayers, the increase in revenue, the results of audits, and the decrease in tax evasion have also been extremely effective in improving voluntary compliance and increasing revenue in many countries. Publicizing the results of past enforcement actions carried out by the tax administration has often proved to be more effective than announcement of future actions. It has been the experience that taxpayers in countries with a long history of high non-compliance simply do not change their behaviour in response to the tax administration=s threats of future enforcement actions.

Taxpayer education

4. Although developing countries and economies in transition should, in principle, try to ensure that taxpayers are audited, in appropriate cases, extensively and intensively, in practice, most of these countries do not yet have the requisite number of staff with the necessary skills to do so. These countries should also need to strengthen their vigilance machinery and anti-corruption strategies to maintain integrity and reputation of their auditors from being compromised by increased contact between tax auditors and taxpayers. Simultaneously, parallel to these efforts to speed up the detection of non-filers, stop-filers and inaccurate filers, the tax administration should seek to promote greater compliance through improved taxpayer education, information and assistance. Improvement in these areas constitute the core of the major operational changes made in recent years by the tax administrations of developed countries, such as, Australia, Canada and the United States as well as by some developing countries.

5. It is considered that taxpayer education and a better relationship with taxpayers, along with well thought out taxpayer education programmes can go a long way in improving voluntary compliance and that most commonwealth countries currently have some form of taxpayer education programme built into their system.3 With respect to better taxpayer relationships, it

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paper presented at the Seventh Meeting of the Council of Executive Secretaries of Tax Organizations (CESTO), Kuala Lumpur, Malaysia, April 1992.

has now become increasingly evident that an effective and efficient tax system would depend on the consent and willing cooperation of the general body of taxpayers, employers and consultants. Countries like Canada, New Zealand and the United Kingdom have given the lead by publishing Taxpayers Charters which set out for the first time in public the principles which should be adopted in handling taxpayers= affairs, along with the rights and obligations of taxpayers. Some right to courtesy and consideration, the right to the presumption of honesty, the right to privacy and confidentiality and the right to every benefit allowed by the law should not remain as unattainable goals, but as something which both the tax administrations and the taxpayers should strive to achieve as partners in a common endeavour. These attitudes can be positively influenced by the >service= provided to the taxpayers by placing greater emphasis on seeing the taxpayer as client or customer, somebody to work with rather than against. This is not a Utopian ideal, but a practical possibility.

6. The strategy to improve taxpayer education, information and assistance in order to enhance tax collections and reduce compliance costs should be based on a commitment to high quality and constructive interaction between taxpayers and the tax administration. Enhancing quality through taxpayer education, information and assistance requires a determined effort to increase public confidence by focussing on taxpayer requirements and satisfaction. The approach should address compliance in the context of correcting system deficiencies; simplifying cumbersome and complex tax laws and rules, forms and instructions; presenting the tax laws as fair in their intent and administration; and assisting complying taxpayers who are trying but are unable to meet their obligations.

7. A practical approach would aim at:

1. Enhancing citizen support of the tax system by making taxpayers understand the need for and the value of taxation, and by streamlining tax rules through the reduction of exemptions, exceptions or caveats;

2. Improving the process of developing, producing, and delivering forms and information bulletins which currently are very often so complicated that taxpayers must seek costly professional help of tax consultants, accountants and lawyers;

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3. Evaluating the taxpayer=s ability to cope with tax forms and publications by monitoring taxpayers= comments, conducting town meetings, interviewing professional groups, carrying out surveys, and testing tax forms in order to be able to resolve problems and make improvements in design, information technology and communications, and taxpayer behaviour.

Achieving the goals of a well-designed and well-implemented taxpayer education, information and assistance strategy contains the promise of greater taxpayer responsiveness, substantial increases in tax collection accompanied by significant savings in compliance costs C in money and time C for both the taxpayer and tax administration.

8. Tax administrations should recognize the need for an active taxpayer education, information and assistance programme to educate the public and provide hands-on assistance to taxpayers to help them comply with their tax obligations. Experience has shown that it might be desirable to centralize responsibility for education, information and assistance activities in a single department or unit. These activities would normally include media advertisements, telephone and electronic information exchange, publications, workshops and school curriculum enrichment.

9. It might be desirable to organize broad education campaigns to explain taxpayers= rights and obligations, the rationale to pay taxes, the way in which tax revenues are spent and benefits taxpayers derive from government spending. The campaigns might also bring to the public=s attention the penalties leviable for infraction of law and make it clear that all those found guilty will be punished impartially according to the law. The campaigns should also seek to project a positive image of the tax administration itself, since the elimination of misconceptions about its mission and operation can improve relations between it and the taxpayer. To that end, the tax administration might also consider issuing a statement setting out its mission and objectives. It would also be beneficial to include tax education programmes in school curricula and to organize, under the auspices of the tax administration, lectures and workshops on tax matters for smaller groups of taxpayers with shared interests. Education campaigns should make optimum use of the appropriate mass media; they should be carefully designed with the assistance of communications professionals and tailored to the needs of the target groups.

10. Assuming that the basic background situation is conducive to voluntary compliance C that

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is, the tax laws are equitable, that the tax administration implements those laws fairly and uniformly and that the tax courts are impartial C there may still be room for improvement of voluntary compliance through broad education campaigns. These campaigns can be aimed at the public at large and seek to raise tax consciousness and tax conscience by explaining taxpayers= duties and rights, the rationale of paying taxes, the manner in which the tax proceeds are spent, and the advantages which the country and citizens derive from government spending. The connection between payment of taxes and economic progress can be highlighted. These campaigns can also bring to the public=s attention the consequences of tax evasion, in the form of penalties and prosecution and should make it clear that those found guilty will be dealt with in accordance with the law. Penalties may not only deter potential tax evaders but also fulfil the function of "keeping complying taxpayers satisfied with their compliance."

11. Broad-based campaigns can also help to project a positive image of the tax administration itself. Many taxpayers consider the tax administration as an impersonal, insensitive, heartless bureaucracy seeking to extract taxes from cowering taxpayers who are treated as evaders until proved innocent. The removal of such misconceptions can promote voluntary compliance. The tax administration can issue a mission statement and objectives, as for example, the United Kingdom issued in 1986 C the Taxpayer=s Charter, which defines "the rights and entitlements of the taxpayer" (these include help and information, courtesy and consideration, and confidentiality). Similarly, the United States Internal Revenue Service (IRS) issued a Mission Statement which states that "the purpose of the IRS is to collect the proper amount of tax revenues at the least cost to the public, and in a manner that warrants the highest degree of public confidence in our integrity, efficiency and fairness." In an accompanying Declaration of Commitment, the IRS states, inter alia, that "it will produce products and services to meet the needs of our customers (i.e. taxpayers) and will treat [them] with dignity, respect and professionalism." In both these examples, emphasis is placed on the fact that the tax administration will do all it can to help taxpayers discharge their tax obligations, a fact which certainly helps to erase any negative image that may exist. The campaign may also seek to describe, in broad outline, how the tax administration operates (e.g. how income tax forms are distributed, the general method of selecting returns for audit and the availability of publications on various tax questions).

12. Educational efforts can focus not only on the public at large but also on smaller groups of people. Taxpayer education programmes in schools, devised jointly by senior tax officials and

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officials of the Ministry of Education can improve voluntary compliance in the coming generation by instilling in it the idea that paying taxes is a civic duty that benefits all members of society. Similarly, lectures and seminars can be organized for groups of taxpayers with shared interests, such as, small entrepreneurs, farmers, fishermen, and members of professional associations. These encounters would enable the tax administration to explain its general mission and the rationale for its actions, and give taxpayers an opportunity to voice their concerns, thus leading to improved mutual understanding. Educational programmes can continue all year round, whereas information efforts can perhaps be more narrowly focussed on the period when taxpayers are preparing their tax returns.

Taxpayer information

13. Tax administration should ensure that the tax forms are as simple and few in number as possible; the forms should be accompanied by detailed instructions for their completion, written in a clear and simple style. It may prove beneficial to issue leaflets and booklets on various aspects of the tax laws, designed for the general public and for different groups of taxpayers (e.g. wage earners, small entrepreneurs, etc.). The public should be informed of the issuance of these publications and of the places where they can be obtained or consulted. The public should likewise be informed about the location of tax offices and other places where tax forms can be filed and tax payments effected; the offices should be strategically located and as numerous as is consistent with available resources and cost-benefit criteria. Information campaigns, like the education campaigns, should make optimum use of the appropriate mass media through carefully designed and targeted programmes.

14. There is a difference between taxpayer education (i.e. familiarizing taxpayers with the general background to the payment of taxes and the mission of tax administration) and taxpayer information (the provision of the specified detailed information taxpayers need to complete their returns fully, accurately and in due time). Taxpayers must be informed where they can obtain their tax forms (if they are not mailed to them), where, when and how they are expected to file their return and pay the taxes due, and what penalties are leviable if they fail to fulfil their obligation within the stipulated time limit.

15. For both educational and information activities, the mass media can be used to advantage in reaching large numbers of population at minimum cost. In the specific case of information,

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newspapers and magazines can be used to remind taxpayers of filing dates and of addresses of tax offices, and to highlight penalties imposed on delinquent taxpayers. However, written materials will not reach taxpayers who are illiterate, either because they have not attended school or because their education has been inadequate. Radio, on the other hand, can be understood by all and reaches a very wide audience, and should be used to the maximum; during the filing season, short "spot" announcements and advertisements can be inserted in popular programmes. Television too reaches a wide audience and has the advantage of presenting information both visually and aurally. Some countries have also used mobile units, which tour towns and villages disseminating tax information. Furthermore, intermediaries, such as, professional associations, such as lawyers, accountants, etc., trade associations (businessmen, industrialists, contractors, etc.) and trade unions can be used as a means for informing their members.

Taxpayer assistance

16. Tax officials should assist taxpayers in an efficient, courteous and considerate manner. Tax offices should be made as accessible and comfortable as possible. Staff at these offices might help small taxpayers, either in person or by telephone. Tax administrations might also consider the possibility of training approved members of recognized voluntary organizations or other groups to help taxpayers who cannot or do not wish to obtain assistance at tax offices. Service over the telephone might be provided to taxpayers who need answers to a limited number of questions. It would be helpful to make available pre-recorded telephone messages furnishing general information or standard replies to specific common questions asked by many taxpayers. Audio-visual aids (such as video cassettes) can be made available to groups of taxpayers at their request to help explain filing procedures and other tax matters. Where feasible, developing countries might follow the example of developed countries which have developed computer programmes that enable tax administration staff to provide accurate and uniform answers to taxpayers on the basis of pre-programmed questions.

17. The dividing line between taxpayer information and taxpayer assistance is in some ways rather artificial, but taxpayer assistance is here defined as the provision of specific information in response to taxpayer=s request and of general assistance to taxpayers, also on request, for the completion of tax forms and procedures. The assistance should cover not only the preparation of tax returns but all tax matters, including the resolution of questions and adjustments that may arise after the tax returns have been submitted to the tax administration.

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18. Taxpayer assistance involves personal contacts between tax administration staff and taxpayers, and can do much to enhance the image of the tax administration and promote voluntary compliance, provided that the assistance is given in an efficient, courteous and considerate manner. The tax administration can reinforce the idea that its intention is to provide the best possible service to the taxpayers by making tax offices as accessible and comfortable as possible, within the limits imposed by financial constraints. Tax offices should be open at convenient times, and consideration should be given to the possibility of extending the office hours and even opening the offices on weekends and holidays during filing periods; this has been done in many countries.

19. The staff at tax offices can help small taxpayers to complete their returns either in person or by telephone, but should encourage taxpayers to help themselves, so that they would be able to complete their tax returns unaided on subsequent occasions. In some countries, the tax administration has trained approved members of recognized voluntary organizations so that they can provide services to persons who cannot or do not wish to avail themselves of assistance at the tax office. These people include the elderly, the disabled and persons of moderate means. Other countries provide such assistance by using university students in such disciplines as law and accounting. Trade unions could also provide assistance to their members. Free telephone service can be provided to help taxpayers who need answers to one or two questions about their returns. Some countries have established a set of pre-recorded telephone replies to questions asked by many taxpayers that can be listened to around the clock by those needing information C this method economizes human resources and replies are uniform and accurate.20. Computer based assistance programmes have already been introduced in some Latin American countries, e.g., one country has established "Taxpayer Assistance Centres" provided with modern computer equipment, but the results have been disappointing because a number of parameters were disregarded, including the inevitable need to educate the human element, the complexity and constantly changing nature of its tax legislation and the permanent feedback needed by the equipment to fulfil its purpose. On the other hand, in another, the taxpayer assistance has taken many forms, namely, on-line enquiries of data base, unloading from website, personalized enquiries, delivery of returns, elimination of forms, electronic payments, on-line modification of returns, etc. Facilities for complying with the filing and payment of taxes include assistance for preparing and filing returns through diskettes, elimination of forms for specific taxes through the electronic transfer of funds and centres for answering calls at the

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4 Olaechea, Alberto, National Superintendency of Tax Administration (SUNAT), Peru (1998): Case Study: Taxpayer Assistance" at the Conferencia Tecnica do CIAT, Porto, Portugal, 20-23 September 1999.

5 Department of the Treasury: Internal Revenue Service, USA: Publication No. 1275 (Rev.5-98), Catalog No. 62993C.

national level.4 Further, the facilities for complying with the filing and payment of taxes in 1999 included payment without forms through EFT (electronic funds transfer), whereby payments are received and recorded through the bank=s system and transferred to the national tax administration system for generating the payment note, the transmission of information and collection reconciliation. Taxpayers pay at window, automatic tellers, home banking, telephone and other facilities common to banks, by providing only 3 or 4 data without the need to fill out forms. The resulting reduction of time for the taxpayer, the opportunity to receive the information, the quality thereof and the reduction of costs for the tax administration are the main advantages of this system. A number of other developing countries such as, Barbados, Cyprus, Malaysia, Malta, Mauritius, Swaziland and the United Republic of Tanzania have established taxpayer assistance centres or units within the tax administration to provide assistance to taxpayers.

Taxpayer education in the United States

21. The Internal Revenue Service of the United States has diffused authority and responsibility for taxpayer education between its taxpayer service, examination and collection functions. Taxpayer education is the core to voluntary compliance. There are many facets to taxpayer education including outreach programmes, post office and library programmes, small business education programmes, programmes at post and secondary educational institutes, practitioner education, pro bono tax clinics, emergency assistance, media information programmes, voluntary tax assistance and distribution of tax forms and publications. Professional educators and adult education techniques facilitate greater compliance by emphasizing education over enforcement. If properly designed, taxpayer education and outreach can be a proactive method of enhancing compliance. In the United States, the taxpayer education and assistance take the following forms,5 namely:

A. Volunteer Income Tax Assistance (VITA)The IRS trains the volunteers to help people prepare basic tax returns for those with a low

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to limited income, individuals with disabilities, and non English speaking persons and elderly taxpayers. The volunteers serve in the community at neighbourhood centres, libraries, churches, shopping malls, and other convenient locations. Volunteers also provide assistance and return preparation for prior year federal income tax returns, as well as, the earned income and advanced earned income tax credit. A number of locations also offer electronic filing.

B. Tax Counselling for the Elderly (TCE)TCE is another programme where tax skills and a helping hand are offered. TCE offers

free tax help to people who are 60 years or older. Many of the volunteers are retired themselves or are affiliated with non-profit groups that have received grants to run a local TCE programme. Grant funds are used to reimburse volunteers to pay mileage and other travel expenses so they can go wherever they are needed C retirement homes, neighbourhood sites or private houses of the homebound.

C. Community Outreach Tax EducationIn the Community Outreach Tax Education Programme, individuals conduct lectures or

seminars on some aspect of tax law. The presentations are targeted at groups of taxpayers who have a common occupation or tax concern C farmers, retirees, and small business owners. Outreach is offered year round at convenient community locations and at convenient hours, including evenings or weekends. Tax education seminars are tailored to the interests of each group attending. Tax return preparation sessions cover federal tax forms line-by-line so that taxpayers can prepare their returns correctly.

D. Small Business Tax Education Programme (STEP)Through the Small Business Tax Education Programme (STEP), the IRS offers a variety of

business tax workshops, seminars and college courses in partnership with community sponsors. The IRS= nationwide sponsors include community, junior and technical colleges, universities, business and economic development agencies and chambers of commerce. In addition to federal taxes, many programmes include state and local requirements through cooperative efforts with those government entities.

In the state of California, a Small Business Tax Connection (SBTC) team operates in conjunction with the Fed/State Partnership Committee on Taxpayer Education and Issues for Small Business. The team includes representatives from the Board of Equalization, the

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6 California State Board of Equalization: Taxpayer Education Information.

Franchise Tax Board, the Internal Revenue Service and representatives (sponsors) from the community working together to achieve the following objectives:

! enhance the awareness of small businesses about their tax responsibilities and where they can go to get more information and assistance; and

! expand the community sponsors= information and services to include tax responsibilities and compliance.

The theme of the team=s outreach is "Striking Gold in California." Members have worked with community sponsors to develop a number of educational products on businesses= tax responsibilities.6

E. Understanding Taxes ProgrammeThere is no better time to learn the basics about taxes than while in school. Many students

have part-time jobs or other sources of income requiring them to file a tax return. Hence the IRS has three Understanding Taxes Programmes which provide basic tax education to students. These are the three programmes offered:

Eighth Grade: Explains the evolution of taxes in US history. Used as a supplement in eighth or ninth grade US history courses, teaches students how tax policies of the past

have affected those of today.High School: An introductory tax course aimed primarily at high school students.Teaches about the American tax system and how to complete the basic tax forms.Post Secondary: Provides adult learners an introduction to, and practice with,completing and interpreting tax forms. Shows learners how to be responsibleparticipants in the tax system.

F. Practitioner EducationTax professionals can learn about recent tax law changes at Practitioner Institutes, which

will enhance the professional quality of the services they provide. These institutes are sponsored by qualified educational institutions, state and local governments, professional and other non-profit organizations. Qualified tax professionals also like to teach other professionals the recent developments in the tax field.

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7 Del Giudice, Michel, Director General, Ministry of Finance, Italy (1999): "Case Study: Taxpayer Assistance" Paper presented at the Conferencia Tecnica do CIAT, Porto, Portugal, 20-23 September 1999.

G. Bank, Post Office and Library (BPOL) ProgrammeThe IRS supplies over 47,000 libraries, banks, post offices, technical schools, state and

local governments, and similar facilities with free tax forms and instructions. Tax forms on CD-ROM and reference materials are available at many participating libraries.

Taxpayer education and assistance in Italy

22. The law of March 15, 1997 No. 59, article 20, paragraph 2 provides that within a period of 5 years from 1 January 1998, the Italian public administration must adapt its information systems in order to completely "automate the production, management, diffusion and use of its acts, documents and procedures."7 The Italian tax administration is responding in a global manner to the challenges posed by this different administrative "philosophy" based on the two elements of "service" and "quality" and is acting in a parallel fashion, internally, by adapting its organization and structures, as well as externally, emphasizing the visibility and the control of its activities, by building and reinforcing in all its aspects, this new relationship of collaboration with the taxpayer.

23. The Italian Ministry of Finance, which has been for some time using all telematic and computerization possibilities, openly administers a significant part of the information stored in the data bank called "Tax File," with the help of the integrated communication programme called "Fisconet," for the purpose of reaching the largest possible number of citizens with innovative services, available throughout the national territory, in offices located in the centre of the cities as well as in outlying areas, in the working places as well as in private residences.

24. The programme provides for the use of different communication means for different levels of transmission of information:

! Firstly, there are the publications edited by the tax administration: which not only fulfil a basic informative function, since they are very diversified in the graphical aspects as well as contents. For example, these comprise the monthly publication

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"Tributi" (Taxes) which is an instrument of debate and in-depth consideration of tax forms, with comments, documents and even jurisprudence annotations, up to a "Taxpayer Agenda," published annually with a significantly large number of copies, that constitutes the tax planning agenda for the entire year. On the other hand, the "Taxpayer Guide" is a pocket size publication with diversified graphics according to the topic being considered. It can be obtained free of cost at all of the Administration=s offices.

! There is also the possibility of providing taxpayer information (automated or through telephone operators at the Ministry) by means of two special telephone lines, easy to remember and practically at no cost, which may be used, as they in fact are, on the occasion of the expiration of certain tax deadlines. The service is active throughout the entire year.

! The taxpayers may also "ask questions" C through the use of a magnetic card which has his tax code, from a total of 250 self-service telematic tellers C similar to the automatic bank tellers C from which he can obtain some special information on his own tax or social security situation and also request a new card, if necessary. (The tax code, currently called "Personal Identification Code" consists of an alphanumeric sequence elaborated on the basis of an algorithmic programme established by the tax administration. It must be reported every time an important economic or commercial operation takes place. This code is assigned to every citizen from the time of his birth).

! The mass media par excellence C television C is also used for the purpose. The Ministry of Finance has its own institutional space within the already traditional "tele-text" communications. In this way, the citizen while looking at the pages devoted to fiscal issues receives information on obligations, deadlines, innovations etc. not only of a national but a local nature as well.

! Finally, there is the use of the most successful technological instrument, the "Internet" existing at present. For this administration (www.finanze.it) the communication channel represented by Internet is particularly innovative and effective, because of its immediate receipt and increasing diffusion. With the help of Internet, it is possible to disseminate the information produced by the administration or dealing with the activities thereof that may turn out useful and interesting to the

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taxpayer. The data bank of the Italian Ministry called "Tax Documentation Service" through this great virtual network may contribute to the diffusion and knowledge of the decrees, memoranda, resolutions, legislativeprovisions, etc.

! On the other hand, the same system may be used for providing the taxpayer certificates, models, forms and even instruments for calculating the amount he must pay to the Treasury. In addition, the possibility of achieving maximum interaction with the taxpayer is of the greatest importance. Through the "network" the tax administration allows the taxpayer to carry out operations that would otherwise require his physical presence at the offices. For example, the payment of taxes or contributions, informing a change of address or domicile, the opening or closing of a VAT item.

25. A main aspect of the reform which is particularly important for the simplification of taxpayer obligations, is the introduction of certain modes of operation and exchange of messages between the administration and the taxpayer, leading to the concept of "Telematic treasury." The project C which allows for making a single deposit including the total of taxes and contributions owed C implies the participation, in addition to the taxpayers, of credit institutions, post offices, social security and insurance entities, the regions, the professionals of the sector, the "assistance centres" and the professional associations.

26. The most important innovations of the "Telematic treasury" involve the introduction of the Unified Deposit and the Unified Return and their telematic management through the network connection with the data bank of the Ministry of Finance called "Tax File." There are over 100,000 individuals called to play the role of middlemen between the Treasury and the taxpayers. Through the unified deposit, the taxpayers by means of a single operation may pay the taxes to the Treasury, the regional ones, social security contributions, with the possibility of balancing the debits and credits between taxes and contributions. Deadlines for making payments and the number of tax deposits are reduced by over 50%, while refund operations turn out to be really insignificant.

27. The Unified Return allows for summarizing the taxpayer=s situation with respect to the payment of taxes and contributions, there being a process of integration between different administrations (tax administration, social security entities and regions) which leads to a

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reduction of the returns filed each year, from 44 to 22 million. With the implementation of the "Telematic treasury" the Ministry of Finance, in addition to rationalizing the collection procedures, improves the quality and timeliness of information to support the struggle against evasion, always respecting the taxpayers rights and guarantees. Although the "Telematic treasury" is in an initial phase, there are obvious advantages for the taxpayers and the tax administration. The Italian tax administration intends to:

1. Reduce the paperwork at its office, and the related costs of acquisition of the data and news required for their operation.

2. Promptly have available the data from the income returns for fulfilling the subsequent administrative obligations, such as, the assessment and control procedures.

3. Reduce the number and burdens linked to the implementation of purely formal controls.

4. Have available immediate and reliable information for the elaboration of the necessary tax policy measures as well as for the analysis and studies of the sector.

28. Also noteworthy are the advantages for the taxpayers and intermediaries who can offer their customers a more complete and modern service as regards:

! unification of compliance with obligations dealing with the taxes and contributions;! reduction in the number of returns;! reduction of the margin of error within a psychological limit of 3% due to the

possibility of eliminating "at the source," the mistake made when filling out the income return;

! assurance of having complied with the tax obligations toward the administration, which sends a receipt upon the arrival of the taxpayer=s return;

! immediate verification of eventual irregularities, prior to transmission to the tax administration;

! communication, since in shorter time frames than in the past, the taxpayer may become aware of the formal results of his return, thus having the possibility of taking the necessary measures, prior to filing the next return;

! access to information concerning the "tax status" itself with respect to deposits made, credits eventually recognized, refunds to which he may be entitled and income from buildings and lands.

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It is necessary to highlight that in the new system, sanctions for formal violations have been drastically reduced, while those dealing with real tax evasion have been increased.

29. Taxpayer=s rights:

It is critical to foster a tax administration system that:

1. Applies the tax laws in a fair and even handed manner.2. Aids taxpayers in fulfilling their obligations under the law.3. Is sensitive to the impact that taxes and administration have on people=s lives.4. Operates efficiently and effectively.

In Italy, in 1996, the Council of Ministers approved the "Taxpayer Statute" outlining the guidelines of a new relationship between the administration and the taxpayer. The "Statute" provides for affording the taxpayer maximum information, forbids the retroactive application of norms and obligations to the taxpayer, sixty days prior to the enforcement of new tax norms, requires from the administration the elaboration of clear and understandable norms, especially for those who are not specialists on the subject, affords the taxpayer the possibility to "request the administration for explanations with respect to certain matters, anticipates shorter time frames in the case of tax controls and verifications, prevents legislative modifications during the taxation period and establishes the figure of "Taxpayer Guarantor." This new figure should be established in all the General Directorates and should consist of three individuals, selected by the Minister among categories of a high professional level who should carry out their functions gratuitously, who must protect the rights of the taxpayer, disclose eventual dysfunctions or errors in the administration=s actions, in addition to requesting any initiative that may be timely and useful for solving or eliminating causes of friction and confrontation between the Treasury and the citizen.

30. An important modification of a structural and organizational nature characteristic of a Italian tax administration is, at the central level, the presence of a "taxpayer information office" at the Directorate General and at the local level in all regional income tax directorates of "public relations offices." These offices provide taxpayers information and assistance, they regularly register the level of acceptance by the public of the initiatives and the services rendered by the Ministry, elaborate the proposals for improving the services, for the modernization of the

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structures, and for the simplification of obligations. These offices also fulfil the activities relating to "administrative transparency" which allow access to administrative documents and necessary information to identify the officials responsible for the procedures that are of interest to a specific taxpayer, in order to understand their modalities and be aware of the time frames for their conclusion.

Conclusion

31. In addressing the challenges of securing sustainable, adequate and stable financial resources to enable government to deliver public services, reduce fiscal deficits and promoting sustainable socio-economic development, many developing countries and economies in transition have designed and implemented comprehensive tax reforms through, firstly, restructuring the tax system, secondly, selecting taxes which are administratively feasible, and thirdly, by making existing taxation rules and procedures more efficient. It may relevant to note that ineffective, inefficient or insufficient administrative or compliance procedures jeopardize maximum collection of tax properly due and consequently raise the risk of increasing the tax burden for all taxpayers. Hence, there is need to evolve new methods and strategies to promote greater taxpayer compliance by placing adequate emphasis on taxpayer education, information and assistance.

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2. MANAGEMENT OF HUMAN RESOURCES

Introduction

32. With a view to strengthening domestic resource mobilization, many developing countries and economies in transition have relied on taxation and have sought to raise additional revenues by expanding the tax base and by strengthening the tax administration. No matter how well designed the tax laws may be in theory, they may fail to achieve their purposes in practice unless they are efficiently implemented and taxpayers can be induced, and if necessary, compelled to comply with them. An efficient and effective tax administration is, therefore, a pre-requisite if a tax system is to fulfill its revenue-producing potential, and even a best designed tax system is only as good as the administration which implements it.

33. A major factor in enhancing the efficiency and effectiveness of revenue administration in management in the broadest sense of the term, is designed to achieve optimal results through the best possible use of the available human, financial and material resources, and encompassing personnel management, planning and control.

34. In many cases, radical changes in personnel management are essential to the implementation and sustainability of tax administration reform. Hence, the aim should be to develop and implement an adequate personnel management scheme to remedy the shortage of highly-skilled and professional staff, and of experienced functional administrators or managers. Such a scheme applicable across the board to administrators and managers at all levels, should be flexible enough to respond to realities. Personnel management should be viewed as a package consisting of four major components: recruitment, motivation, training and management development.

Personnel management

35. It would be highly desirable, wherever possible, to establish and apply personnel policies and practices aimed at recruiting and retraining staff with the skills needed to carry out the full range of the tax administration=s mission. Effective personnel policies are also a key element in allowing the tax administration to progress. To be effective, a personnel policy should address three interrelated issues: the tasks assigned to each position in the organization, the skills and

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8 Schlemenson, Aldo (1992): AOrganizational Structure and human resources in Tax Administration@ in AImproving Tax Administration in Developing Countries,@ ed. by Bird, Richard M. and Casanegra de Jantscher, Milka (International Monetary Fund, Washington, D.C.).

9 Silvani, Carlos and Katherine Baer (1997): ADesigning a Tax Administration Reform Strategy: Experiences and Guidelines:@ IMF Working Paper: WP/97/30, pp. 30-31.

experience required to carry out the tasks for each position and the appropriate salary.8 Staff in different positions in the organization should have the skills and experience required to carry out the tasks of each job and be appropriately compensated for that job. If personnel policies do not take into account these variables, staff satisfaction will suffer as will the productivity of the entire organization.

36. There are certain relevant questions in assessing the tax administration=s personnel policies, namely, what is the distribution of staff by function; what is the distribution of staff by salary; what are the rules for hiring and firing personnel; are there clear career paths and job descriptions. Frequently, an excessively high percentage of staff C in some countries up to even 25% of total staff performs administrative functions, rather than core operational functions. Salaries are also considerably lower than those in the private sector for identical skills and responsibilities. Also the rules for recruitment, promotions and retrenchment/dismissal do not provide the right incentives and promote "sclerosis" of the organization.

37. Personnel policies will also depend upon the kind of organization which is adopted. A tax administration that is dependent on a larger public sector agency, such as, a Ministry of Finance or of the Economy, will have to follow that agency=s personnel policies; a more

autonomous organization will have greater flexibility in defining its own. Silvani9 has observed that although personnel matters are usually given less attention than the technical matters, ignoring the former may handicap other tax administration reforms. For a reform effort to succeed, tax administration staff C from the head of the tax administration to the bottom of the career ladder C need to have a degree of job security, and know that the organization has fair personnel policies. The requirement of a degree of job security should be weighed against the need for establishing staff accountability and responsibility.

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38. To assess the tax administration from the point of view of an organization, it may be desirable to analyse the turnover of the tax administration=s top management as well as the administrative rules governing the terms of their appointment and employment. High turnover usually results from the absence of strategic plans and clear definition of medium and long-term objectives. If the tenure of the head of the tax department is perceived as highly unstable, the lower level managers and the institution as a whole will not pay much attention to the directions and instructions coming from higher authorities.

39. While considering tax reforms vis-a-vis personnel policies, an important issue to be kept in view is the degree of autonomy of the tax administration. The more the administration enjoys autonomy vis-a-vis the civil service rules and regulations, the more flexibility it will have to make the major organizational and procedural changes needed to modernize the tax administration. Essentially, the reformers should seek to establish a tax administration that can carry out its part of the country=s macro-economic programme. The tax administration is more likely to respond far more easily to the Government=s initiatives to generate more revenue if it is able to make its own decisions regarding the appropriate organization, staffing, salary levels, procurement, renting or purchasing office space, etc. In many countries, experience has shown that introducing drastic basic changes in tax administration is easier when the organization is

relatively autonomous. Conversely, countries whose tax administrations are fully dependent on other government agencies for approval, authorization and staffing have found it more difficult (and therefore have been slower) to introduce major changes in tax administration.

Recruitment

40. There should be a recruitment strategy designed to provide the tax administration with a core of professionals C accountants, computer specialists, economists, lawyers, managers, statisticians and so on C of comparable competence to their private sector counter-parts.

41. The first step in the recruitment of suitable staff should be the preparation of clear job descriptions setting forth the nature of the duties and responsibilities involved, the education and experience required, and the salary and benefits offered. Recruitment and promotion should be based strictly on the principles of transparency and non-discrimination with regard to gender, ethnic background and religious beliefs. Aptitude tests may be necessary in certain cases, and the

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recruitment process should be so designed as to ensure that candidates understand the possibilities and limitations of the job and possess not only the requisite technical skills but also such qualities as a sense of responsibility, moral integrity, and a commitment to public service.

42. The first step in the recruitment of suitable staff is the preparation of clear job descriptions. Candidates for various positions can be found internally (that is, within the tax administration itself), or externally (through spontaneous job applications, applications submitted in response to press advertisements, and recruitment campaigns in educational institutions, professional associations, universities and specialized institutions). The core values for candidates are honesty, integrity, professionalism, respect for people, diligence, adaptability, and ability to treat all taxpayers fairly and equally and to provide them with quality services.

43. It would be desirable to establish a roster of qualified persons both within and outside the

tax administration who might be able to fill vacant posts. Candidates= academic background should be taken into account in determining whether they are likely to become good revenue administrators after suitable training. In this connection, standard entrance examinations, possibly on a competitive basis, may be appropriate. In any event, aptitude tests may be desirable in certain cases.

44. The recruitment of a suitable revenue administration staff poses special problems in developing countries and economies in transition where the number of people possessing requisite skills may be limited and, in many cases, the private sector can siphon off desirable candidates because it can offer financial and professional conditions that the public sector with its usually limited resources find hard to match.

45. Tax administration personnel are recruited through various institutional channels. For example, in Ghana, in terms of the Constitution, the authority to make the appointments and promotions within the revenue administration is vested in the President, who acts on the advice of the Board of Service in consultation with the Public Service Commission. Similarly, in India, where the Department of Revenue is part of the Civil Service, recruitment is the responsibility of the Union Public Service Commission, a statutory and independent organization under the Constitution of India. The revenue administrations in Nepal, Bangladesh and Pakistan have direct recruitment at senior levels with a restricted quota of promotion from lower ranks. In

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Bangladesh and Pakistan, officers are recruited directly through a competitive examination conducted by the Civil Service Commission and assigned to various services, depending upon the candidates= choices and their rank in the examination. In Nepal, officers are likewise selected through a competitive examination conducted by the Civil Service Commission and then posted as Tax Officers, Customs Officers, and Excise Officers.

Staff at the junior executive levels also have to pass competitive examinations in all three countries. Recruitment at lower ranks is centralized in Bangladesh and Nepal and partly

decentralized in Pakistan.

46. In Malaysia, recruitment is also handled by the Public Service Department. In Malta, the Department of Inland Revenue does not recruit its own staff since it is a part of the civil service; recruitment is carried out by the Central Government Agency. Moreover, the Department is subject to the policy prevailing in the civil service whereby government employees may be transferred from one department to another. In Papua New Guinea, the power to recruit is vested in the public services. In Venezuela, recruitment is the responsibility of the General Sectional Directorate of Human Resources of the Ministry of Finance, which, for that purpose, uses the educational and experience requirements set out in the "Types of Position" description manual prepared by the Central Personnel Office.

Motivation

47. In developing countries and economies in transition, the recruitment of suitably qualified staff poses special problems, which include poor working conditions, political interference, low morale and the unattractive low levels of remuneration for professional personnel, compounded by the lack of benefits such as, welfare services. Another problem is the keen competition between revenue administration agencies and the private sector for the services of the limited number of people possessing the requisite skills. In order to attract and retain the qualified personnel, there is obviously a need to provide adequate motivation.

48. If the full potential in value-for-money terms of the recruitment process is to be realized, motivation should be perceived as a major component of the personnel management package and should include such incentives as, adequate remuneration and fringe benefits, job security,

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general job satisfaction, recognition by the top level of tax administration hierarchy of anemployee=s contribution to the administration=s performance, and career development opportunities. Career development should be viewed as a process enabling employees to look

forward to an orderly progress in the performance of their jobs or series of jobs, throughout their working life, with increased job complexity, personal responsibility and benefits.

49. Job satisfaction depends on observance by supervising authorities of sound management principles. Each employee should be able to feel that he is a part of a team working on the basis of clearly understood policies and directives towards clearly defined goals for the good of the country. Decentralization of authority and proper delegation on clearly understood policies and specific programmes should be on the basis of qualifications, skills and experience of the staff concerned. Individual officials should feel inclined to imbibe team spirit and supervising authorities should provide adequate guidance, assistance and encouragement to subordinate officials.

50. Staff performance should be evaluated at periodical intervals according to objective criteria and awarded standardized ratings. There should be positive efforts to commend excellent performance and suggest remedial measures for removing deficiencies without sounding unduly critical. If defects or deficiencies persist, strict action should be contemplated against the erring official. Promotion to higher posts or special positions of responsibility should be normally based on merit-cum-seniority principles. Promotion prospects, with suitable training opportunities have considerable impact on staff morale. Staff members should be encouraged to suggest measures for avoiding waste and improving productivity, with the incentive of prizes for best suggestions. There should be instituted award schemes for outstanding performance for different fields of activities in the revenue administration.

51. Adequate motivation eliminates or greatly reduces the incidence of dishonesty or corruption. Dishonesty is detrimental to a revenue administration not only because of the resulting loss of revenue but also, more significantly, because of the harmful effects on the

taxpayers= confidence. It is, of course, well recognized that there will be less temptation to

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engage in corrupt activities if tax officials receive salaries which match those of the private sector. However, most developing countries and economies in transition lack the resources to pay such salaries and must therefore rely on security of employment to encourage honesty. Top officials will be less likely to behave dishonestly if they know that, if discovered, they will lose the guarantee of a secure future for themselves and their families. Other strong motivations for remaining honest are the likelihood of an employee=s acts being discovered as a result of internal auditing, and the certainty of criminal prosecution and punishment for those found guilty of corrupt practices. Public esteem and approbation of honest officers also constitute an important element in maintaining integrity by revenue officials.

52. To increase the attractiveness of tax administration posts, certain countries have introduced financial incentives for tax administration officials. For example, in 1986, Uruguay established a Participation Fund financed by 30% of the additional collections received by the General Directorate of Taxation as a result of audits, examinations and legal proceedings undertaken by its officials; tax administration staff receive payments from the Fund. In 1988, in Argentina, the General Directorate of Taxation became an autonomous entity, with its own administration, net worth, bodies, resources, and control procedures; and in 1989, the Special Hierarchical Account was established as a means of motivating the staff of the General Directorate. The Account is maintained with up to 0.60% of the revenue originating from taxes administered by the latter. About 35% of the funds are distributed among all officials in proportion to their salaries; 55% are distributed by taking into consideration their position in the hierarchy of functions, performance, attendance and disciplinary record; the balance of 10% are devoted to motivating the staff in accordance with the objectives and goals set in each operational area. In 1991, Peru reorganized the National Superintendency of Tax Administration (SUNAT). Soon thereafter, the SUNAT Employee Fund was established to provide health benefits and loans. Also in 1991, Colombia established the Tax Management Fund within the framework of the Directorate of National Taxes. The Fund=s objective is to support the modernization of the tax administration, mainly by

promoting productivity, training and social welfare programmes for officials and their relatives, and by investments intended to help defray the operating expenses of the tax administration. Also in 1991, Panama established the Tax Management Fund within the framework of the General Directorate of Revenues. The Fund is financed by 1% of the excess revenues originating from taxes administered by the General Directorate; its resources are distributed among the entire staff, in accordance with performance.

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Training

53. Training should be broad based and cover all aspects of revenue administration. Whenever and wherever possible, the training programme should cover at least four main areas, namely:

1. Basic training for new entrants in the relevant fiscal laws and operating procedures;2. Refresher training to upgrade knowledge and skills of revenue administrators;3. Specialized training in specific areas of revenue administration;4. Management training to enable employees to move upwards to supervisory and

managerial positions.

Wherever possible, the revenue administration should consider the feasibility of establishing its own training centre. Revenue administration employees should be given opportunities to exchange technical knowledge and experience with their counter-parts in other countries within the framework of international conferences, workshops and seminars.

54. Suitable training facilities for revenue administration officials are essential. Newly recruited revenue administration staff are rarely fully prepared for the tasks they are supposed to perform. Moreover, the staff already on board need to be instructed in the administration of new regulations and procedures and given an opportunity to update their knowledge and techniques, with a view to enhance productivity and seek future promotion. A well-conceived

training programme can do much to enhance the efficiency of revenue administration staff and motivate them by providing opportunities for personal development and career advancement. Training should include not only technical matters but also other aspects of revenue administration, such as, communication and public relations.

55. The lack of managerial capabilities seriously handicaps the effective functioning of revenue departments in many developing countries and economies in transition. While some progress has been made in developing technical capabilities through entry-level training programmes, insufficient attention has been given to developing revenue officials as good managers. This situation resulted from a lack of management training facilities and also a lack of awareness of the potential of management tools and techniques, with respect to decision-making

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and problem-solving in revenue administration. Every revenue department should develop a training plan spanning the entire service career of a revenue official, including basic training, periodical refresher training and executive and development programmes. Training is an investment which yields substantial dividends if properly administered and regularly provided; resources permitting, each revenue department should have its own training centre or access to a joint training centre. At present, a number of developing countries have reasonably good centres for training revenue officials, some have small training facilities and some have none. The centre should provide four types of training as mentioned in paragraph 53.

56. If training is to be effective, there is need to secure good trainers and adequate incentives should be provided to attract them. Periodic interregional, regional and sub-regional seminars, workshops and conferences, which enable revenue officials to learn from each other=s experience can be extremely useful. The use of a country=s training facilities by other countries can also make a valuable contribution and increased exchange of information on revenue administration between developing countries and economies in transition, especially neighbouring ones, is highly desirable.

57. In order to strengthen the infrastructure of management capacities, the revenue administration should emphasize management development and devise procedures and programmes that make it possible to identify the potential of managerial personnel at all levels and develop it to the fullest. In particular, steps should be taken to ensure that senior managers have sufficient command of the specialized tools of management (including planning, organizing, budgeting, cost accounting, information systems, etc.) in order to be able to use them well and in coordination for optimum results.

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3. MANAGEMENT INFORMATION SYSTEMS

58. A management information system (MIS) is a formal system designed to provide information to managers. The basic idea behind an MIS, regardless of its sophistication, is to provide managers with information in a systematic and integrated manner rather than in a sporadic and piecemeal manner. A good MIS enhances strategic control and strategic planning.

59. The role of the MIS is to enable members of the administration to carry out their work efficiently and effectively by means of providing a continuous, reliable and secure information technology service:

! to enable access by members of administration, the senior management of the organization and where appropriate, other members of the organization to administrative and management information and to ensure that such information is reliable and consistent;

! to ensure that the information technology currently available or planned is used effectively.

59. The responsibilities of MIS in the context of revenue administration are:

! to provide applications for support for the operational and management processes of the tax administration and for the purposes of the institutional plan;

! to design and develop information systems which promote the efficient and effective operation and management of the tax administration and improve the quality and quantity of management information available;

! to devise appropriate methods for the dissemination and control of management information within the tax administration;

! to promote and, as appropriate, provide training in the efficient and effective use of information processing in the tax administration.

60. MIS as applicable in the revenue administration operates in two tiers, one at the policy

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formulation level at the Board of Revenue or Revenue Authority and second, at the operational level or the field level where the actual tasks of assessment and collection of taxes take place. At the policy formulation level, the information required to take management decisions will be regarding the figures of total assessments completed and aggregate demands raised and the collections reported from different centres on a periodical basis which may enable the authorities to compare the annual plan figures of projected assessments and collection targets and the actual performance at the periodical interval. The senior administrators at the Board of Revenue level would be able to assess the performance at the field level and draw necessary conclusions about the meeting of targets by the subordinate authorities and take corrective actions by proper deployment of personnel or remove organizational deficiencies by other means.

61. Another important use of the information received at fixed periodic intervals concerning collection of taxes can be transmitted to the Budget Division in the Ministry of Finance for their consideration of the "ways and means" position for incurring necessary expenditure therefrom and to weigh the various options regarding public borrowing. On the other hand, the information made available to the senior administrators regarding the benefits availed of various tax concessions and abatements in actual monetary terms or regarding the overall impact of tax raising measures enables the authorities to draw necessary conclusions regarding planned action for future budget proposals.

62. At the field level, the management information received by Commissioners of Taxes from the lower formations is primarily in regard to the pace of assessments and raising and collection of demands, outstanding demands, effects of various judicial decisions and appellate

orders and effects of recovery measures. These details available through computer operated systems enables the Commissioners to assess the strengths and weaknesses of the organization, need to take remedial measures and periodical review of the results achieved. The management information also highlights the performance of individual subordinate employees entrusted with assessment and collection tasks and provides necessary input for shifting personnel to different positions for obtaining optimum results.

63. The management information received at fixed periodical intervals can be collated, aggregated, analysed and presented in a form as to enable proper conclusions to be drawn by the

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senior administrators. For this purpose, it is necessary to select proper hardware and software and formulate systems which are capable of meeting the demands of the tax administration. While not absolutely essential, most MIS incorporate the use of computers. A frequently used acronym in computer technology is EDP (electronic data processing). EDP refers to the hardware, software and personnel that process data into information. Hardware is the computers and various input and output devices that make up a computer system. Software refers to the programmes or sort of instructions that direct the hardware to perform its various functions. The personnel in the EDP system fall into three categories: systems analysts, programmers, and operators. Systems analysts design MIS; programmers prepare computer programmes based on the specifications of systems analysts and operators run or operate computer hardware.

64. Unfortunately, many MISs have been failures. Careful design and implementation of an MIS is essential. Several crucial factors that determine the success of an MIS are as follows:

1. The information system must be designed and implemented so as to meet the needs of those managers, i.e., senior tax administrators who will use it in carrying out their day-to-day responsibilities.

2. Designing and implementing an MIS is best accomplished through the close

cooperation between systems analysts and managers.3. A good starting point in MIS design is an examination of the information systems

that currently exist in the tax administration.4. Flexibility of design is a most desirable characteristic of an MIS.5. Output from the MIS must be presented in a form that is appropriate for use by

managers. Information overload must be avoided.

65. MIS must be designed to meet the needs of the users and must be constantly evaluated in terms of changing user needs. Then the following ten questions should be posed regularly to users to ascertain the effectiveness of the tax administration=s MIS system:

1. Do you feel that the information system exists to provide service to you in your day-to-day work? Has it helped you in this respect?

2. Has the information system provided the service that you feel was promised at the

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start of the design and implementation? In which area has it failed and excelled in your opinion?

3. Do you consider that the system has been implemented with due regard to the costs and benefit? Are there any areas in which you consider that costs are excessive?

4. Do you feel comfortable using the system? Could more attention have been paid to matching the output of the system to your needs and if so, in what areas?

5. Is the system flexible enough in your opinion? If not, where should changes be made?

6. Do you still keep a personal store of information in a notebook or elsewhere? If so, will you share that information with the system? Do you see any benefits in so doing?

7. Do you think that the information system is still evolving? Can you influence this evolution and if not, why not?

8. Does the system provide you with timely, relevant and accurate information? Are

there any areas of deficiency in this regard?9. Do you think that the information system makes too much use of complex

procedures and models? Can you suggest areas in which less complicated techniques might be used to advantage?

10. Do you consider that there has been sufficient attention paid to the confidentiality and security of the information in the system? Can you suggest areas for improvement of these aspects of its operation?

MIS in US Tax Administration

66. Employing over 115,000 persons, collecting over $1.5 trillion, processing over 204 million tax returns, issuing over 89 million refunds, distributing over 300 million forms and publications, the Internal Revenue Service of the United States of America is modernizing the tax system by implementing a $23 billion plan encompassing an update of its entire computer, software and communications infrastructure. The IRS modernization plan will result in improved taxpayers satisfaction, increased revenue and reduced operational costs. A major programme objective is to migrate from paper intensive tax processing system to one that is automated and service oriented. The technologies implemented to achieve this goal include electronic tax filing, converting data received on paper to an electronic format, and organizing tax information in

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integrated databases so that authorized IRS personnel can handle taxpayers= enquiries more efficiently. Another challenge is to review and refine and the steps the IRS must take to ensure continuity of tax processing from the old system to the new.

67. It may be instructive to note the salient points of the "Tax Division Docket and Case Management System" of the United States Department of Justice with its brief features, as a case study.

Title: Tax Division Docket and Case Management System

Originator:Department/Agency: United States Department of JusticeMajor Organization Subdivision: Tax DivisionMinor Organization Subdivision: Office of Management and Administration

Abstract: The Tax Division Docket and Case Management System allows Division personnel to locate information about the status of pending and terminated civil and criminal matters and litigation handled by Division personnel, including the following: case identifiers and descriptors, plaintiffs and defendants, post-litigation debt collection information, and disposition information. The system also contains the identifiers of Tax Division personnel assigned to matters and the numbers of hours each worked on the matter.

Purpose: The Tax Division=s chief activity is to enforce and defend the tax laws in civil and criminal litigation. Consequently, information which is maintained by the Tax Division pertains mainly to civil and criminal tax litigation, either filed or unfiled. This system was created and is maintained to permit Division personnel to locate matters currently or formerly handled by the Division, to identify assigned staff, and to track the status of litigation. The system is also used in the preparation of reports for the Division=s budget requests, as well as various official reports.

Access Constraints: In accordance with the requirements of Section ___ of the Internal Revenue Code and Rule ___ of the Rules of Criminal Procedure, all records contained in the system are protected from unauthorized access through administrative, physical and technical

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safeguards. These safeguards include restricting access to those with a need-to-know to perform their official duties, passwords, and encrypted dial-in-access.

Use Constraints: Users of the Docket and Case Management System are restricted to those privileges necessary to perform assigned tasks.

Agency Programme: The Tax Division enforces and defends the tax laws in civil and criminal litigation. The Docket and Case Management System is one of the tools used to accomplish this mission.

Source of Data: Data contained in the Docket and Case Management System is entered by the Litigation Section based on pleadings and correspondence received from the courts approving counsel, the IRS and other parties as well as activities reported by the Tax Division personnel.