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IDR PERFORMANCE REPORT For Fiscal Year 2010 Mark R. Schuling Director TABLE OF CONTENTS Introduction ........................................................................................................... 1 Agency Overview ...............................................................................................2-5 Key Results........................................................................................................6-9 Performance Measures-Local Government Assistance .................................10-11 Performance Measures-Resource Management ...........................................12-13 Performance Measures-Collections and Compliance ....................................14-18 Performance Measures-Tax Research and Program Analysis ......................19-20 Agency Contacts and Acknowledgments............................................................ 21 INTRODUCTION On behalf of the staff of the Iowa Department of Revenue, I am pleased to present our Fiscal Year 2010 Annual Report. The mission of our Department is “To serve Iowans and to support government services in Iowa by collecting all taxes required by law, but no more.” The Department deposits over 90% of the state’s appropriable receipts. Other state agencies depend on timely deposits to provide the funds they use to operate. This is accomplished by providing taxpayers with current and complete information, and up-to-date technology to support tax filings and payments. This report provides information about some of the ways in which that mission was accomplished during the past fiscal year. The Iowa Department of Revenue (IDR) monitors performance of four core functions, under which there are seven services, products and activities (SPAs). In all, 74 measures are used to monitor the core functions and the SPAS in the IDR’s Performance Report. We are pleased to report an excellent year by the IDR. Sixty-three measures or 85% were met or exceeded during the fiscal year. Several of the measures missed were due to staffing reductions and furloughs due to the fiscal funding reductions. Performance measures monitoring the core functions of local government assistance show the IDR has done extremely well in education and service to local governments. A total of eleven of the twelve outcome measures met or exceeded their targets. Performance measures monitoring the core functions of revenue collection and compliance show that 29 of the 37 outcome measures met or exceeded their targets. All of the measures that involved revenue collections exceeded their measures except for one and this measure was not achieved as a result of reductions in staffing resulting in lower than anticipated work hours spent on audits. All eight of the non-revenue collection measures that were not achieved involved reductions in staffing resulting in lower than anticipated work hours spent on collections and audits. Performance measures monitoring the core functions of research, analysis and information management show the IDR has done extremely well in providing taxpayer analysis and economic and statistical research. A total of 11 of the 11 outcome measures met or exceeded their targets. Performance measures monitoring the core functions of resource management show the IDR has done extremely well in supporting the agency in meeting its targets within budget. A total of 12 of the 14 outcome measures met or exceeded their targets. We recognize our responsibilities to the taxpayers, and service is a priority. We are pleased to offer our professional services through the Internet and will continue to make progress and improve on those services. Our actions comply with the statutory provisions of the State of Iowa, and our duties under those statutes are carried out in a fiscally responsible manner. Yours truly, Mark R. Schuling, Director Iowa Department of Revenue IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 1 AGENCY OVERVIEW The Iowa Department of Revenue is responsible for administering the taxes noted below: Taxes Established by Iowa Code Individual Income Tax Consumer Use Tax Motor Fuel Taxes Corporation Income Tax Retailer Use Tax Fiduciary Tax Partnership Income Tax Hotel / Motel Tax Inheritance & Estate Taxes Franchise Income Tax Local Option Tax Cigarette / Tobacco Tax Sales Tax Withholding Tax Drug Stamp Tax Property Tax Replacement Tax Real Estate Transfer Tax Motor Vehicle Use Tax Car Rental Tax Moneys & Credits Tax Vision To be recognized as a department employing a well-trained workforce that in a fair and respectful manner provides responsive and accurate services that enables all customers to comply with Iowa’s tax law. Mission The Department’s mission is to serve Iowans and to support government services in Iowa by collecting all taxes required by law, but no more. Guiding Principles • Customer Focus: We will encourage collaboration and partnership with our internal and external customers. We operate in an ever-changing environment and will integrate advanced technology into our work processes in order to make them more efficient and of higher value to our customers. • Integrity: We will through honest and open policies maintain the public’s confidence in our ethical standards. We will carefully safeguard our customer’s confidential information. IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 2 • Responsibility: We will provide expert advice and support to policy-makers and to local and state government entities. We will help local governments responsibly manage their resources through education and supervision of the property tax system and local option taxes. • Understanding: We will recognize that Iowa tax laws are complex and will provide the services and education necessary to enable compliance by all our customers. We understand that to have a well educated and responsive work force we need to provide our employees with ongoing training to develop their professional skills and to achieve personal growth. • Fiscal Management: We will responsibly manage our financial resources to fulfill our mission. We will continually monitor and measure our processes to assure economy and efficiency. Core Functions ●Local Government Assistance – Provide assistance to local governments by administering fair and equitable assessments and programs for property tax relief and local option sales taxes. ●Revenue Compliance and Collection – Educate customers on tax policy and collect revenues in compliance with Iowa’s tax laws, including processing and collections, policy development, education, examination, audit, and timely resolution of disputed tax issues. ●Research, Analysis, and Information Management – Provide tax policy analysis, fiscal impact estimation, and economic and statistical research and analysis to help customers, stakeholders, and policy-makers make informed decisions. ●Resource Management – Provide vital infrastructure necessary to administer and support agency operations, including personnel, the agency’s Web site, performance measurements, and the development and support of technology and information applications. Department Operational Units The organization is structured into seven operational units. The following is a brief overview of the Department’s primary organizational entities and services provided. ●Director’s Office The Director's Office consists of two sections: IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 3 The Internal Audit Section and The Tax Research and Program Analysis Section. ●Compliance The Compliance Division is divided into three major sections: Field Audit, Office Examination and Tax Gap. ●Technology and Information Management Maintains and develops the Department's computerized systems, including the planning and technical support of the Wide Area Network and related automated systems. ●Internal Services The Internal Services Division includes: Employee Resource Team Budget and Finance Office Communication Section Performance Management Section ●Revenue Operations The Revenue Operations Division has three major sections: Customer Accounts Collections Document Processing ●Property Tax The Property Tax Division assists local governments in making property tax assessments fair and in compliance with the law. ●Taxpayers Services and Policy The Taxpayers Services and Policy Section includes: Audit Services Tax Policy Taxpayer Services Customers The Department’s customer base is, by its very nature, one of the largest of Iowa State governmental agencies. In addition to all persons with Iowa tax responsibilities throughout the state and nation, the Department deals with all levels of state, local and federal governments, tax practitioners, business groups, state employees, the legislature and other states’ revenue agencies. The Department deposits over 90% of the state’s appropriable receipts. Other state agencies depend on timely deposits to provide the funds they use to operate. Externally, taxpayers expect timely processing of refunds or that an audit billing is accurate and understandable. Each customer expects information and products to be disseminated timely, accurately and clearly. This expectation holds true for both external inquiries and for product generated by the Department. IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 4 Staff The Director of the Iowa Department of Revenue is Mark Schuling. During FY10 there were 356 fulltime employees working for the Department. Three employees work at out-of-state locations, 77 are assigned to 10 field offices across Iowa, and the remaining 276 are domiciled in Des Moines. All contract-covered job classifications in this Department fall under the AFSCME bargaining agreement. The Department director is a position appointed by the governor. IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 5 KEY RESULT Core Function Name: Revenue Collections and Compliance Description: The Department of Revenue collects delinquent tax debt and also provides collection services to the Iowa Judicial Branch, Iowa College Student Aid Commission, Department of Human Services and Department of Natural Resources Why we are doing this: To provide quality, competitive collection services. The Collection Enterprise is self-supporting. What we are doing to achieve results: The Collection Enterprise completed a major upgrade to collection software and coordinated that effort with a business process reengineering designed to maximize the effectiveness of the new software and to utilize nationally recognized best practices. Results Dollars Collected By Collection Enterprise Performance Measure: $250 Dollars collected by Collection Enterprise. Dollars In Millions Performance Target: The Department estimated in Fiscal Year 2010 a total of $157.5 M in tax and non-tax collections. $25.6 $200 $28.7 $25.4 $150 $21.9 $166.9 $21.0 $143.4 $100 $123.3 $134.2 $95.2 $50 $0 What was Achieved: FY 06 FY 07 FY 08 FY 09 The Department far exceeded Tax Collections Non-Tax Collections Its expectations in fiscal year 2010 with $192.5 million collected in both tax and non-tax liabilities placed with the Department. FY 10 Data Sources: Collections Annual Report, Dollars Collected per Dollar Spent by Tax and Non-Tax Programs. Resources: Collections represent recoveries by all units of the Collections Enterprise. IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 6 KEY RESULT Core Function Name: Revenue Collections and Compliance Description: The Department of Revenue receives and processes income tax returns from taxpayers each year. Some taxpayers must pay additional tax when filing their returns. However, a majority of taxpayers are entitled to refunds. The Department recognizes that taxpayers entitled to refunds prefer having their payments in a timely manner. Why we are doing this: To serve the taxpayers of Iowa by processing tax information so that refunds are issued in a timely manner. What we are doing to achieve results: The Iowa Department of Revenue has two key systems for processing individual income tax returns. One system is used to process returns filed on paper documents. The second system is for processing electronically-filed returns. The Department monitors the processing efficiency and turn-around time for both systems. Since refunds requested electronically are issued much quicker, the Department continues to promote electronically filing returns. Results Performance Measure: Percent of electronically-filed Individual income tax refunds issued within 14 days. % Electronic Refunds Issued in 14 Days Calendar Year 100% 96% 97% 97% 96% 95% 2005 2006 2007 2008 2009 80% Performance Target: 95% of refunds issued in 14 days. What was Achieved: The Department met its goal of 95% of electronic refunds issued in fourteen days. 60% 40% 20% 0% Data Sources: Iowa Revenue Information System. IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 7 KEY RESULT Core Function Name: Revenue Collections and Compliance Description: Percent of Dollars Deposited on the Same Day as Receipt. Why are we doing this: Prudent money management principles require that revenues be deposited as quickly as possible to maximize investment proceeds and cash flow, and to provide for accurate accounting. The timely deposit of revenues ensures that funds are available for the continued provision of state government services. What we are doing to achieve results: The Revenue Operations Division deploys strategies to improve deposit of sales tax and income tax withholding during high-volume quarterly periods. Results Performance Measure: Percent of dollars deposited on the same day as received. % Dollars Deposited on the Same Day as Received 100% 85% 86% 86% 87% FY 06 Performance Target: 80% of dollars received will be deposited on the same day as received. 82% FY 07 FY 08 FY 09 FY 10 80% 60% 40% What was achieved: 87% of dollars received into the Department was deposited on the same day as receipt. 20% 0% Data Sources: Revenue Operations reports and information systems. IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 8 KEY RESULT Core Function Name: Revenue Collections and Compliance Description: The Examination and Audit Sections review returns covering 14 major taxes established by Iowa law. These sections determine unpaid tax liabilities and bill for the correct amount of tax. The staff tries to make audits both educational and informative to avoid the need for future audits of the same taxpayer. Why are we doing this: To improve the voluntary compliance with Iowa's tax system. What we are doing to achieve results: The Examination and Audit Sections integrate internal and external databases to enhance compliance and enforcement. Results Performance Measure: Revenue Established Revenue Collected FY 2010 Office and Field Enforcement Programs Actual Revenue Established and Collected $300,000,000 Performance Target: Establish $172,290,547 and Collect $75,233,199. $269,180,176 $250,000,000 $200,000,000 $153,322,904 $150,000,000 $100,000,000 What was achieved: $50,000,000 The Examination and Audit $0 Sections established Revenue Established $269,180,176 in revenue and collected $126,099,155. In addition, the Examination and Audit Sections reduced refunds by $27,223,749. Revenue Coll/Refunds Reduced The dollars collected and refunds reduced total $153,322,904. Data Sources: Compliance Division Return on Investment and Cost Benefits reports. Business Objects query tools. IOWA DEPARTMENT OF REVENUE PERFORMANCE REPORT FY10 9 Agency Performance Report FY 2010 Name of Agency: Iowa Department of Revenue Agency Mission: The Iowa Department of Revenue will serve Iowans and support government services in Iowa by collection all taxes required by law, but no more. Core Function: Local Government Assistance Performance Target Performance Actual Agricultural 75% 71% Residential 75% 88% Commercial 75% 81% 2.Number of appraisals completed to date. 100% 100% 3.Automation of collection information from counties. 75% automated by 06/30/10 Send exam results by 11/07/09 05/09/10 Notify by 08/31/09 01/31/10 Oral response