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2006 May Status Report of the Auditor General of Canada
May 2006 Status Report—Chapter 8
Insert 8.1—How the collection system works
When tax assessments or reassessments are not paid, the unpaid balances are drawn from the appropriate accounting system and become collection accounts. There is a separate accounting system for each revenue line—personal income tax, corporate tax, goods and services tax (GST), and payroll deductions by employers.
The Agency tries to collect the full balance of a tax debt or make an arrangement for payment in full within a certain amount of time. When it is not possible to arrange a payment, legal action can be taken. Legal actions include, but are not limited to
- garnisheeing wages or pensions or accounts receivable,
- setting off the debt against other government payments,
- seizing assets,
- certifying the debt in Federal Court, and
- putting a lien on a taxpayer's assets.
The Agency can take tax debtors to court to collect the unpaid debt.
A combination of procedures, both automated and by human intervention, is used to collect outstanding tax debts. The procedures used include computer-generated letters, telephone calls, field visits, and legal actions. Collection actions take place automatically through REMITS (Revenue Enforcement Management Information Tracking System), at a national collections call centre in Ottawa, at eight locations that collect for two national pools of accounts (personal tax and GST), and at Tax Services Offices across Canada. The size and complexity of an account determine which collection mode will be used.
REMITS sends out letters to tax debtors and handles some accounts for which arrangements have been made. The call centre conducts mainly outbound calls to tax debtors whose debts are below a certain dollar limit. The call centre has a telephone system that allows it to automatically dial out to taxpayers. The national pools conduct mainly outbound calls to tax debtors, regardless of geographic boundaries, for individual tax and GST owed below a certain dollar limit. The pools also conduct limited enforcement actions such as garnishees. The Tax Services Offices work on the larger and more complex accounts and conduct a full range of legal actions, such as seizing assets and placing liens on the property of tax debtors.
Information technology systems. The Agency has several systems that help it undertake and manage collection activities. Because the Agency collects debt on all revenue lines, its information technology systems have to connect to the information technology systems of all revenue lines. The unpaid balances of tax, penalty, and interest for personal and corporate tax are transferred from the accounting systems into two collections systems: the management information system STARS (Statistical Tracking Analysis and Reporting System) and REMITS. The unpaid balances of goods and services tax and payroll deductions are transferred to ACSES (Automated Collections and Source Deductions Enforcement System).
The STARS system provides information to staff to manage their operations. It provides information on new debt assessed but not paid, cash collections, write-offs, debt aging, and revenue line. A query facility allows for queries of accounts.
REMITS applies a risk model to individual and corporate tax debts to determine whether they should be handled by REMITS, the call centre, a national pool, or Tax Services Offices. REMITS then handles some accounts automatically and routes others to the appropriate location.
Collection officers use a system called ACSES to manage their accounts. ACSES allows collection officers to document the details of day-to-day collections activity on each account in a diary, bring forward work, refer work to team leaders and managers for review and approval, and link to other Agency systems.