The employees of the ombudsman office are poorly trained and learn little on the job because they are not busy. The USA counterpart had 300,000 files and three quarters were resolved in tavour of taxpayers: In Canada, only about 2000 files were handled, and only 87 were resolved in favour of taxpayers..The Canadian ombudsman's office only handled 3 complaints per employee in 2010. Dept of holidays here. Great sodoku and crossword players here I'm sure.
Paper Tiger: Taxpayers ombudsman lacks real power (external - login to view)
By James Bagnall, Postmedia News September 24, 2011 8:02 PM
“Are people not complaining?” he asks rhetorically, “or are they not aware of their rights?”
It’s difficult to know what to make of Dube’s state of mind. His office last year hired Ipsos Reid, a polling firm, to assess how Canadians view the CRA. Turns out 42 per cent of them believe that making a complaint about the agency would only serve to draw heightened scrutiny of their next tax return.
It was this sort of paranoia that Dube’s office was meant to redress. The Tories four years ago expanded the taxpayer bill of rights to include, among other things, the right to professional and fair treatment, the right to complain about CRA staff and the right to be provided with explanations of the agency’s findings.
But there’s a problem, articulated cogently by Catherine Swift, the chief executive of the Canadian Federation of Independent Business, which represents more than 100,000 small businesses across the country.
“The CRA is feared by our members,” says Swift. “To access the ombudsman you have to work through the CRA’s internal complaints process first, then you go to the ombudsman. And our members are unlikely to want to do that.”
There are taxpayers who do seek Dube’s help, but few are rewarded for their efforts. Here’s how the numbers break down.
The ombudsman’s 26 employees last year fielded about 5,300 telephone queries, which were quickly whittled down to 1,200 files for review. Nearly 300 were closed because the complaints were outside the ombudsman’s mandate — he can’t review disputes about amounts owing or that involve matters of tax policy. Anything before the courts is also out of bounds.
The ombudsman kicked 722 cases back to the CRA or other government bodies. That left just 205 files, and 35 of those were closed because, upon more detailed examination, they also were found to be “non-mandate.” Another 83 complaints were resolved in favour of the CRA.
Bottom line: Dube’s office fixed only 87 complaints in favour of taxpayers, representing seven per cent of the files.
The contrast with the experience of the ombudsman’s U.S. counterpart is stunning. The National Taxpayers Advocate last year handled nearly 300,000 files and resolved three-quarters of them in favour of the taxpayer. Another way to look at it? Each of the advocate’s 2,100 employees solved 105 complaints in the taxpayer’s favour last year; Dube’s employees resolved just three on the same basis.
It’s little wonder so few Canadians think of Dube when they have difficulties with the CRA. What’s needed is an ombudsman with effective powers and a willingness to exercise them. Dube unfortunately possesses the power of moral suasion and little else.
The fault lies in part with his mandate. The federal government has long resisted the idea of giving watchdog agencies real independence and resources.
The Harper Conservatives promised to make a difference with their 2006 Federal Accountability Act, which created or expanded a number of offices to handle grievances from ordinary citizens and government employees. The act gave rise to commissioners who monitor lobbyists and keep an eye on potential conflicts of interest between public office holders and their private interests. Other commissioners oversee procurement and appointments to government agencies. The Tories also created a Parliamentary Budget Officer and a Public Sector Integrity Commissioner, with a mandate to encourage public-sector whistleblowers.
Some of the appointees, such as Budget Officer Kevin Page, have thrived. This is largely thanks to personalities who aren’t cowed by the establishment. At the other end of the spectrum, former integrity commissioner Christiane Ouimet was a spectacular disappointment for her unwillingness to launch investigations into complaints she received.
Taken as a whole, the federal overseers have faded quietly into the background, many of them held captive by the very departments or agencies they are meant to watch.
Andre Marin, the ombudsman for Ontario and former ombudsman for the Department of National Defence, is unimpressed by how things turned out.
“Right now in the world of ombudsmen, the risk that we face is of diluting the brand,” he says. “Everywhere you look there’s an ombudsman and it doesn’t require any particular credentials. You just put up a shingle and it’s easy to launch into the job without the right mandate or vision, and you end up duping your constituency.”
The Department of National Defence was one of the first federal departments to create an ombudsman — a direct result of the inquiry into the 1993 Somalia affair, when Canadian soldiers were caught torturing a teenage thief. The inquiry recommended an inspector general with real powers of investigation, someone who would report to Parliament. However, the Chretien Liberals opted instead for an ombudsman who reported to the minister of defence.
“What they did was a half measure,” says Marin, who is renowned for his clear-spoken, combative style. “If you report to a minister, as I did, and you’re outnumbered 100 to one by the bureaucracy you’re overseeing, it’s hard to do your job properly. So I sympathize with (Dube) in that regard.”
As ombudsman for Ontario, Marin today enjoys considerably more authority, including the right to enter provincial government offices and to compel testimony under oath.
Dube, on the other hand, reports directly to the minister of national revenue, which gives him some independence from the CRA, but not much.
“He can’t be very impartial when he reports directly to the government official with responsibility for raising revenue for the government,” says Paul DioGuardi, a former CRA tax lawyer and author of The Taxman is Watching.
“Also, when it gets to matters of real substance in your tax filings,” DioGuardi adds, “the ombudsman doesn’t have the mandate to get into the merits of the case — he’s really just a public relations operation.”
The relationship between the ombudsman’s office and the CRA is tighter than many understand. Most of Dube’s employees used to work for the CRA, for instance. And, even though Dube’s office is an independent unit within the tax agency, everyone who works there remains a CRA employee. Indeed, just down the hall from his office is a sign proclaiming the presence of the CRA.
There’s nothing especially wrong with this setup. After all, the U.S. National Taxpayers Advocate’s workers are employees of the Internal Revenue Service. But there are crucial differences between the U.S. and Canadian experience.
Most notably, the U.S. advocate has the power to correct an IRS action that may have created an unfair situation or hardship for a taxpayer. Nor can the advocate’s decision be appealed. The advocate’s case workers can also issue formal requests to compel the involvement of IRS employees.
With Dube, the interaction between his office and the Canada Revenue Agency is more of a dance. “In the early days of this office there was a fair amount of apprehension in the CRA,” Dube says. “It took longer for us to get information on files. They would ask, ‘Why do want this? Is this relevant?’ I’ve had to explain myself to them and they’ve had to be less apprehensive. The relationship is working very well right now.”
Somewhat surprisingly, Dube sees his role as honest broker between the taxpayer and the CRA, one of the government’s largest organizations with 44,000 employees. “We’re careful not to be an advocate for the taxpayer,” he says. “As a middleman, we have a lot of leverage because the CRA takes us seriously. And they take us seriously because we have the power to report publicly on what we find.”
Dube says his job is to present tight, irrefutable arguments based on the taxpayer bill of rights. The evidence, he says, will determine whether he should be in favour of the CRA or the taxpayer.
Dube’s middle-of-the-road approach flows naturally from his former position as alternate chair of the New Brunswick Labour and Employment Boards. His job there — which he filled from 2001 to 2005 — was to collect evidence from both sides involved in a dispute and produce fair rulings. The University of Windsor law graduate also practised law in Dalhousie, N.B., with his father.
There, the Dubes took on a wide assortment of civil and criminal cases. Dube was working as legal counsel for a pilot project run by Legal Aid Ontario in 2006 when he learned the federal government was looking for its first taxpayers ombudsman. He was attracted, he says, by the idea of defending the taxpayer bill of rights.
If he is frustrated by his lack of effective power, it doesn’t show. “The powers I have are fine,” he says. “The challenge we have is to be persuasive.”
Of course, this approach presupposes his staff is getting the information they need from the CRA. Dube believes they are. “We have former auditors, collection agents, project managers on staff,” he says. “When we ask for information from CRA, they’re in a very good position to get the information. They can separate the wheat from the chaff.”
However, his office’s investigations of certain files suggest two disconcerting tendencies. One is that he interprets his mandate very narrowly, which is why so many files are refused or referred back to the CRA. The second is to accept the CRA’s point of view at face value.
The first pattern is evident in an ongoing battle between the CRA and dozens of information technology professionals who are facing hefty tax bills after a CRA audit determined they were de facto employees of their clients, not independent businesses eligible for certain tax breaks. Dube’s office declined to probe the matter. “The determination of whether or not someone is a contractor is not a service issue,” Dube explains. “It’s an application of policy and procedures and that’s not within our mandate.”
The ombudsman is restricted from considering matters of tax policy or disputes about CRA calculations. These are to be dealt with through the CRA’s internal complaints system. If you still don’t like the CRA’s ruling, you can appeal to the Tax Court of Canada. Judgments there can be challenged in the Federal Court of Appeal.
Taxpayers upset with how CRA is dealing with them are encouraged to file a special form (RC193) that concerns service complaints.
Needless to say, by the time some taxpayers arrive at Dube’s doorstep, they’re at their wits’ end. The ombudsman’s 2009 report noted that it closed a significant number of cases because the “complainant was too abusive of staff.”
Nevertheless, Dube does have some flexibility in interpreting how the CRA is meeting its obligations to provide fair service.
For instance, a key to the IT professionals’ fight is the manner in which CRA employees conducted a detailed questionnaire for determining the contractors’ work status. Lawyers contacted by the Citizen claimed the questions were crafted so well that the IT professionals who answered it without their lawyer present, “probably regretted it.”
Serge Buy, the head of the Canadian Business Information Technology Network, which represents the IT professionals, contends this is precisely the sort of issue Dube should investigate. “He’s refusing to consider the fact that these people are being evaluated by CRA without a proper guideline,” Buy says. “It is very definitely a service issue.”
Detailed insight about the operation of Dube’s office emerges from the case of Suzanne Boudreau, a former Department of Justice lawyer who has been fighting the CRA for years.
Boudreau got in touch with Dube’s office three years ago and has agreed to share her correspondence. It offers examples of how the ombudsman’s staff seem unwilling to challenge the information they receive from CRA. Boudreau signed a waiver to allow the ombudsman to discuss her case publicly, but Dube declined for reasons of policy.
“We don’t discuss individual cases,” he said.
Boudreau sought the ombudsman’s help in dealing with CRA employees who, she felt, were treating her unfairly by refusing to answer her questions in a tax matter related to pensions. Boudreau cited the taxpayer’s “right to timely information” to ask for the CRA’s reasons for its decision. In particular, she was seeking the legislative authorities used by CRA officials.
Boudreau’s first letter to Dube’s office in 2008 was referred to then-minister Jean-Pierre Blackburn. New to his job, Blackburn took five months to reply. Boudreau followed up in April 2009 with a lengthy history of her dispute and included a court case as background to illustrate her points. A month later, an ombudsman employee pointed out that the case was still before the courts, which meant Boudreau’s complaint couldn’t be considered. Boudreau replied days later, noting that she was not party to the case in question.
Her frustration was already showing. “I would also ask that my file be transferred to knowledgeable and experienced personnel in your office,” she wrote to Dube in May 2009. “So far, simple issues of jurisdiction appear not to be well understood.” Over the following year, Boudreau’s file was forwarded to more senior ombudsman employees.
There followed a sporadic correspondence marked by a series of misunderstandings. Boudreau must bear some of the blame as her letters were filled with background detail about a variety of complex matters. Nevertheless, her request for assistance on the basis of service rights contained in the taxpayer bill of rights was clear enough.
The ombudsman’s staff attempted to refer her case elsewhere. A telling example concerned a deduction cited by Boudreau. An ombudsman staff member advised her to take up the matter with the Tax Court of Canada, even though the deduction in question had already been allowed in Boudreau’s favour.
The chain of letters finally reached Christopher Bozik, the ombudsman’s director of operations who on May 10, 2010, listed the taxpayer bill of rights — with which Boudreau was clearly familiar — before noting “we will not entertain further correspondence from you in this matter.”
Boudreau did not let up, however. In July, she enclosed a set of 11 questions for the CRA and sought Bozik’s help in getting answers. One of the ombudsman’s roles is to help Canadians get in touch with CRA officials. Bozik replied Aug. 3. He attached the CRA’s replies to each question. In most cases, the CRA referred to earlier correspondence with Boudreau — the very letters Boudreau claims failed to provide the information she was seeking. “We are satisfied that the CRA has answered your questions,” Bozik wrote. “There remain no other service issues for us to deal with and our involvement in this matter has concluded. Please be advised your file is closed.”
Dube appears to concentrate much of his effort on what he calls “systemic” issues — his office examines instances when large numbers of taxpayers are experiencing similar problems with interpreting CRA rules.
Earlier this summer, for instance, Dube published his analysis of why so many Canadians were confused about the CRA’s treatment of deductions related to tax-free savings accounts, which came into effect early in 2009. The central issue was whether taxpayers who mistakenly over-contributed to their tax-free savings accounts were treated fairly.
Confusion arose because the government didn’t anticipate that so many Canadians would use the new accounts so aggressively. They deliberately over-contributed and used the extra proceeds to invest in stocks, calculating they would earn more than enough to pay the penalty of one per cent a month.
Finance Minister Jim Flaherty announced changes in the fall of 2009 to discourage this behaviour, which is when the confusion started.
In his report published three months ago, Dube castigated the CRA for not doing a better job of anticipating the confusion. The ombudsman recommended to Minister of National Revenue Gail Shea that the CRA “take steps to make Canadians more aware of the information it provides about the TFSA.
The CRA said it would.
“The proof of our effectiveness is in the reaction to our recommendations to date,” Dube says, referring to earlier reports his office commissioned on the Canada child tax benefit and the CRA’s policy on accessing tax accountants’ working papers. “All of them to date have been accepted,” Dube observes.
Indeed, Dube appears comfortable in his role of publisher of reports, which gives him a bigger stage compared to the detailed work of trying to solve problems faced by individual and anonymous taxpayers. Yet, although his recommendations on the bigger issues have been accepted, the reports on which they are based are notable for their lack of bite.
Dube remains convinced he is on the right track, that it will be just a matter of time for his office to become known as a credible champion of taxpayers. But his weapons are just words, and his determination to play the intermediary is unlikely to impress the government’s most powerful agency — no matter how diligent his approach.