ARCHIVED - Examination of service issues related to processing and delays in the processing of taxpayers' request to authorize a representative

March 31, 2016

The Office of the Taxpayers’ Ombudsman is closing its examination of systemic service issues arising from complaints of the Canada Revenue Agency (CRA) either not processing or creating undue delays in processing taxpayers’ Form T1013, Authorizing or Cancelling a Representative, or Form RC59, Business Consent, when submitted by mail or fax. This examination is closed without recommendation.

Background

When an individual chooses to have a third party, such as an accountant, lawyer, or relative, interact with the CRA on his or her behalf, the CRA must be notified of the taxpayer’s consent to this arrangement. To do so, the taxpayer must give consent online through My Account (www.cra-arc.gc.ca/myaccount), My Business Account (www.cra-arc.gc.ca/mybusinessaccount), or send a completed and signed Form T1013, Authorizing or Cancelling a Representative, or Form RC59, Business Consent, to his or her tax centre for processing. The form must be received by the CRA within six months of the date of the signature in order to be valid.

During the 2009-2010 fiscal year, my office received complaints from taxpayers and tax professionals regarding the Form T1013 and Form RC59. Some complainants stated that the CRA did not process the consent forms. Other complainants stated that the CRA created undue delays in the processing of the consent forms. As a result of these complaints, my office initiated an examination to review both of these systemic issues.

Specifically, my office looked at:

• the causes of the delays;
• the CRA’s performance in preventing the submission of duplicate requests; and
• the CRA’s processing of invalid or incomplete forms.

Our examination did not include the processing of the consents submitted through My Account, My Business Account, or through EFILE, as these authorizations are processed differently and no issues of delay were raised.

Findings

During our examination, we found that the delays were mainly attributed to the following factors:

• a large number of duplicate requests for authorization were being submitted by taxpayers and/or their representatives;
• the submitted forms were incomplete and could not be processed by the CRA; and
• internal CRA delays when forwarding forms to the correct processing areas from the incorrect areas to which taxpayers or representatives sent the forms.

We found that the CRA is developing an application that will assist in the identification of duplicate forms when received; thereby reducing the amount of time spent processing forms that are duplicates. The CRA also developed new messaging on the forms, informing taxpayers that they “do not have to complete a new form every year if there are no changes.”

A large number of duplicate forms are generated through the T2 EFILE software, used for a business’s tax return, where the Form RC59 is automatically generated by the software and submitted to the CRA by the user. This submission occurs regardless of whether any information is modified from the previous authorizations the CRA has on the business’s file. In order to avoid these challenges, 2D bar code logic is being introduced for T2 EFILE software, adding a 2D bar code to the Form RC59 for faster identification of duplicates.

We were concerned that the CRA did not have a consistent procedure for handling incomplete authorization forms. Where appropriate, the CRA makes an effort to develop common processes and procedures for the Business and Individual programs. However, the CRA explained that this is not always the best solution as these two programs are very distinct. Through our review of the two programs’ procedures, we found that the CRA has clear procedures for handling incomplete Form T1013 and Form RC59 authorization requests.

During the course of our examination, the CRA took measures to introduce new proactive telephone contact procedures to address incorrect or incomplete Forms RC59. Before 2013, the procedures directed processing clerks to send a letter, rather than attempt to contact a business owner or representative by telephone to correct the forms. The processing clerks now contact the business owner or representative by telephone if a Form RC59 cannot be processed due to incorrect or incomplete information. The CRA advises that these measures contribute to a lower number of complaints about the processing of these forms.

My office also examined the issue of delays by the CRA in forwarding forms to the appropriate area for processing, when the forms were sent by taxpayers or representatives to incorrect areas of the CRA. We found that the CRA has sufficient procedures in place to avoid these delays and instructs employees on where to forward the forms when received internally by the incorrect area. The authorization forms and the CRA’s website clearly instruct taxpayers to send the completed forms to the taxpayer’s tax centre.

We found that the CRA website and both authorization forms provide complete, accurate, and clear explanations of how to authorize a representative and the expected length of time it should take to have an authorization request processed. Our examination revealed that completed forms are processed within the CRA’s service timeframes of 20 days or less (Form T1013) and 15 days or less (Form RC59).

The CRA has taken an active role in describing and promoting its electronic services across a variety of communications, targeting a diverse audience of stakeholders. The CRA informed my office that these communications have resulted in a steady and significant decrease in the volume of paper authorizations and an increase in electronic submissions which can be processed faster. The introduction of electronic options has also reduced the number of incomplete paper submissions since the electronic forms cannot be submitted until all of the necessary information is provided.

Next steps

Given our findings, the changes that were made by the CRA since we opened our examination, and that we are no longer receiving complaints on this matter, we are closing this examination without recommendation.

A copy of this memorandum will be published on the Office of the Taxpayers’ Ombudsman’s website 60 days following its receipt by your office. A summary of our findings may also be included in our 2015-2016 annual report or published in a future newsletter on our website.

Should you require additional information, please do not hesitate to contact me.

Original signed

Sherra Profit