The Taxman Reformeth: Making revenue collection user-friendly
John D. LaFaver
Secretary of Revenue, Kansas
Being the chief tax collector is hardly a way to become a beloved public servant, but at least you see a lot of the public. That's just the point John D. LaFaver makes about his three-year stint as head of the Kansas Department of Revenue: For many people, the tax agency is the main and major contact they have with government. "People use it as an indicator as to how well their government is working," LaFaver says.
If so, the people of Kansas couldn't have been thinking highly of their government in 1996. LaFaver had been in his job at the revenue department for just a few months — he'd come there in 1995 from Maine, where he'd run that state's revenue department — when a magazine for chief financial officers ranked state tax departments from best to worst. Kansas showed up as fifth from the bottom.
"There was a perception that we were tone-deaf to the real-world needs of taxpayers," he says. "There was a really strong, entrenched enforcement mentality that revealed itself in many unpleasant ways." Taxpayers who called with questions waited weeks — and sometimes months — for their calls to be returned. Taxpayers who appealed a department decision waited years for the department to get around to the case; when LaFaver took office, some appeals for the 1980 tax year were still open.
LaFaver wasn't there at the creation of those problems, but, as Harley Duncan, who heads the Federation of Tax Administrators, points out, LaFaver didn't try to distance himself from the issues. "He was under the gun, but he didn't hunker down and say, `What would you expect of people who don't want to pay their taxes?' He looked at issues that were raised and revamped the entire department."
LaFaver started a fundamental change in the articulation of the business of the department. He set out some key premises by which the department would conduct its business: It would view taxpayers as customers and make it easier for those customers to file taxes and gain access to information; revenue agents would no longer harass customers or treat them in an overly confrontational manner. And the department's reforms would be accomplished as a team: The traditional hierarchical bureaucracy would be replaced with cross-functional groups that worked on solutions together.
Accordingly, LaFaver worked with department teams to design new business processes and changed the organizational structure to accommodate those processes. Only then did he bring in new technology to help accomplish those aims.
Among LaFaver's improvements: The appeals process is now limited to nine months. (If an appeal isn't handled within that time, it is automatically bumped up to the Board of Tax Appeals.) An informal dispute-resolution process helps head off appeals when an audit triggers a disagreement between the department and a taxpayer over an assessment; this change reduced assessment appeals by 62 percent last year and helped lop off two-thirds of the outstanding appeals. And according to report cards completed by taxpayers, the agency is now less hostile and more helpful during an audit.
LaFaver says his work in Kansas reflects his belief that state governments are "uniquely situated to be innovators. Many local units are too small to attract the level of resources needed. The federal government is big and cumbersome and moves so slowly that it's not a good place to lead a cutting-edge innovation."
That said, LaFaver was tapped recently to join the beleaguered Internal Revenue Service in Washington, D.C. His job? To transform the IRS into the same kind of customer-focused tax agency he's leaving behind in Kansas.
— Penelope Lemov
Photo by Steve Barrett