AGENDA FREE MARKET PROTECTION AND PRIVATIZATION BOARD

Transcription

1 AGENDA FREE MARKET PROTECTION AND PRIVATIZATION BOARD Thursday, December 12, 2013, 2:00 PM Room 20 House Building State Capitol Complex Salt Lake City, Utah 1. Call to Order 2. Public Input (10 minutes) a. Persons may make statements or comments for up to two minutes each on matters pertinent to the board. 3. Board Business/Minutes a. Minutes from November 14, 2013 for consideration page 3 b. Committees for discussion 4. Commercial Activities Inventory a. Utah State Tax Commission presentation page 9 b. Department of Insurance presentation page 39 c. Department of Agriculture and Food presentation page 49 d. Department of Heritage and Arts presentation page Review Privatization of an Activity 6. Review Issues Concerning Agency Competition with the Private Sector 7. Other/Adjourn Next meeting: January 9,

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3 Draft - Approval Pending Minutes of the Free Market Protection and Privatization Board Thursday, November 14, :00 p.m. Room 20, House Building State Capitol Complex Members present: Kimberley Jones (Chair), Brian Gough (Vice Chair), Sen. Howard Stephenson, Sen. Karen Mayne, Rep. Johnny Anderson, Thomas Bielen, Sherrie Hayashi, Bob Myrick, and LeGrand Bitter Members absent: Rep. Lynn Hemingway, Randy Simmons, Manuel Torres, Kerry Casaday, Al Manbeian, Steve Fairbanks, and Louenda Downs Staff present: Cliff Strachan, Governor s Office of Management and Budget Note: Additional information including related materials and an audio recording of the meeting can be found at and the Utah Public Meeting Notice Website ( w w.utah.gov/pmn). 1. Welcome and Introductions Kimberley Jones chaired the meeting. Rep. Lynn Hemingway, Randy Simmons, Manuel Torres, Steve Fairbanks, and Louenda Downs were excused from the meeting. Katina Curtis has resigned from the board for professional reasons.. [As a quorum was not present at the beginning of the meeting, the presentations under item 3. Commercial Activities Inventory were heard before item 2. Item 2 (both minutes and RFP) was heard only after a quorum was then present.] 2. Board Business/Minutes a. Minutes from October 10, 2013 Added Bob Myrick to the lists of members absent and excused. Motion: Sen. Mayne moved to amend and approve the minutes of the October 10, 2013 meeting. CARRIED Sen. Stephenson called for the board s meetings to be recorded and broadcast like regular legislative meetings. Cliff Strachan noted the request was previously made to and rejected by legislative staff. Sen. Mayne said she is drafting legislation to enable any committee that includes legislators to be able to use the legislature s equipment and resources to post notices and minutes, record and broadcast those meetings. b. Request for Proposals (RFP) The board reviewed the draft Request for Proposals for the development of a privatization review process. Mr. 1 3

4 Draft - Approval Pending Strachan and Mark Parry, Division of Purchasing, fielded questions. Proposals received will be evaluated with on a points basis with 70% of the points based on technical considerations and 30% based on cost. Technical considerations are weighted in favor of approach and tools to be provided. Proposals deemed to be insufficient technically will not be proceed to the cost evaluation. Mr. Parry noted it normally takes about three months from the issuance of an RFP to the signing of a contract. The RFP can be issued as early as next week with a deadline in mid-to-late December recommended. The Division of Purchasing will handle the RFP process and the Governor s Office of Management and Budget (GOMB) will be the owner on behalf of the board. Motion: Sen. Mayne moved to approve the Request for Proposals and direct that it be issued with a December 17, 2013 deadline. CARRIED The Chair appointed Bob Myrick, Sen. Stephenson, and herself to serve on an evaluation committee with Mr. Strachan and one additional staffer from GOMB. The evaluation committee will report to the board on January 9, 2014 with a recommendation. 3. Commercial Activities Inventory a. Public Service Commission (PSC) Ron Allen, Commissioner, and Gary Widerberg, Commission Administrator, gave an overview of the work done by the agency, which was described as quasi-judicial and established to protect the public from the adverse effects of utility monopolies. Noted that PSC has a tight budget (about 90% is personnel) and is funded by regulatory fees. Its work has helped to keep Utah s utilities fees low. PSC s responses to the survey unpinning the Commercial Activities Inventory indicated its functions were inherently governmental. protecting Utahns from monopolies profit incentives, with little potential for privatization. PSC hires consultants where needed, even routinely, where expertise is needed. Talked about a phone program, Relay Utah, that is administered by the agency but delivered by contract. b. Department of Technology Services (DTS) Mr. Strachan noted the areas currently undergoing Operational Excellence reviews by GOMB. An updated summary for the Commercial Activities Inventory was provided in the meeting packet. Staff recommended the agency, particularly Application Development, for further review. Ken Peterson, Chief Operating Officer, and Dan Frei, Finance Director, presented. Stated the agency runs on private sector principles and operate as an Internal Service Fund (ISF) relying on service agreements with other state agencies. Noted efficiencies are important to the agencies as is returning value to shareholders (taxpayers) and agencies. DTS provides about 1100 services to stakeholders (agencies) online. Figures it spends about 50 percent of its budget in the private sector. Hosts a regular vendor day to go over score cards and to see what wares they have to offer. Talking about what the agency has done in recent years, talked about hosting services and commented on cloud hosting stating their top three issues are security, redundancy, and portability. Shared experience with the state s migration to gmail. On networking services, noted that the state owns zero fiber, relies on the private sector for it. The state 2 4

5 Draft - Approval Pending does own a microwave system as a back up, primarily in public safety. Principle followed by agency is right sourcing : what is the right place to source? On desktop support, agency is constantly looking to outside sources for cost competitiveness. On application development, DTS figures its paying 60 percent of its are personnel related. Can t pay market for top or bottom personnel but needs to have a core group of people to work with. Uses a lot of software services outside. Noted income tax software comes from the private sector. During questioning, board members heard in response that: the network is about 85 percent migrated to Microsoft. keeping employees up to date on standards and products is a priority of the Chief Information Officer, uses vendor days, an architectural review board, the business solutions requirement, surveys of the agencies, and embedding of IT directors to meet the priority. uses an IT resource committee to prioritize agency requests. reduced the number of employees by 170 since DTS was reorganized several years ago, relied on attrition and early retirements to make reductions. the agency finds it is a training ground for the private sector as it cannot pay market prices for IT professionals; but noted DTS is an innovative place to work. DTS uses two practices to pave the pathway to privatization: asks buy or build for every project, and follows rightsourcing ; says price, security, redundancy are three factors. virtual desktop services are available to agencies through the cloud. agency is zero base minded, to determine costs and of benefit to the agencies, compares rates with private sector and other states. Sen. Stephenson noted he is working on a bill to combine data systems (Utah Futures and Utah Data Alliance) and wondered whether the board should review a decision to build it or buy it. The Chair called it a business case assessment. 4. Review Privatization of an Activity None 5. Review Issues Concerning Agency Competition with the Private Sector a. Nathan Andelin - Petition Mr. Andelin s petition, was provided in the agenda packet (see Privatization Proposal Summary), alleges that the Utah State Office of Education engages in unfair competition against private enterprise, raises barriers and other practices that limit or exclude private sector entities from providing student information systems to schools and school districts in the state. Mr. Andelin requests that the board investigate USOE under its authority. Nathan Andelin and Kendall Andelin discussed their information system, used in two charter schools, and the state s funding of SIS2000, which is provided free to school districts. Noted several school districts have gone to the private sector for other student information systems [eg., PowerSchool and Skyward], which raises question of need for taxpayer funding for SIS2000. Notes state does not need to recoup the funding from school districts or users. 3 5

6 Draft - Approval Pending b. Utah State Office of Education (USOE) - student information systems Judy Parks, Associate Superintendent, and Jerry Winkler, IT Director, provided a three-page handout titled Student Information Systems (SIS) that described the SIS framework in Utah and noted there are nine SISs in operation in Utah. USOE indicated that data needs be defined and standardized to be useful, and has to meet standards set by USOE. Gave a history of SIS development. During questioning, board members heard in response that: requirements are online, programs are about data aggregation agency still provides the program, noted many states still operate under one state system though Utah opts for local control it is worth looking at why some school districts opted to buy programs from the private sector rather than taking the free program provided by the state user groups set the priorities for the product USOE doesn t understand the complaint about barriers but do have some user meetings excluding vendors to get users input; even so, USOE works with providers and LEAs system was never statewide Motion: Thomas Bielen moved to set up a committee review to explore this [the student information systems] privatization proposal. CARRIED Mark Ursic, Executive Director, Renaissance Academy, was invited to speak by USOE. He called student information systems the lifeblood of [its] operation. Jennifer Andelin was given opportunity to comment: alleged Renaissance Academy transitioned to state system under threat by USOE of funding reductions. In rebuttal, Mr. Ursic said USOE had not bullied, but had been supportive. Other Business/Adjourn Advisory groups or committees - Noting that UCA 63I-4a-203(4)(a) allows the board to appoint advisory groups [or committees], the board discussed a suggestion to create specific ad-hoc committees for various studies. In addition to the committee appointed to review the RFP, it was noted that committees could be formed: 1) to work with a consultant to build the privatization review process, 2) review the unfair competition complaint against USOE, 3) review privatization opportunities at an agency, and others. Staff will survey board members to find out on which committee(s) each would like to serve. Sen. Mayne noted that it will be difficult for the four legislators on the board to do committee work during the legislative session. Public comment - The board also discussed whether or not to include a regular public comment period in meetings. The board s consensus was to provide such a period. Staff will research and report to the board on procedures for public comment used by the legislature and by Utah s local governments. Time will be provided at the beginning of the board s meetings until directed otherwise. Future meetings - Mr. Strachan advised that he has scheduled the board s regular meeting room for the regular monthly meeting date and time from April 10, 2014 through January 8, With the legislature in 4 6

7 Draft - Approval Pending session, the meeting room will not be available in February and March. Committee work would be a good fit during that period. Motion: LeGrand Bitter moved to adjourn. CARRIED Next two meetings: Thursday, December 12, 2013 at 2 pm in 20 House Building Thursday, January 9, 2014 at 2 pm in 20 House Building 5 7

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9 Commercial Services Inventory Services highlighted in grey are those that have been determined to be "Commercial" in nature. Services marked both as "Commercial" and "Inherently Governmental" have aspects that are considered to fall into both categories ( i.e., - commercial activities that private industry doesn't provide, etc.). Services marked "Further Study Required" are currently being assessed for their privatization capabilities. Note that services marked as commercial do not necessitate a designation of "privatizable". Some services should not be privatized due to cost benefit analysis - or structural considerations. Tax Commission Services Commercial Inherently governmental Commissioners Establish tax policy Adjudicative appeal process for state assessed taxes and county property tax appeals Provide economic and statistical information for taxes and motor vehicle Provide public information on tax and motor vehicle matters Internal investigations and audit Administration Administration and oversight Accounting Security Agency planning, performance, budget, and accounting functions Already Privatized Further Study Required Privatization Study Recommended Review of legislation and oversight of the implementation changes to tax and motor vehicle laws Internal budget and accounting functions Investigate criminal tax evasions cases Property Tax Oversee statutory compliance of county property tax assessment Provide technical assistance and training to counties Certify county and local entity tax rates Appraise centrally assessed properties (mines, utilities, etc) Support of counties on personal property audits Auditing Audit taxpayer returns & confidential financial records (includes education of tax laws) Taxpayer Services Provide confidential assistance to taxpayers to help them comply with state tax laws Resolution of delinquent taxpayer accounts to ensure tax fairness and compliance Processing Limited outsourcing 9

10 Receive and process the state's tax revenues Review, edit, correct, and process confidential taxpayer returns Record returns and payments to all tax types and all revenue funds administered by the agency Update taxpayer account information Tax return retention for agency and taxpayers research and audit processes Motor Vehicle Issue and maintain official records of vehicle ownership and related lien holders Register vehicles, ensuring that all registration requirements are met Collect and distribute to various funds all vehicle related taxes and fees Renewal vehicle registrations Suspend, revoke and reinstate vehicle registrations Release state impounded vehicles Register and collect fees for interstate motor carriers Motor Vehicle Enforcement License and regulate motor vehicle businesses Vehicle Registration Enforcement Vehicle Crime Investigations Agency- Authorized Contracts 10

11 UTAH STATE TA COMMISSION Board reviews 12/12/2013 Commissioners Establish tax policy: Provide direction and leadership to the revenue processes of the state, as organized within 8 divisions of the Utah State Tax Commission. Adjudicative appeal process for state assessed taxes and county property tax appeals: Provide economic and statistical information for taxes and motor vehicle: Provide public information on tax and motor vehicle matters: Internal investigations and audit: Administration and oversight Administration Accounting 11

12 Security Agency planning, performance, budget, and accounting functions Review of legislation and oversight of the implementation changes to tax and motor vehicle laws Internal budget and accounting functions Investigate criminal tax evasions cases Property Tax Oversee statutory compliance of county property tax assessment: Provide technical assistance and training to counties Certify county and local entity tax rates 12

13 Appraise centrally assessed properties (mines, utilities, etc) Support of counties on personal property audits Auditing Audit taxpayer returns & confidential financial records (includes education of tax laws) Taxpayer Services Provide confidential assistance to taxpayers to help them comply with state tax laws Resolution of delinquent taxpayer accounts to ensure tax fairness and compliance Receive and process the state's tax revenues Processing Review, edit, correct, and process confidential taxpayer returns 13

14 Record returns and payments to all tax types and all revenue funds administered by the agency Update taxpayer account information Tax return retention for agency and taxpayers research and audit processes Motor Vehicle Issue and maintain official records of vehicle ownership and related lien holders Register vehicles, ensuring that all registration requirements are met Collect and distribute to various funds all vehicle related taxes and fees Renewal vehicle registrations Suspend, revoke and reinstate vehicle registrations 14

15 Release state impounded vehicles Register and collect fees for interstate motor carriers Motor Vehicle Enforcement License and regulate motor vehicle businesses Vehicle Registration Enforcement Vehicle Crime Investigations 15

16 DIVISION/UNIT: CONTACT: FREE MARKET PROTECTION AND PRIVATIZATION BOARD COMMERCIAL ACTIVITIES INVENTORY SURVEY 2013 UTAH STATE TA COMMISSION Administration - Office of the Commission / Executive Director s Office Bruce Johnson, Chairman Barry Conover, Executive Director CONTACT PHONE: , CONTACT rbjohnson@utah.gov, bconover@utah.gov Service/Function: Utah tax and motor vehicle policy, supervision, oversight, and taxpayer appeals processes Agency Overview The Tax Commission s role is established in the State Constitution, and is detailed in State Statute. In Article III, Section 6 it states that the State Tax Commission shall administer and supervise the State s tax laws. The administration and supervision of the state s tax laws, which necessarily includes enforcement of these laws, are inherently government activities. The Tax Commission in responsible for the administration and enforcement of most of the laws found in Utah Code Title 41-1 the Motor Vehicle Act, Title 41-3 Motor Vehicle Business Regulation, and Title 59-1 through Title The tax and motor vehicle administration processes provided by the Tax Commission is not available in the competitive business market, and therefore is not in competition with the private sector. The integrated processes for the overall administration of tax and motor vehicle laws reside in the Tax Commission and its divisions. The divisions provide coordinated efforts for all interrelated tax functions, including implementation of tax and motor vehicle law changes, tax policy and rule making, update and distribute forms and instructions, update and maintain computer systems and processes, receive, record and retain tax and motor vehicle information, assist taxpayers in understanding their tax and motor vehicle registration obligations, complete audits to ensure accuracy and compliance, provide enforcement of the laws, collect tax balances due, account for and properly distribute the state s revenue collections to the appropriate state, local, and trust accounts. There is also a judicial function for taxes that is required in the constitution for the taxpayer appeal process. Taxpayers are providing confidential and financial information they would not normally provide if it were not for government requirements to do so. There are public concerns with privacy of information. Federal law imposes strict non-disclosure requirements on tax information that is vital to maintain within the confines of the agency. 16

17 In order to comply with Federal non-disclosure laws, the main Tax Commission building is a secure facility. Access beyond the lobby area is strictly limited. Employees with access to taxpayer information are monitored in compliance with Federal law. The agency itself is subject to rigorous audits of its computer systems, processes, building security, and employee oversight. There are also policy reasons for not outsourcing these processes, including possible conflicts of interest of a private entity, ongoing stability of any outsource company, and public concerns with a private company having access to their personal information. Any process that requires decision-making or the exercise of judgment relative to the state s tax and motor vehicle laws is an inherently government activity. Private enterprises should not be interpreting or enforcing state tax and motor vehicle laws. As indicated above, these tax and motor vehicle oversight and enforcement processes are integrated. Decisions and actions of one function impact other functions and divisions. Many of these decisions and actions are based on division management having a shared understanding and interpretation of the state s tax and motor vehicle laws. Ongoing interactions with these functions are necessary to ensure adherence to the administration of these laws. Specific to Office of the Commission and Administration Division The Office of the Commission and the Office of the Executive Director provide direction and leadership to the revenue processes of the state, as organized within 8 divisions of the Utah State Tax Commission. Those divisions include Administration, Auditing, Taxpayer Services, Processing, Property Tax, Division of Motor Vehicles, Motor Vehicle Enforcement, and Department of Technology functions assigned to the agency. The Commissioners develop tax policy, rules, agency vision, and provide an appeal process for tax matters. The Executive Director s Office provides direction and coordination of the day-to-day operations of the department. The various assigned duties are met through the following functions performed within these two groups: The functions of the Office of the Commission include: Liaison between the Agency and the Governor s Office Develop state tax policy and interpret state tax laws Receive, hear and rule on tax appeals Perform internal investigations and audits Coordinate all media inquiries of the Tax Commission Develop revenue forecasts & provide statistical and economic information 17

18 The functions of the Executive Director s Office: Provide direction and supervision for the day-to-day tax and motor vehicle administration processes including the functions of all the divisions of the Tax Commission Provide accounting and reconciliation of the state s tax and motor vehicle fee collections, ensure internal controls, ensure accuracy of fund allocations, and ensure the proper distribution of tax dollars to state funds, local governments, and other trust and agency accounts Provide agency security and nondisclosure resources to maintain and protect all the confidential information provided to the Tax Commission and its divisions. Adhere to IRS requirements and review all GRAMA requests related to taxpayer and motor vehicle records. Review and coordinate input from divisions on all proposed tax and motor vehicle legislation Prepare tax rules and tax bulletins to inform taxpayers of necessary changes Provide the department s internal accounting and support processes, including oversight of Human Resource Management functions assigned to the department Provide direction and oversight of the agency s budget processes Coordinate all the division s goal setting and performance measurement processes Update the agency web site and web-accessed taxpayer applications Provide project management to long-term agency improvement processes, and the implementation of annual tax and motor vehicle law changes Investigate criminal tax evasion cases. The State Constitution Article III, Section 6 establishes the duties of the Tax Commission, as well as specific tax and motor vehicle administration processes as outlined Utah Code Title 41 and Title 59. Other statutory requirements are in other sections of code where the agency collects funds for other state functions, local entities, and trust and agency accounts. can be provided by commercial/private companies? Please provide information regarding the None. The administration, oversight, appeals processes, and overall supervision of the state s tax and motor vehicle functions is required within the agency. It is an inherently government function that resides within the Tax Commission, the agency that has constitutional and statutory obligations to administer and enforce the state s tax and motor vehicle laws. See Agency Overview above for more details. D. Is the service/function available in the Private sector? No, oversight of the state s tax and motor vehicle processes is not performed by the private sector for many of the reasons stated above. E. Is the service/function advertised in the Yellow Pages or on the Internet? No, oversight of the state s tax and motor vehicle processes is not a service advertised by private businesses. 18

19 within the Private Sector? N/A 19

20 DIVISION/UNIT: Auditing CONTACT: Craig Sandberg, Director CONTACT PHONE: CONTACT Service/Function: Audit of Utah Tax Returns Agency Overview FREE MARKET PROTECTION AND PRIVATIZATION BOARD COMMERCIAL ACTIVITIES INVENTORY SURVEY 2013 UTAH STATE TA COMMISSION The Tax Commission s role is established in the State Constitution, and is detailed in State Statute. In Article III, Section 6 it states that the State Tax Commission shall administer and supervise the State s tax laws. The administration and supervision of the state s tax and motor vehicle laws, which necessarily includes enforcement of these laws, are inherently government activities. The Tax Commission in responsible for the administration and enforcement of most of the laws found in Utah Code Title 41-1 the Motor Vehicle Act, Title 41-3 Motor Vehicle Business Regulation, and Title 59-1 through Title The tax and motor vehicle administration processes provided by the Tax Commission is not available in the competitive business market, and therefore is not in competition with the private sector. The integrated processes for the overall administration of tax and motor vehicle laws reside in the Tax Commission and its divisions. The divisions provide coordinated efforts for all inter-related tax functions, including implementation of tax and motor vehicle law changes, tax policy and rule making, update and distribute forms and instructions, update and maintain computer systems and processes, receive, record and retain tax and motor vehicle information, assist taxpayers in understanding their tax and motor vehicle registration obligations, complete audits to ensure accuracy and compliance, provide enforcement of the laws, collect tax balances due, account for and properly distribute the state s revenue collections to the appropriate state, local, and trust accounts. There is also a judicial function for taxes that is required in the constitution for the taxpayer appeal process. Taxpayers are providing confidential and financial information they would not normally provide if it were not for government requirements to do so. There are public concerns with privacy of information. Federal law imposes strict non-disclosure requirements on tax information that is vital to maintain within the confines of the agency. In order to comply with Federal non-disclosure laws, the main Tax Commission building is a secure facility. Access beyond the lobby area is strictly limited. Employees with access to taxpayer information are monitored in compliance with Federal law. The agency itself is subject to rigorous audits of its computer systems, processes, building security, and employee oversight. 20

21 There are also policy reasons for not outsourcing these processes, including possible conflicts of interest of a private entity, ongoing stability of any outsource company, and public concerns with a private company having access to their personal information. Any process that requires decisionmaking or the exercise of judgment relative to the state s tax and motor vehicle laws is an inherently government activity. Private enterprises should not be interpreting or enforcing state tax and motor vehicle laws. As indicated above, these tax and motor vehicle oversight and enforcement processes are integrated. Decisions and actions of one function impact other functions and divisions. Many of these decisions and actions are based on division management having a shared understanding and interpretation of the state s tax and motor vehicle laws. Ongoing interactions with these functions are necessary to ensure adherence to the administration of these laws. Specific to the audit of tax returns: A. What process does the division use to determine which services /functions will be provided? The Auditing Division ensures citizen compliance with the state tax laws. It audits confidential tax returns filed by individuals and businesses for all of the tax types administered by the Tax Commission to determine accuracy and compliance with the Utah tax laws. This helps ensure voluntary compliance by the state s citizens and businesses. Auditors are thoroughly trained in the tax laws applicable to their area of work with in-house training and on-the-job oversight. However, all audits require the exercise of judgment in how to interpret and apply the tax laws. This exercise of judgment is monitored by division management to ensure consistency in applying the laws. In addition, auditors are trained on tax audit methods and strategies that are confidentially maintained within the administrative processes of the agency. These processes can result in tax assessments, issuance of liens, and tax penalties that are inherently government driven. Returns are selected for audit based on predefined selection criteria, the amount of audit hours available, and the need to provide audit coverage for all tax types. can be provided by commercial/private companies? Please provide information regarding the None. Tax audit services and review of taxpayer records are inherently government functions that should reside within the Tax Commission, the agency that has constitutional and statutory obligations to administer the state s tax laws. See Agency Overview above for more details. D. Is the service/function available in the Private sector? No, government tax return auditing is not performed by the private sector for many of the reasons stated above. Audit processes that are specific to auditing for Utah s tax laws are developed and administered within the government process. 21

22 E. Is the service/function advertised in the Yellow Pages or on the Internet? No, government tax return auditing is not a service that is advertised by private businesses. within the Private Sector? N/A 22

23 FREE MARKET PROTECTION AND PRIVATIZATION BOARD DIVISION/UNIT: Motor Vehicle Division CONTACT: Brad Simpson, Director CONTACT PHONE: CONTACT COMMERCIAL ACTIVITIES INVENTORY SURVEY 2013 UTAH STATE TA COMMISSION Service/Function: Motor Vehicle Registration, Titling, Compliance, Revenue Collection & Distribution Agency Overview The Tax Commission s role is established in the State Constitution, and is detailed in State Statute. In Article III, Section 6 it states that the State Tax Commission shall administer and supervise the State s tax laws. The administration and supervision of the state s tax laws, which necessarily includes enforcement of these laws, are inherently government activities. The Tax Commission in responsible for the administration and enforcement of most of the laws found in Utah Code Title 41-1a the Motor Vehicle Act, Title 41-3 Motor Vehicle Business Regulation, and Title 59-1 through Title The tax and motor vehicle administration processes provided by the Tax Commission is not available in the competitive business market, and therefore is not in competition with the private sector. The integrated processes for the overall administration of tax and motor vehicle laws reside in the Tax Commission and its divisions. The divisions provide coordinated efforts for all interrelated tax functions, including implementation of tax and motor vehicle law changes, tax policy and rule making, update and distribute forms and instructions, update and maintain computer systems and processes, receive, record and retain tax and motor vehicle information, assist taxpayers in understanding their tax and motor vehicle registration obligations, complete audits to ensure accuracy and compliance, provide enforcement of the laws, collect tax balances due, account for and properly distribute the state s revenue collections to the appropriate state, local, and trust accounts. There is also a judicial function for taxes that is required in the constitution for the taxpayer appeal process. Taxpayers are providing confidential and financial information they would not normally provide if it were not for government requirements to do so. There are public concerns with privacy of information. Federal law imposes strict non-disclosure requirements on tax information that is vital to maintain within the confines of the agency. In order to comply with Federal non-disclosure laws, the main Tax Commission building is a secure facility. Access beyond the lobby area is strictly limited. Employees with access to 23

24 taxpayer information are monitored in compliance with Federal law. The agency itself is subject to rigorous audits of its computer systems, processes, building security, and employee oversight. There are also policy reasons for not outsourcing these processes, including possible conflicts of interest of a private entity, ongoing stability of any outsource company, and public concerns with a private company having access to their personal information. Any process that requires decision-making or the exercise of judgment relative to the state s tax and motor vehicle laws is an inherently government activity. Private enterprises should not be interpreting or enforcing state tax and motor vehicle laws. As indicated above, these tax and motor vehicle oversight and enforcement processes are integrated. Decisions and actions of one function impact other functions and divisions. Many of these decisions and actions are based on division management having a shared understanding and interpretation of the state s tax and motor vehicle laws. Ongoing interactions with these functions are necessary to ensure adherence to the administration of these laws. Specific to Motor Vehicle Registration and Titling Functions: The Motor Vehicle Division administers state motor vehicle laws that include: processes and issues vehicle titles, registrations, license plates and annual decals for vehicles, vessels, and off highway vehicles. maintains a long-term record of vehicle information for ownership and registration purposes. collects and distributes all fees and taxes associated with Utah s vehicle registration laws. determines when to suspend or revoke a title, registration or license plate. processes state vehicle and vessel impounds. administers the registration programs for apportioned vehicles - for international vehicle registration programs and interstate fuel taxes. Utah State Code Title 41 Chapter 1a (Motor Vehicle Act) establishes the Division of Motor Vehicle and provides for the division to provide the administration of the Motor Vehicle Title and Registration laws for the State of Utah. This includes the following: 41-1a-108 The division shall examine and determine the genuiness, regularity and legality of each application to register a vehicle and issue a certificate of title and issue license plates. 41-1a-115 The division shall keep a record of each registration and maintain a current record of each certificate of title it issues 24

25 41-1a-116 All motor vehicle title and registration records of the division are protected unless the division determines that the record is public, or according the federal Driver s Privacy Protection Act of 1994, 18 U.S.C., Chapter a-206 Requires the payment of property tax at the time of registration and requires payment of sales tax where applicable. 41-1a-part 12 Requires the collection and disbursement of registration, title and other associated fees provides for the operation of a motor vehicle office to serve the public in each county, either by the state or by the county, at the county s option. 41-1a-110 The division suspends or revokes registrations, titles, and license plates as outlined. 41-1a-part 11 The division maintains records of state impounded vehicles and vessels, releases impounds to owners and sells unrecovered impounded vehicles and vessels. 41-1a-part 3 and part 5 The division manages the programs to title, register and collect fuel tax for vehicles operated in two or more jurisdictions. The division works closely with the International Registration Plan (IRP) and the International Fuel Tax Association (IFTA). can be provided by commercial/private companies? Please provide information regarding the The division has evaluated the renewal process to determine if outsourcing could provide alternatives to the public. Since the annual renewal process does not require a decision by the administrative authority, it was determined that this function could be provided by the private sector. A renewal program has been initiated through authorized safety and emission inspection stations. These entities use information generated by the Tax Commission to collect the appropriate fees and taxes and report these transactions to the Tax Commission for update to its central systems. Inventory and audit functions have been established to review this function. This is providing alternative renewal locations to the public with a one-stop process for obtaining their inspection requirements and renewing their registrations. These private companies charge an additional fee for this service. Titling of vehicles and other legal actions can result from the division s work, as it carries legal consequences for vehicle owners and the state. Decision-making processes must reside within the division. Therefore, the non-renewal division activities remain inherently government functions that should reside within the Tax Commission, the agency that has constitutional and statutory obligations to administer the state s motor vehicle laws. See Agency Overview above for more details. D. Is the service/function available in the Private sector? As noted above registration renewals are currently performed by agency-authorized private safety and emission inspection businesses. Businesses located throughout the state are participating in this program. Because titling of vehicles and other legal actions carry legal consequences for 25

26 vehicle owners and the state, decision-making processes must reside within the division. Therefore, the non-renewal division activities are inherently government functions that should reside within the Tax Commission, the agency that has constitutional and statutory obligations to administer the state s motor vehicle laws. E. Is the service/function advertised in the Yellow Pages or on the Internet? Agency-authorized contract agents can advertise their participation in the registration renewal program, though that is left to the individual participating business. within the Private Sector? Agency-authorized businesses that are located throughout the state are able to participate in the registration renewal program. 26

27 FREE MARKET PROTECTION AND PRIVATIZATION BOARD COMMERCIAL ACTIVITIES INVENTORY SURVEY 2013 UTAH STATE TA COMMISSION DIVISION/UNIT: Processing Division (Processing of tax returns and payments) CONTACT: Dennis Ritz, Director CONTACT PHONE: CONTACT Service/Function: Processing taxpayer returns and payments Agency Overview: The Tax Commission s role is established in the State Constitution, and in State Statute. In Article III, Section 6 it states that the State Tax Commission shall administer and supervise the State s tax laws. The administration and supervision of the state s tax laws, which necessarily includes enforcement of these laws, are inherently government activities. The work provided by the Tax Commission is not available in the competitive business market, and therefore is not in competition with the private sector. The integrated processes for the overall administration of tax and motor vehicle laws reside in the Tax Commission and its divisions. The divisions provide coordinated efforts for all interrelated tax functions, including implementation of tax and motor vehicle law changes, tax policy and rule making, update and distribute forms and instructions, update and maintain computer systems and processes, receive, record and retain tax and motor vehicle information, assist taxpayers in understanding their tax and motor vehicle registration obligations, complete audits to ensure accuracy and compliance, provide enforcement of the laws, collect tax balances due, account for and properly distribute the state s revenue collections to the appropriate state, local, and trust accounts. There is also a judicial function for taxes that is required in the constitution for the taxpayer appeal process. Taxpayers are providing confidential and financial information they would not normally provide if it were not for government requirements to do so. There are public concerns with privacy of information. Federal law imposes strict non-disclosure requirements on tax information that is vital to maintain within the secured confines of the agency. In order to comply with Federal non-disclosure laws, the main Tax Commission building was designed specifically to provide a secure facility to protect the confidential tax information that is provided by the state s citizens. Employees with access to taxpayer information are monitored in compliance with state and federal laws. The agency itself is subject to rigorous audits of its computer systems, processes, building security, and employee oversight. 27

28 There are also policy reasons for not outsourcing these processes, including possible conflicts of interest of a private entity, ongoing stability of any outsource company, and public concerns with a private company having access to their personal information. Any process that requires decision-making or the exercise of judgment relative to the state s tax and motor vehicle laws is an inherently government activity. Private enterprises should not be interpreting or enforcing state tax and motor vehicle laws. As indicated above, these tax and motor vehicle oversight and enforcement processes are integrated. Decisions and actions of one function impact other functions and divisions. Many of these decisions and actions are based on division management having a shared understanding and interpretation of the state s tax and motor vehicle laws. Ongoing interactions with these functions are necessary to ensure adherence to the administration of these laws. Specific to the processing of taxpayer returns and payments: A. What process does the division use to determine which services /functions will be provided? The Processing Division is the first point of contact by the taxpayers of the state with the Tax Commission. This function: produces both online and printable tax return forms, schedules, and instructions for over 40 tax types. These forms and related schedules are reviewed and updated each year as legislative changes are to be implemented. receives and ensures timely deposit of all tax revenues for the state, transmitting deposit information to the State Treasurer s Office for their cash management process while maintaining the privacy of the taxpayer s financial information receives, extracts, and examines taxpayer returns and related documents that are received electronically and in paper format. updates computer systems with confidential individual account information from taxpayer returns to properly account for the returns filed by taxpayer ID, and to ensure that funds are securely remitted and posted and properly redistributed to over 200 governmental agency funds. performs edit and error correction processes on tax returns to assure that the most accurate information is transmitted to the Tax Commission s computer system. retains and archives documents or electronic images of all taxpayer returns for use by other taxpayer assistance, compliance and enforcement activities of the agency. securely reviews and maintains confidential and proprietary tax account information for new business tax accounts, updates demographic information on accounts, and processes account closures. B. Which services have been evaluated in the past 5 years, to determine if the service or function 28

29 None, processing of the state s tax returns and tax revenue is considered to be inherently government functions that should reside within the Tax Commission that has constitutional and statutory obligations to administer the state s tax laws. See the Agency Overview above for more details. C. Is the service/function available in the Private sector? No, government tax return and payment processing is not typically performed by the private sector for many of the reasons stated above. D. Is the service/function advertised in the Yellow Pages or on the Internet? No, government tax return and tax payment processing is not a service that is advertised by private businesses. E. If the service/function is available in the Private Sector, is there more than one competitor within the Private Sector? N/A 29

30 DIVISION/UNIT: Property Tax Division CONTACT: Denny Lytle, Director CONTACT PHONE: CONTACT FREE MARKET PROTECTION AND PRIVATIZATION BOARD COMMERCIAL ACTIVITIES INVENTORY SURVEY 2013 UTAH STATE TA COMMISSION Service/Function: Property Tax Oversight for Utah and Centrally Assessed Valuations Agency Overview The Tax Commission s role is established in the State Constitution, and is detailed in State Statute. In Article III, Section 6 it states that the State Tax Commission shall administer and supervise the State s tax laws. The administration and supervision of the state s tax laws, which necessarily includes enforcement of these laws, are inherently government activities. The Tax Commission in responsible for the administration and enforcement of most of the laws found in Utah Code Title 41-1 the Motor Vehicle Act, Title 41-3 Motor Vehicle Business Regulation, and Title 59-1 through Title The tax and motor vehicle administration processes provided by the Tax Commission is not available in the competitive business market, and therefore is not in competition with the private sector. The integrated processes for the overall administration of tax and motor vehicle laws reside in the Tax Commission and its divisions. The divisions provide coordinated efforts for all interrelated tax functions, including implementation of tax and motor vehicle law changes, tax policy and rule making, update and distribute forms and instructions, update and maintain computer systems and processes, receive, record and retain tax and motor vehicle information, assist taxpayers in understanding their tax and motor vehicle registration obligations, complete audits to ensure accuracy and compliance, provide enforcement of the laws, collect tax balances due, account for and properly distribute the state s revenue collections to the appropriate state, local, and trust accounts. There is also a judicial function for taxes that is required in the constitution for the taxpayer appeal process. Taxpayers are providing confidential and financial information they would not normally provide if it were not for government requirements to do so. There are public concerns with privacy of information. Federal law imposes strict non-disclosure requirements on tax information that is vital to maintain within the confines of the agency. In order to comply with Federal non-disclosure laws, the main Tax Commission building is a secure facility. Access beyond the lobby area is strictly limited. Employees with access to 30

31 taxpayer information are monitored in compliance with Federal law. The agency itself is subject to rigorous audits of its computer systems, processes, building security, and employee oversight. There are also policy reasons for not outsourcing these processes, including possible conflicts of interest of a private entity, ongoing stability of any outsource company, and public concerns with a private company having access to their personal information. Any process that requires decision-making or the exercise of judgment relative to the state s tax and motor vehicle laws is an inherently government activity. Private enterprises should not be interpreting or enforcing state tax and motor vehicle laws. As indicated above, these tax and motor vehicle oversight and enforcement processes are integrated. Decisions and actions of one function impact other functions and divisions. Many of these decisions and actions are based on division management having a shared understanding and interpretation of the state s tax and motor vehicle laws. Ongoing interactions with these functions are necessary to ensure adherence to the administration of these laws. Specific to Property Tax Administrative processes: Ensure statutory compliance in county assessments, county property tax procedures, and requirements of Truth in Taxation laws Ensure fair and equitable proper valuation and taxation throughout the state Certify county and local entity tax rates Value all mines, utilities and other centrally assessed companies in the state Provide appraisal and other property tax training Provide technical assistance to counties Provide support to counties on personal property audits The Property Tax Division is delegated certain responsibilities of the Tax Commission as established in the State Constitution Article III. Utah Code Title 59-2 is the Property Tax Act. It provides direction to the processes the division must provide: , , the annual assessment/sales ratio study and ad valorem appraisal training technical assistance to the county assessors centrally assessed property appraisal personal property auditing (21)(24) statistical reporting to the legislature and governor , , tax rate certification 31