Management alert memo from D.C. Office of Integrity and Oversight

In this audit obtained by The Washington Post, the D.C. Office of Integrity Oversight warned the city's tax office about bad addresses in its mailing database.

i ..

Office of the Chief Financial.


Office of Integrity and Oversight


Office ofTax and Revenue

mom: William J. Di\/ello. Executive oil- JM

Office oflntegrity and Oversight
DATE: March 14, 201
S13 BJECT: Final Management Alert on Lack of Address Cleaning Processon Real Properties

Tax Administration Mailing Database at the ot"l'ax and Revenue (Report
No. -

'l'l1is is a Mariagcinent Alert Report to inform you that during, our
evaltizttion ofihe Internal Controls over Undelivered Mail and Address Change Processes,
the ()iTic.e of Integrity and Oversight (OIO) determined that, due to the absence of an
address cleaning process on the Real Property Tax Administration (RPTA) lvlailing Database,
the of Tax and Revenue (OTR) experienced a large. volume of undelivered mail of
notices that could have been avoided. The 010 provides these reports when it believes
a matter requires the immediate attention ofthe officials.

On August 25. 3010. Off) initiated an Audit of Internal Controls Over Mail and the
C-hange Process No. Our field work commenced on
l4. 2010 and is currently ongoing.

The objectives ofthe audit are to determine whether:

lillective internal controls are in place For processing umlelivercr.l mail for all
fiinctional otlices: and -.

(ill lrfileetive internal controls are in place to provide reasonable assLn'anee that the
address cliange process free from errors or Fraud.

qlliffl fir' "inn-"1-1 r"nx's'x . .- can

i\rlarch l-l. 20l
Page 2 olifi


The ot'Tax and Revenue is responsible for gericrat one million
or more business "notices and/or bills on a yearly basis (OTR generated l.0l0,699

and twice a year. average Ina'-ling for is about
($00,000 pieces per year. Current_ly, a contractor is used to prepare the RPTA mailing
based on a file of addresses received from the Integrated Tax System (ITS) Real
Property Mailing Database. Of the mail sent, OTR receives approximately 53.000

pieces of returned mail per year on a Fve-year average

To ensure OTR is mailing notices and./or bills to updated and current addresses, OTR
has a memorandum agreement with the U.S. Internal Revenue Services (IRS) where
OTR, on a regular basis, requests the IRS to provide OTR with the IRS Taxpayer
Address Request (TAR) Tickler File for address change data. The program updates
addresses in ITS where the taxpayer's address has not updated in the last 18 months in
the ITS mailing addresses database. However, this address cleaning process is only
applied for other non--real property tax types mailing addresses.



l. Lack of Address Cleaning Process on Real Properties Tax Administration
Mailing Database at the Office of Tax and Revenue

noted the RPTA accounted for 70% or 37,000 pieces of the returned mail received
on a Iive~year average basis. This large volume ofreturned mail can be attributed to the
fact that the RPTA Mailing Address Database does not go through an address cleaning
process such as comparing the Integrated Tax System (ITS) mailing addresses database
with the IRS Taxpayer Address Request (TAR) Tickler File. Our discussion with the
Office of the Chief Technology Officer (OCTO) Geographical Information System
(GJS) project personnel revealed that OCTO's personnel also noted inconsistencies

between the GIS Master Address Repository (MAR) and the ITS address database.'

OCTO communicated this issue to the OTR and the Office of" the Chief Information
Olitieer (OCIO) Tax Systems Gr_oup (TSG) in__ El. 2009

The Real Property Tax address database does not go through a cleaning process due to
historical practices. is aware of the lack of an address cleaning process on RPTA
mailing addresses; however, it is TSG's understanding that the ITS records cannot be
updated unless they are verified by the taxpayer. Altliougli TSG cannot find a written
policy that specifically states the change prohibition, TSG requires an OTR senior
management directive to act contrary to the general understanding about changes to the
mailing addresses.

March 14.2011
l'ag,e 3 ot'5

Our request to the OCFC.) legal counsel on whether there are an_v statutes in the
('ode that speak to tipdatizig of addresses for business. individual as well as
real property taxes }-'ielt'led the lbllowing (DC 42405):

a] All parties with an interest in a

b) The Recorder of' Deeds shall enter into its land records all updated inforniation


The District shall assess-a fee not to exceed fi7fiei*es_t_ecl party ilthe
District is unable to locate the interested party using all available information in
--R-ecorder oi' iniionnation available at the
Oflice of Tax and Revenue.

Due to the absence of an address cleaning process on the Real Property Tax
Administration Mailing Database, (JTR experienced a large volume of undelivered
mail ol' RPTA notices that could have been avoided. It is estimated that on a yearly basis.
DTR spends about $65,000 to process RPTA undelivered mail (see Exhibit 2), and

articular real propertv shall notify the Recorder of

wffers lost

plans to conduct the"Rl5'Ti5i"1iiailii1g function in house instead
of using a contracted vendor which makes the corrective actions from the above mentioned
issue urgent.


To resolve potential and reduce costs a_s_sQciate_c_l_
mail. vveiirecommend:

I. The OTR Deputy Chief Financial (')l'ficer issue an Exectitive order to allow
and the relevant RPTA personnel to perform an address cleaning
process and update the RPTA mailing address database to avoid or minimize the
unnecessary cost of processing undelivered mail and lost/delayed collection of real

property tax re venue.

7. The Real Property Tax Administration Director in conjunction with the OCH)
lax Systems Group collaborate with the OCTO GIS project personnel to investigate
and correct (ifdeemed necessary) the inconsistencies between the ITS addresses and


"The Real Property Tax Administration Director use all available information in the
land records at the Recorder of Deeds or other information available at the ()i'l'1ce of
Tax and Revenue, as required by the DC and

4. If District is" unable" to locate' the pa1tv"'"Jter_ performing
recommendation 3 above, the Real Property Tax Director consider assessing a tee
a5_gainst' the interested party as allowed by ?42--405.

March L4. 20} i
Page 4 of 5

Response and (H0 Comments

As noted in the response. management has concurred with recorntnendations and
has attdfor will implement corrective actions detaifed in the attached document below {Exhibit

find UTRHS actions [0

for the corrective actions.

We appreciate the cooperation and coartesies extended to our staff during the audit. If you
have questions, please Contact Mohamad Yusuff. Director oflntemal Audit, at (202) 442-8240
or me at (202) 4416445.

cc: Naftvar M. Gandhi, chiermnanctat Officer
Angel! Jacobs, C'hiefofStaff, OCF
Kathy Crader, ChiefRisk Officer, OCFO
Jim Hightower, Director, Tax System Group, OCIO
Robert Farr, Director, Real Property Tax Administration, OTR

I4. 301 I

Page 5 M5


3) I I I

Type of I Agency f,
"g I Benefit I Reported I
2 Description of I Imtnnated Status
5 Benefits I Completion
I Date
as I

[m prove RPTA
Mailing Database Compliance I
Update Process and and
Reduce Undelivered Internal I
I Mail Control I TBD I OPEN
Improve RPTA I I
Mailing Database Compliance
Update Process and and
Reduce Undelivered Internal I
2 Mail I Control I use oPs_:N

Improve RPTA Mail I Compliance I
Delivezy Process I and I
and Reduce Internal
3 Undelivered Mail Centre! I TBD OPEN
Delwer) Iroeesa. and I I
i and Increase Fee a Internal I I
-1 I Revenue Centre! TBD OPEN

{his mimnnr the ufa report Lime. Fm" fine} repurm_ meslns
rnamaigexwaern. and the Hit. cm the to be taken, buIa1c:i:.m is net mean:-3
hm; that the action rreecksary in wrrecr. the eunditien is eesnpiete. [fa wmpleiinra Liar-3 ms ma: prev-feed.
the ziaze is used. n-matrrze that mnmigement hats Io neither rake the
ner proposed aiternat?ve actions to correct the ecmditimw.

Officc ofthe Ch1's:f Financial Officer
Offcc 0fTz1x and
as 9: air

Stephen M. ("cull
Deputy; Grief' Financial

I '4 -u 4
I0: l)1Vcl|o, la'
(Nficc: of Integrity qficl

lvl. Curdi jf

Marrsh 3. 201

SUBJECT: OIO lvlanagement Alert

Tlals is in :'cl'erence to 3-mu.' clated l*'ebrum'y 2. 20! l, I'ega1'cling the lack ofzm
on the Real Property Tax Malling I)a1ab21s_e at the
Officc Revenue. - - --

An clearuilxg process; to p1'evenl Lmnecessary returned mail in the Real Property Tax
Admi11isn'ation had not been p'E1'fo1'2m-zcl due to a policy of not updating address informeition unless
to do so by a propeny owner. Aclclitlonally, property taxes were paid for the vast
majority of the atzcmuns with rcturnecl mail or the Office of'Tax and Rex-'e1me would llave
:1 much volume of accounts for tax sale. ln Fact. over accounts or 40% of
all real tax accounts are paid via electronic cxclumge bezwecn n1o1'tgage

on um' rcscarcl1 {be following are to reconunemlutinns.

l. The OTR Chief Financial Officer Executive order to allow
and the relevant personnel to perform am address cleaning" process
and update the RPTA mailing database to avclid or minimize the unnecessary
cost of processing undelivered mail and lost/delizyed collection real tax

. .

We agree wiIl1 this The Deputy Cll?cf Financial (DCFO) will
an adclr?ss c'lea11i11g process ?0 minimize the cost of

at gm.-

I - Street'. 3 I lit" EIZIHJJ at {Jill}


:\.IcrL [Report Ni).


'I".hc notice}: am.' crzuniud In an

MM upciutc the mailing upon the
We will aiso invoke CODI.-Z I. an address product. Etguinsi our
addresses. 'H1is reduce mafiling azdcimrss and the cost of
mzzii. A 1'c\'icwnf'tI1c in the (HS d::l:1hu5a:3
mrmg.-' 01' the isstics Imteci-wi-II be 1'csnJu:u! by {his m:tion.

Real the
Ciruup with the OCTO (SIS project tn investigate
and correct (if the inconsistencies between ITS amd (HS

agree with rhis I)irec1m's of' RI"f'z\ and will IHIJC1
persolaluei lo LleIern1im:iI'thu:re are nakiitionul
to our new process in GIS and ifso. we wil! those

The Real Tax ALI111inistr:1tiuI1 l)ircct0r use ail information in the
land rc-cords at the in fnranutimn the ()ft'icc of'
Tax and Re.-venue, as by the and

We with this The mil all ux.-uiluhlrz
in the land rrzcords at the I{ecors;le1' of (ROD).
at ROD are processed by our Maps and Titles Divission.

If District is unable to locate the i.11tercs.te.d.
3 abm-'0, the Real I'rUpert_v Ta.t I)irec'ror crmsider nssessizag :1 fee
uguiust the party as allmved by

The Diz'cctot' will this Ilzc il' panics; uzmnul
bu Iucmusd by the: means -abox-:3.

Ifjy-;m haw: or cunc<21*ns :'cg:t1'diI1g this Imfiicl'. ammo: Rabat I-fin:
Real Property Tax Acimi11istrau'm1, at (2021) 442-M383.

cu: Farr. Direclm, Real Tax ALimi11istraii<m, (NR
Jzamczs Direscror. CJCIO