Can lean help to improve tributary processes in México?

Good day, everyone. It´s been two frustrating weeks for me. And I needed to write all my experience dealing with governmental agencies, here in México.

Unfortunately, had to wait, until this experience was over, to try not to jump on conclusions that would bias my writing. I guess is hard for people in general, to wait and see. Often we desperately want to solve things right away, with little investigation. I guess this is natural, and it´s because the things we experience and see, are granted as THE TRUTH.

Anyway, I´m happy that this awful experience is over. This experience has to do with taxes and the requirements to present my anual tax declaration to the state. Yes, as its often said, you can´t skip death and taxes.

A little bit of context

In Mexico, it is required that every April, you have to declare your earnings and expenses the year before, in this case 2015. The process can be done through the website and it is supposed to be easy. Like myself there are many who hire accountants to do the trick for them. By the mexican legislation, if during that year, you pay more taxes than the regular limit imposed by the law, the excess should be returned to you within a short time frame.

Sounds cool right. So every April, most people present their anual tax declaration and hopefully their balance is positive so they can ask to be refunded. But there are rules, you should follow. Dead line is April 30th, you gotta do it through the website, and you need an RFC code; which is a code that the tax agency provides to you in order to identify you and track your operations. This RFC code is formed according to your birthday, and other data that it is supposed to be exclusively yours. The legend says, that one person cannot have 2 RFC codes, because the system would detect and won´t allow to create a new one, unless you delete the previous one through a specific procedure the agency does. The other requirement is that if you would require to be refunded by a quantity over 10,000 mxn (about 800 usd) you require an electronic signature. This signature is match with your RFC coded and your CURP code (This one is a code that the population agency provides to identify you as a mexican person, with all rights and obligations according to current legislations). Yes, this code is supposed to be unique for every person, and one person cannot have two. Sine this CURP code is formed by your birthdate and other important data that should be unique for you. Two people with the same name, should have different CURP and RFC codes. But going back to the electronic signature,  once you show your CURP and RFC, the employee puts your data into the system and the system woul tell all about your working history, your tax declarations, etc. Here is when the thing gets tricky for me.

CURP Code First.

This year the law changed, if you needed to get a refund over 800 usd you need to have an electronic signature. This signature is supposed to be super safe. The story says that not even anonymous can break it down. Its a combination of your fingerprints, eye iris and a password created by you.

April´s first week I sent all information i gather to my accountant. We have worked for years, and this was the first time something went wrong.  Sent al my bills, payments & charity donations. She already had my info so that was it. Started to getting anxious because i had no news from her for over a week. When she finally reached out, told me that this year my refund would higher than 800 usd so, would need the electronic signature. She told me this 4 days before deadline, so the next mourning when to the agency office to get the damn signature. to my surprise, the offices were clean, furniture was in good shape, personnel was nice and treated everyone with respect. The employee who had me, told me there was something funny and that I won´t be able to get the signature that day. When look for me in the system, I had 2 RFC´s codes, and 3 CURP codes. Remember when I say that a person cannot have more than 1 of these codes? Bullshit!

So, first I had to go to the population office to know what had happened with my CURP.  How could I have 3 different CURP codes. the lady who helped me didn´t have the answer but thanks to god, she was able to leave active the correct one.  One mourning lost. couldn´t do anything more that day was a wednesday. Thursday and Friday couldn't do anything else since I had a training so couldn't missed it. So decided to go on Saturday to the tax office. For people reading this in Us, Canada or even Asia, you got to know that government offices do not open on Saturday, but as the deadline was close, decided to open. Unfortunately could´t do present my tax declaration, since Saturdays they were only processing requests to get the electronic signature, so the girl who had me, passed my case with an older lady for her to explain me what the process would be in my case. Remember that at this point I still had 2 RFC codes. So the lady told me that should come back on Monday, to perform an RFC code cancelation due to a duplicity. I asked if this was common, and said that it is. But she also lecture me saying:

But it is people's responsibility to check everything is alright with with their tax situation.

So, It is my fault then, for you not having the systems to prevent this. As the lady said, I came back this past Friday and this time could do it. In one hour I was able to cancel my duplicated RFC code and get my brand new electronic signature. My accountant was able to present my tax declaration 1 week after deadline.  I just hope, the SAT would be able to get my money back with little delay in one week or two, otherwise...

What lessons can be seen here at a personal level?

Of course the first lesson is that I need to learn how to do it myself. It is supposed to be very easy. The tax declaration is done through a website, filling a form filling the blanks and there you go. Next year won't be a delay, because my account had my tax at her desk for 2 weeks to find in the last minute that I need something else.

How can the SAT office lean to further improve processes and attention?

• The first one is of course, improve the security to avoid one person having 2 different RFC codes. When I finally got my electronic signature, the guy who had me, told me that they should have notice back in 2008  when I got my CIEC code. During the investigation, I found that I had another RFC code since 2005. So, I guess the guy at that time, didn´t check properly. But should´t be a man´s decision to follow a process. Processes should have controls in place to avoid this kind of mistakes.

• Second, I found the duplicated codes where requested by a company I worked for in 2005. But as you remember from reading the top of this story, those codes are supposed to be unique and you cannot get a CURP or a RFC code for your mom. The interested person should get the codes for her/him. How is it possible that a company got those codes for me? Again, system failure. The system should be able to tell you if a person already has a code or not.

• Although I´m sure the SAT office did the best to help people to get their tax declaration, there´s definitely room for improvement. To start, from the 3 times i went to the local office, people was treated in batches (see VSM).    

Fig. 1 VSM Tax declaration with E - signature process. Only 3.94% of Value Added.

• Wouldn´t it be better to establish one piece flow, and avoid having people early in the mourning  being moved from  in batches from one office to the next one and reduce/eliminate transportation? Even better, why not allowing people do their own registration?

• Third, the electronic signature is electronic, but you cannot get it through the web. You gotta go to the office to have your information (birth date, your city  and then they take your fingerprints, iris and signature. Would´t it be better if people performs the first part of the process themselves at home? I mean, is just getting your data in the system; registration. And as this story illustrates, looks like there is not much of a difference if the data is placed in the system by me or by a SAT employee. As the system isn´t error proofed, the probability of an error is basically the same. This way, people would only attend the office to get the picture, signature digitalised and eyes scanned.

• Another one, there is the possibility of getting an appointment though phone or internet. And it depends on the process you will follow (VSM to be followed). However although most of time this works properly and helps customers to go through the processes faster, does not work when its Tax time.  I´m saying that isn´t working since, when i look for an appointment, there wasn´t room. Why not opening the range and provide more time so people can present their tax declaration on time.  

• Finally, do not lecture people.  In the case of Mexico, workers must wait for companies to deliver their tax payment certificate, so each and every one of the workers can present the tax declaration based on that information. If the companies do not deliver on time those certificates, you cannot blame the workers for doing late their declaration.

If you put any people in a bad, weak and fragile, process, without error proofing, or strong controls to diminish mistakes and error, the results will be bad, undesired ones. Such as presenting late the tax declaration.

As usual, thanks for reading this stuff. I would love to hear your thoughts on this issue.