Department of Revenue Desire to Enhance Communication Leads to Research Partnership

Have you ever considered a challenge your agency needed to tackle but struggled with where to begin?  As a program leader, have you wanted more data and evidence to guide an initiative or make a decision? Have you craved a fresh perspective? A research partnership might be the answer for your agency’s improvement project. 

Housed within the Office of State Budget and Management, the NC Office of Strategic Partnerships (OSP) develops, launches, and enhances partnerships between state government and North Carolina’s renowned research and philanthropic sectors. This means building and strengthening a collaborative network of government and non-governmental partners interested in working together on issues of shared interest. As this case study of a North Carolina Department of Revenue (NCDOR) project demonstrates, a connection over a seemingly simple goal like updating a form can blossom into ongoing collaboration.

From Mailer to Motivation

Making taxpayers’ interactions with the agency easier and about more than “just taxes” is an ongoing goal for NCDOR. For example, the agency upgraded its website to make it easier for taxpayers to find information and the agency invested in tools to improve its ability to conduct electronic transactions with customers. While improved technology has helped, NCDOR relies on a more traditional tactic to reach out to North Carolinians who haven’t paid their taxes.  

When someone fails to file or pay their taxes, they receive a physical mailer from NCDOR containing both a collection notice and an insert about past due taxes. The inserts are meant to motivate the taxpayer to action, but the team at the Taxpayer Assistance and Collection  Division at NCDOR had a hunch the inserts were overdue for an overhaul. 

“We had various inserts to prompt different actions and the wording for each might make perfect sense to us in the tax administration world, but did they resonate to the average taxpayer?” explained Barrett Morris, Assistant Director of the Taxpayer Assistance and Collection Division. “We needed to streamline our forms and figure out what could make the inserts more effective.” 

Improved inserts could see a higher response rate from taxpayers, which would save the agency time and money (see The Task of Collecting Late Taxes). The desired outcome was clear, but what wasn’t clear was which changes would have the most impact. When OSP learned of NCDOR’s quandary, they saw an opportunity for collaboration with external research partners.  

The Process

The NC Office of Strategic Partnerships’ process typically begins by meeting with the agency to explore research needs, discuss feasibility and timelines, identify what expertise is needed, and brainstorm ideas for potential partners and opportunities. Once the research needs are refined, OSP promotes the partnership opportunities across a broad network of contacts at colleges, universities, and other research organizations. 

In this case, representatives from OSP – Jenni Owen (Director), Eliza Edwards (Policy Analyst), and David Yokum (Senior Advisor) – met with Morris and her team to explore how an external research partner could help. NCDOR needed a partner with expertise and experience in behavioral science and design and, ideally, a partner with knowledge of tax law. After sharing NCDOR’s partnership opportunity widely and receiving expressions of interest from researchers, OSP connected the project team at NCDOR with behavioral researchers from Duke University and a University of North Carolina law professor whose expertise is tax law.  

The researchers and project team at NCDOR, with OSP, first tackled the wording and design of the existing inserts. They focused on simplifying language and emphasizing the call to action and timeline. The changes are intended to increase customers’ understanding of the language and their options. 

Revisions to tax inserts
The revised inserts (left and right) use color and emphasize a call to action and timeline

Next, the research and evaluation portion of the project began.  The Duke behavioral science researchers considered reasons why people didn’t pay taxes on time. For example, one cause might be a misperception that a lot of people don’t file or pay taxes (the true portion is less than 10 percent). With a human behavior perspective in mind, the team created a list of potential factors that could motivate delinquent taxpayers to act. This became the basis for three versions of the same notice, each version employing wording based on a motivating factor. 

Following the July 2020* tax deadline, taxpayers who failed to pay on time received one of the three designs. NCDOR has been tracking responses for each of the three designs. This data will be used to determine which of the designs is most effective at eliciting response. 

Early Wins Pave the Way for Future Projects

Analysis of the data from insert responses will reveal whether there are patterns in the responses and if one version has been most effective. In the meantime, NCDOR has reaped benefits from the project.

“Every insert we used this year was an updated version based on the improvements we identified early in the tax insert project,” noted NCDOR’s Morris. “We have seen a lower call volume this year and our research may confirm the modifications made during this project were a factor in the improvement.”  

Even as this tax insert project culminates with the data analysis, NCDOR and the researchers recognize there are other emerging opportunities, questions to explore, and potential projects to address NCDOR priorities while producing research findings that can be applied across multiple scenarios or needs. For example, a future project will focus on improving the agency’s tax collections website pages.

“We discovered the value of getting an outside perspective,” says Morris. “We review our materials regularly, but we are so close to the work of tax administration, we can miss things. We learned to appreciate outside feedback and have committed to getting fresh perspective on our taxpayer information.”

While redesigning a few forms might sound like a simple goal, NCDOR’s interest in engaging outside partners has led to more than just a better form. It has opened the door to new questions about how to improve tax administration more broadly with collaborative partners who bring to the table unique skills and perspectives. Additionally, the lessons learned during the project can be applied to communications efforts at any state agency. 

This is where the strategic part of these partnerships is most apparent. They can yield benefits to not just an individual project and its partners, but to all state government and ultimately to North Carolinians. 

The Task of Collecting Late Taxes

In FY 2018-2019, NCDOR’s Collection Division resolved 698,281 cases, cleared 407,297 delinquent (non-filed) returns, and ultimately collected $636,307,833 in owed but unpaid taxes. Improving the response rate for late taxpayers means reducing the time and money the state invests resolving these cases and increasing public benefits to North Carolinians as the revenues are then invested into public services. 

More About the NC Office of Strategic Partnerships

OSP helps state agencies reimagine the way they approach priorities and research needs by emphasizing the opportunities that exist in North Carolina to leverage external expertise and support and facilitating cross-sector connections. OSP prioritizes projects that are scalable, sustainable, and develop public, open-source resources. The team is committed to sharing project learnings, resources, and deliverables with other agencies. 

If you are interested in learning more, email and sign up for OSP’s Highlights (monthly e-news and resources) and Monthly Connect (virtual sessions on cross-sector partnerships).

*The deadline for filing 2019 taxes was delayed from April 15 to July in 2020.