Michael Urbach, CPA
Commissioner, New York State Department of Taxation and Finance

By Louis Grumet

You have worked with the governor on an active legislative agenda over the last few years. What have been your achievements?

Obviously, Governor Pataki's greatest achievement in the legislative arena has been cutting taxes at unprecedented levels. In each of the last three years, New York state has led the nation in cutting taxes.

We enacted a $4 billion personal income tax cut, the STAR School Property Tax Reduction Plan, and significantly reduced the corporate tax rate. I am also quite proud of the progress we made in repealing New York's estate and gift taxes. By February 1, 2000, we will have repealed the New York gift tax and reduced the New York estate tax to an amount equal to the federal credit. In effect, we will have eliminated the burden of both taxes, putting New York on an even footing with more than 30 other states. All of these tax cuts will ultimately return more than $12.5 billion to New Yorkers each year.

Another great accomplishment was persuading the state legislature to pass what is known as the single file bill, something I've personally been fighting for since I arrived. As a result of this legislation, employers will be able to file combined withholding, wage reporting, and unemployment insurance returns beginning January 1. Employers will make a single payment to the state tax department to cover their withholding and unemployment costs. This new measure will eliminate close to two million pieces of paper currently required to be filed by businesses.

We have also incorporated new technology that will simplify the old nightmarish filing procedures businesses faced. Now, rather than the hours it used to take to comply with these complicated requirements, it will be a matter of minutes and a few easy keystrokes using new data transfer technologies. This new measure will also dramatically reduce the state's processing costs.

Regulatory reform was one of your goals. What have you accomplished in this regard?

For so many years, this department's answer to every situation was to put forth more regulations, which only served to make life harder for taxpayers and even employees here at the department. Since I arrived in 1995, we have been conducting an ongoing regulatory "housecleaning," which has gotten rid of hundreds of pages of regulations that were either obsolete or unnecessarily burdensome. In fact, we have eliminated close to 25 percent of the regulations which existed prior to my arrival.

Also, we have altered some existing rules to make life easier for taxpayers. For example, we adopted new regulations to allow for 100,000 additional businesses to file sales tax returns on an annual basis rather than quarterly. We estimate that this move alone saves businesses $18 million in tax preparation costs each year. Also, we altered our regulations to allow as many as 75,000 more employers to file the less complicated corporation tax short form, again saving these businesses almost $2 million in tax preparation costs.

We know the New York State Department of Taxation and Finance is in the process of a major Total Quality Management (TQM) initiative. What tangible benefits can taxpayers and CPAs expect to see from this process?

Total Quality Management is a concept that I introduced to the tax department after seeing its benefits at the state Department of Motor Vehicles. A few years back I had to go to the DMV to have my license renewed. I was absolutely dreading it, knowing what my past experiences had been. When I got there I was pleasantly surprised to experience a friendly, efficient, and energized staff working with me to address my problems, as opposed to the chaos for which I had readied myself. When I got back to my office, I called the commissioner of the DMV to congratulate her on turning the department around. When she told me it was a result of TQM, I was astonished. Then the wheels started turning. I thought, "Why not bring TQM to the tax department?"

Total Quality Management is based on the tried and true techniques that our top managers believe in. We believe in employee involvement in planning our agency's future. Employees are more likely to enjoy what they do because of the significant effect they have in contributing to the goals and ultimately the long-term success of the organization. It sounds simple, but in fact, few organizations have realized the powerful effect it can have. Our department has embraced this philosophy and is living it today.

Already taxpayers and tax professionals have reaped the benefits of TQM. We have introduced state-of-the-art technology to our employees, helping them to do their jobs better. We have a fax-on-demand system that allows taxpayers to request forms 24 hours a day; our website allows taxpayers to download hundreds of forms, find answers to commonly asked questions, read about new tax legislation, and refer to the proper people when they need to talk to someone. Total Quality Management has helped us to become "taxpayer friendly" while invigorating a talented workforce. I think we also have proven that government can improve the services it offers while controlling costs.

How can the CPA profession be more helpful to the New York State Department of Taxation and Finance?

Some of our best ideas, our accomplishments, have come directly from taxpayers and tax professionals. We have built a partnership with New York's CPA community, so that we better understand how the decisions we make in Albany affect taxpayers across New York.

For example, we created a Taxpayer Advisory Council, made up of representatives from a wide variety of industry associations, to act as consultants to the department. Also, we conducted a series of chamber of commerce-sponsored town meetings across the state in both 1995 and 1997. The meetings provided a forum for taxpayers and tax professionals to share their thoughts on how the tax department can continue to improve service and make complying with the state's tax laws easier.

At the federal level, the recent restructuring of the IRS is working to make the agency a more taxpayer-friendly, consumer-oriented organization. What has the New York State Department of Taxation and Finance done to achieve this at the state level?

Since I arrived in 1995, we have been working to make our agency more taxpayer-friendly, long before the Internal Revenue Service's highly-publicized problems.

A few months ago, I met with the new IRS commissioner, Charles Rossotti. He faced the herculean task of restructuring the IRS at a time when some in Washington were calling for a total restructuring, and even dismantling, of the agency.

During our meeting, I told Commissioner Rossotti of the accomplishments we've made here in New York state and shared with him what we have realized over the past four years: Treating taxpayers as customers and providing them with fast, efficient, and courteous service in a professional manner must always be our top priority.

Where do you see the accounting profession headed in the next century?

The greatest challenge the accounting profession faces is being able to deliver great service and value in an increasingly global and competitive marketplace. Also, in order to survive, CPAs need to offer a wide range of services, much different from the traditional services offered years ago.

Firms that will be successful in the coming years will need to build on those traditional areas like auditing and compliance work to also provide services like consulting and performance evaluation, which will help their clients become more competitive.

You have said over the last several years that you would be a "one-term" commissioner. When will you be leaving the department, and what are your plans?