“ethics in professional tax collection ”

“ETHICS IN PROFESSIONAL TAX COLLECTION”

David McPhersonRevenue & Tax Administrator

City of Oakland

2nd Annual GRCA ConferenceSan Diego, CA May 3-5, 2010

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I. Where Does Ethics Fit In?

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A. Everyday BusinessB. Key to SuccessC. Secure RelationsD. Attentive Management

Conflicts of Interest Laws– Government Code 1090– Government Code 87100– Government Code 1126– Form 700

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The Law

Government Code § 1090 Conflicts

• General Rule– A public officer or employee may not make

contracts in which he or she is financially interested.

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• Insufficient for interested party to abstain from voting

• Insufficient if contract is fair, just and equitable– Or even if more advantageous than

another contract

• No “good faith” defense

• Contract is void

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Effect of 1090 Conflict

Political Reform Act Conflicts

• General Rule– No public official may make, participate in

making or in any way use or attempt to use his/her official position to influence a governmental decision in which he/she knows or has reason to know he/she has a disqualifying financial conflict of interest.

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Government Code § 1126

• No employment or activity inconsistent with duties

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Government Code § 1126

• Cannot:– Use agency time, facilities, equipment, supplies,

prestige, influence for private gain or advantage.

– Accept money or consideration from third party for performance acts required to perform for agency during regular course of business.

– Engage in off duty conduct if time demands render performance of duties less efficient.

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II. Managing for Ethical Conduct

A. Complexities1. Dealing with economic pressures

2. Rapidity of change

3. Downsizing

4. Globalization

5. Impact of technology

6. Shifting social values

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II. Managing for Ethical Conduct

B. Sharing Common Values

C. Enable and Ensure Ethical Conduct

D. Ethics Should be Seen as a Deterrent

E. Commitment to Ethical Practice

F. Crucial Business Skills

G. Unrealistic Expectations

H. Uncertainty or Greater Risk

I. Instilling Trust and Gaining Respect

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III. Practicing Ethics Everyday

A. Practice, Practice, Practice

B. A Matter of Habit

C. Commitment, Consistency and Follow-Through

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IV. Between the Lines

A. Organization Norms & Values

B. Corporate Culture

C. Codes of Ethics

D. Ethics Program

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V. Implicit Ethics

A. Performance Motivators

B. Overriding Integrity

C. Actions Speak Louder Than Words

D. Undercover Illegal Expectation/Practices

E. Lead By Example

F. Set Realistic Goals

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V. Implicit Ethics

G. Explicit/Implicit Elements

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Explicit

Codes

Policy Manuals

Training Sessions

Ethics Staff

CEO Speeches

Implicit

Culture

Reward Structure

Management Example

Performance Measure

Valued Behavior

H. How to Ensure Current Ethical Initiatives

1. Test employees alignment with the message and values implicit in “the way we really do things around here.”

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V. Implicit Ethics

VI. No Excuses

A. Standard Excuses– “I didn’t know it was wrong.”– “Everyone else does it.”– “I didn’t think it would hurt anyone.”– “It was the only way to get the job done.”

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B. Real Excuse1. “I thought I could get away with it.”

C. Remove All Excuses

D. Take Responsibility for Actions

E. Diminish Temptation

F. Ignorance is not an Excuse

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VI. No Excuses

G. Heighten Ethical Awareness

H. Effective Supervision

I. Impartial Enforcement Leads to Damage

J. Potent Element of an Ethics Program

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VI. No Excuses

VII. Conflicts & Interests

A. Balance and Resolve Conflicting Interests

B. Personal Advantage

C. Conflict of Interest Depends on1. Materiality

2. Level of Independence Required

3. Disclosure

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D. Ignore the Conflict-When Gain/Loss is Below Threshold of Materiality

E. Decision After Disclosure

F. Disclosure is the Key

G. Failure to Disclose

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VII. Conflicts & Interests

VIII. All Work and No Play

A. Undisciplined Self-Indulgence

B. No Secrets with Accounts Payable Clerk

C. Business Entertainment

D. Embarrassing Legal Entertainment

E. Mitigate Risks

F. Publicize Standards

G. Disclosure of Hospitality

H. Identify Risks Before they Become Problems21

IX. Bad Apples

A. Potential ProblemsB. Red Flags

1. Life Style2. Vacations3. Tolerance to Small Liberties4. Conflict of Interest

C. Investigate MisconductD. Commitment to Ethical PracticeE. Ethical Culture

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X. Building Trust

A. Important Ingredient in Economic System

B. Building Blocks of Trust1. Integrity

2. Transparency

3. Responsibility

4. Respect

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XI. Moonlighting

A. Job Security

B. Personal Career Responsibility

C. Secondary Business Loyalty

D. Moonlighting is an Important Source of Risk

E. Outside employment

F. Effective Ethical Compliance24

XII. The Devil is in the Detail

A. Source of Ethical Risk

B. Permitted/Encouraged Behaviors

C. “The Right Thing” should be “The Done Thing”

D. Ethics Process Review

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XIII. Training

A. Key Element to Successful Ethics Program

B. Strengthen Decision-Making Skills

C. Moral Development

D. Experience, Environment and Education Play Important Role in Ethics in the Workplace

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Ethical Dilemmas

What would you do?

Ethical Exercises

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Scenario I

A woman was near death from a very unusual kind of cancer. The doctors thought that one drug -- a form of radium discovered by a druggist in the same town -- might save her life. The druggist paid $400 for the radium and charged $4,000 for a small dose of the drug. Heinz, the sick woman's husband, went to everyone he knew to borrow the money and tried every legal means, but he could only raise $2000, half of the drug's selling price. Heinz pleaded with the druggist, explaining to him that his wife was dying. He presented several options to the druggist: sell the drug to Heinz at a cheaper price, let Heinz pay for the drug in installments or let Heinz pay for it at a later date. But the druggist said, "No, I discovered the drug and I am going to make money from it." Heinz is now considering breaking into the drug store and stealing for his wife.

Question #1 Should Heinz steal the drug?

Question #2 Should Heinz steal the same drug if the dying person is a "not particularly close" friend, rather than a spouse or relative?

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Scenario II

Heinz decided to break into the store, steal the drug and give it to his wife. An account of the robbery appeared in the following day's newspaper. Mr. Brown, a police officer who knows Heinz, read the account and remembered seeing Heinz run away from the store. He realized that it was Heinz who stole the drug. Brown wonders whether he should report that Heinz was the robber.

Question #3 Should Brown report Heinz?

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Scenario III

Officer Brown reports Heinz who is later arrested and brought to court. A jury is selected. The jury's job is to find whether a person is innocent or guilty of committing a crime. The jury finds Heinz guilty. It is up to the judge to determine the sentence.

Question #4 Should the judge give Heinz a jail sentence or give him probation and set him free?

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XIV. Organizational Code of Ethics & Procedure

A. GRCA Code of Ethics

B. CMRTA Code of Ethics

C. Code of Ethics For Officials and Employees

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Code of Ethics

Purpose and ScopeIn order to best serve the citizens and customers of the City of San Jose, the elected and appointed officials, and employees of the City must act individually and collectively to create a City government that is responsible, fair, honest and open. City employees and officials are expected to demonstrate the highest standards of personal integrity, honesty and conduct in all activities in order to inspire public confidence and trust in City employees.

As stated in the City Charter, “The citizens of San Jose expect and must receive the highest standard of ethics from all those in the public service. City officers and employees must be independent, impartial and responsible in the performance of their duties and accountable to the members of the public.”

The purpose of this Code of Ethics is to establish policy and guidelines, reflecting expected values and behaviors for use by and applicable to elected and appointed City officials, City officers, including Board and Commission members, and employees. Individuals employed by the City under contractual agreement must also observe the provisions of this policy for the term of their contract or as the contract may stipulate.

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Code of Ethics

Use of Confidential InformationCity employees and officials shall not use confidential information acquired by or available to them in the course of their employment with the City for personal gain or for personal, non-City business related reasons. City employees and officials shall uphold the public’s right to know, and in accordance with the Brown Act, uphold the public’s right to know not only the decisions taken, but also the deliberations which shape public policies. Any employee or official, who is aware of a breach of confidentiality, is expected to bring forth that information to the appropriate officials in a timely manner.

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-Mrs. Brown in the movie National Velvet

“Well Mr. Brown sometimes you do the right thing for the wrong reasons or sometimes

you do the wrong thing for the right reasons. It really doesn’t matter.”

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David McPhersonRevenue &Tax Administrator

City of Oakland150 Frank H. Ogawa Plaza

Suite 5342Oakland, CA 94612

(510) 238-6650

DMcpherson@oaklandnet.com

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