The Comptroller reveals exemption approvals at the CRIM without the required justifications and deficiencies with virtual appraisal claims
The Office of the Comptroller of Puerto Rico (OCPR) issued a qualified opinion on the fiscal operations of the Office of Management and Information Systems of the Municipal Revenue Collection Center (CRIM). A qualified opinion is issued when the noncompliances, individually or together, are significant but not pervasive.
The Report reveals that, at the CRIM, full tax exemptions of residential property were approved without the required evidence in 15% of the service sheets registered from 2021 to 2022. In addition, of the refund claim requests examined, 50% were not completed within 90 days as provided by regulation but with delays of up to 472 days, 40% did not include the justification to cancel or deny, and 10% were approved without the required documentation.
In fact, the registration and approval of 87% of these service sheets in the CRIM360 system were carried out by employee users who performed functions different from the authorized positions.
This situation undermines confidence in the efficiency and transparency of the process. In addition, due to the lack of evidence in the system, approvals of $19,756 were identified that were not appropriate or the cancellation of valid claims for $41,115. The current tax system, CRIM360, was established in 2021.
The seven-finding audit notes multiple deficiencies with the virtual appraisal claims process. For example, 43% of the claims completed on February 13 and 15, 2024, reflected discrepancies between the valuation of the real property registered in the CRIM360 system versus the virtual appraisal values of the Skala II application. This application established, in 2020, virtual appraisal values for the land and structure of 756,450 real properties.
These discrepancies over the value of the property undermine confidence in the data in the CRIM360 system and in the virtual appraisal notifications sent to taxpayers.
Other deficiencies are evidenced in the changes of mailing address in the CRIM360 system. In 78%, the corresponding form was not used and in 44% it did not include the taxpayer's electricity or water bill. These deficiencies prevent having a correct and updated database.
For fiscal year 2023, the CRIM received 78,952 invoices returned due to errors in the mailing address registration, among which 53% included invoices totaling $36.1 million. The fact that the taxpayer does not receive notification of the tax imposed also limits their right to request administrative review in accordance with the procedure.
The CRIM does not have an automated process for verifying and validating the reconciliation of real property tax collections. As of February 24, 2024, the effort with the bank and the CRIM360 system programmer had not been completed. This situation may cause errors and irregularities with the flow of cash received and managed.
In contravention of current regulations, 74% of the users with access accounts had been assigned privileges that were not necessary for the functions they perform at the CRIM. In addition, for 70% of the authorized access accounts, the required form was not used.
The CRIM's budget increased from $30.7 million in 2022, to $32.6 million in 2023 and to $33 million in 2024.
The Report recommends that the chairman of the Governing Board oversee compliance with the Report's recommendations so that the executive director adopts the appropriate corrective measures and the situations noted are not repeated.
This report covers the period from September 1, 2021 to February 15, 2024.
Audit Report OC-25-93 is available on our website: www.ocpr.gov.pr.
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