Rounding up taxes in Texas
Administering taxes can be a big challenge, as big, let's say, as the state of Texas. The Texas Comptroller of Public Accounts is responsible for providing a balanced budget, for monitoring state spending and for collecting revenues, including taxes. It must administer 30 different state taxes, processing more than 3.8 million tax returns annually. The Audit Division, in turn, must make sure that those taxes are administered fairly.
"We have no income tax in Texas," explains Lisa McCormack, area manager for the Audit Division, "so the sales and use taxes are major components of the state budget." Those taxes account for 25 percent of the state's revenue.
To identify those who owe the state money, the division cross-checks taxpayer records against information from outside sources.
"We might get a list of companies that have participated in a trade show," McCormack says. "We'd want to match that against our tax files to identify anyone doing business without a permit." Those external files include such databases as those of the Federal Aviation Administration, U.S. Customs Service and the IRS.
The old approach had many problems, such as different information formats for different databases; errors, misspellings and abbreviations; and incomplete information. The division sought solution to overcome those problems, and implemented a pilot program using the Data Clustering Engine (DCE) from Identity Systems.
The system emulates an intelligent business user's ability to determine a match based on a variety of factors, overcoming spelling, phonetic and other errors, according to Identity Systems. It also can perform high-volume searches against very large databases. The DCE installation is part of a larger Advanced Database System project begun in 2001. That broader project has generated an additional $70 million per year for the state, McCormack says.
The system has another advantage. McCormack explains, "More accurate identification of those who haven't paid their taxes means less intrusion on those who do. And when everyone pays their fair share, the entire state benefits."