Minnesota Speeds Tax Processing and Reduces Costs
The Minnesota Department of Revenue (MDOR) oversees the state's revenue system, which is made up of 28 state taxes and local property taxes collected by county governments. The department serves 2.4 million taxpayers and processes approximately 3.6 million tax returns annually.
The Situation: The Need to Streamline Tax Processing
The department's legacy mainframe system was 30 years old and relied on sequential batch processing of massive volumes of paper, and was itself merely an automation of historic manual processes. It was difficult to manage and relied upon labor-intensive processes that grew more expensive each year. Upon analysis, it became apparent that the existing system was deficient in several key areas:
- Taxpayer services: the system was inflexible and unresponsive to customers' needs and expectations. Batch processing was slow and it took up to 120 days for citizens to receive refunds.
- Tax and budget policy implementation: the system could not respond efficiently to changes in tax laws. In addition, delays and errors in capturing return and payment information affected quality of the state revenue forecast.
- Compliance: problems with late, incorrect or inadequate data limited the ability to achieve compliance with state laws.
- Risk and cost management: the risk of a major system failure grew each year.
Management knew they needed a radical redesign of business processes to achieve the dramatic improvements they wanted. Yet they realized such an undertaking would involve a significant mobilization of resources and commitment to change in multiple dimensions, including changes to business processes, work group structure and jobs, organizational values and norms, information technologies and management systems.
The income tax reengineering project became a comprehensive, multi-year, multi-phase redesign of the state's individual income tax management system. It involved a major reallocation of the business processes associated with the income tax compliance cycle, including customer education and service as well as document and remittance processing.
The Solution: Forms Processing System
MDOR needed technology to improve the management of the information collected, produced and stored. Management desired to implement an imaging and scanning document management system that would convert paper documents into electronic images. After reviewing numerous bid responses, the department selected a systems integration company to implement a solution. That company turned to FormWare® from EMC® Captiva® to serve as the central platform for capturing and managing the information contained on the tax forms submitted to MDOR.
After the tax forms arrive at MDOR and are scanned, FormWare accomplishes the majority of the processing by capturing the original document, "reading" the data on the form via optical character recognition (OCR) technology, extracting the important data and exporting it into the system.
The system provides the core OCR functionality, including automating form identification, image enhancement, recognition, character repair and the framework for business rules processing. Other technologies implemented included scanners and optical disc storage. The combined solution enables the online collection, transfer and storage of data submitted either electronically or from the scanned paper tax returns.
The Results: Reduced Costs and Improved Customer Satisfaction
The implementation of the new tax form capture solution enabled MDOR to reach its efficiency and performance targets. By liberating themselves from the constraints of paper-based batch processes and using electronic media for managing returns, the department has been able to reduce the costs of processing, storing and retrieving information. Management has substantially reduced the processing cycle time for paper and electronic filing, as well as remittance processing and funding. Finally, they have been able to increase the quality and availability of information for service, tax policy and audit purposes.
During the tax-processing season after the implementation of the forms processing system, MDOR processed roughly 3 million income tax forms and had its best tax-processing season ever, as measured by its earliest finished date on record. In scanning between 25,000 and 30,000 returns per day, the department:
- Reduced the average time to process paper returns from 30-40 days to less then 10;
- Decreased the time to process electronic filing from 10 days to three;
- Processed 95% of returns within five days;
- Significantly reduced the volume of telephone assistance calls;
- Improved compliance through reduced errors and earlier audits;
- Provided much improved taxpayer service; and
- Eliminated its backlog.
Together with improvements in electronic filing, the overall cost of processing returns was reduced by 50%—60%. With its ability to quickly and accurately capture information from high volumes of paperwork, Captiva's FormWare helped put the Minnesota Department of Revenue well on its way to achieving its mission: making the state's revenue system work well for all Minnesotans.
EMC Captiva is a leading global provider of input management solutions used to transform information from paper, fax and electronic sources into business-ready electronic content suitable for processing by content management, enterprise resource planning, customer relationship management and other information management systems.
Captiva's suite of input management solutions meets the needs of organizations large and small and can readily scale from one department to a global enterprise. The comprehensive Captiva input management solution suite includes document capture, forms processing, invoice processing, intelligent document recognition and classification, distributed capture, imaging solutions, applications monitoring and premium services. For more information, visit www.emc.com/captiva.