Accommodating the taxpayer

Traditionally state tax and revenue departments have issued regulations and expected people to obey them. But today those same departments are trying to be more "customer" oriented.

The South Carolina Dept. of Revenue (www.dor.state.sc.us/dor.html), for instance, is conducting market research to find out who will use touch-tone, Internet or paper tax forms.

"Then technology solutions can be targeted to fit that customer," said Terry Garber, technology management manager with the IRM Division of the South Carolina Dept. of Revenue (SCDOR).

"What has been innovative for the agency," added Garber, "was developing a total solution for electronic filing and paper document processing. Scanning and imaging is part of the answer, the Internet is part of the answer. We are looking to have a balance of solutions so that all our taxpayers can be accommodated."

In searching for a solution, the agency wanted to address front-end data capture and back-end storage and retrieval. Data wasn’t being input into the system fast enough.

"The agency simply couldn’t find enough traditional data entry operators for its demand, especially for peak periods," said Garber. "The conclusion was to optimize technology."

The SCDOR also wanted to mitigate off-site storage costs and the direct cost of delays. Specifically, if the state doesn’t issue refunds within 75 days, interest must be paid to the taxpayer.

The agency also wanted to reduce the number of individual tax returns that arrive on paper. South Carolina processes 5 million returns a year--individual returns, monthly sales tax forms and quarterly withholding taxes. Of that number, 1.9 million forms are individual returns--returns that are due refunds or returns with tax due. Although the state leads the nation in per capita electronic filing (500,000 of the 1.9 million individual income tax returns per year are filed electronically), 1.4 million individual returns remained on paper.

"From a customer service perspective, it was cumbersome to retrieve paper," said Garber. "The goal was to have instant access."

An older scanner only read machine print and could not tolerate folds or creases. The forms were transferred to microfilm, but the microfilm equipment was outdated and breaking down, according to Garber.

"Essentially there was no effectively functioning automated system," he said.

Because research indicated that some states spent millions without achieving a workable system, the SCDOR decided to pilot all of its system elements.

"The pilots were an opportunity for SCDOR to learn the technology and how we could best use it when the processes were full scale," said Garber.

Working with KeyMark (www.keymarkllc.com), the agency developed a scanning and imaging pilot project using OCR for Forms from Microsystems Technology (www.microsystemsonline .com), FileNet’s (www.filenet.com) Watermark software and Bell & Howell (www.bhscanners.com) duplex and simplex scanners.

The department is using the forms processing software to scan four applications: withholding tax, property ratio, charge slips and zero dollar sales tax. It is in the process of upgrading to FileNet’s Panagon image software, and the planned new system will scan and image returns.

Currently imaging of the withholding tax is not integrated with data from the legacy systems. The department wants to rectify that and to expand electronic filing in all ways--via tax practitioners, the Internet and telephone.

"The Internet is the biggest potential time saver," said Garber, "but of course those E-forms must be stored electronically. The future vision is that a customer service representative could retrieve the legacy data, then click to retrieve the return and not have to know whether it came from the Internet or phone or scanned paper."

The agency wants to use remittance-processing scanners and check scanners to automate data entry, and to use workflow to automate exception handling and apply specific agency rules against the data.

Over the next few years, the department will expand its pilots into a full range of mature programs.

"The SCDOR piloted a program for combined federal/state electronic filing in 1991, which is standard in 34 states," said Garber. "The agency also has a telefile system whereby simple returns can be filed with a touch-tone phone. SCDOR piloted income tax filing over the Internet last year and proved the system."

Texas challenge

The Texas State Comptroller’s Office (www.cpa.state.tx.us) wanted its accounts examiners to have fingertip access to taxpayer returns. While 51% of the agency’s annual 13.1 million documents were available on a FileNet (www.filenet.com) imaging system, the remaining 49% were being microfilmed on the fly, with such poor results sometimes that the documents had to be refilmed.

The agency worked with Radian Systems (www.radsys.com) to install a new Integrated Image Management System (IIMS), which consists of Radian’s WorldScan and WSDOM software, as well as the FileNet system. Kodak (www.kodak.com) and Scan Optics (www.scanoptics.com) scanners produce image files from which the WSDOM software creates microfilm.

The IIMS has provided many benefits, according to Kim Blazich, systems analyst with the Comptroller’s Office.

"All of the documents received from taxpayers are now available for our accounts examiners to review on the FileNet image system," said Blazich. "This has reduced the amount of time it takes to review an account, because the examiner does not have to find the document in the retention files or on microfilm. The microfilm quality has improved tremendously. Very few documents have to be remicrofilmed."

The Comptroller’s Office is currently working with Radian to replace its key-from-paper system, with a key-from-image system, which will be integrated into the IIMS.