[title slide] data capture strategies for tax agencies chuck adelman fta technology conference 2000
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[Title Slide]
Data Capture Strategies
for Tax Agencies Chuck Adelman
FTA Technology Conference 2000
2
Revenue agencies are moving from being paper-intensive to more electronically-intensive.
Revenue Direction
3
Provide best possible customer service
Data Capture Objective
Minimizing operating costs
… while …
Revenue Direction
4
Crossing Channels
• Start with a comprehensive data capture strategy
• Establish the value proposition for each channel
Finding the Right Mix
5
Data Capture Options
• Electronic filing
• Internet filing
• Telephone filing
• Filing of two-dimensionalbarcoded returns
Four Filing Options
6
Data Capture Options
• Filed by tax preparers
• Faster refunds . . .
• . . . but annual taxpayer costs usually don’t justify the “float” benefit
Electronic Filing
7
Electronic Filing Costs vs. “Float” Benefits
• Assume a $1,800 tax refund…
• Received one month sooner…
• Deposited in account yielding 6 percent...
$30
$9
Float BenefitFiling Cost
Data Capture Options
8
Electronic Filing - Cost to Taxpayers
• Assume 500,000 taxpayers for a particular state file electronically...
$30
Data Capture Options
A state’s taxpayers will pay $15,000,000 per year to electronically file their own returns!
• Assume, on average, electronic filing costs a taxpayer $30/year...
9
Data Capture Options
• Free to taxpayers
• No need to leave home to file
• Significantly cheaper than paper-based returns
• Changes not required to states’ legacy systems (if using Fed/State approach)
Internet Filing
10
Data Capture Options
• Free to taxpayers; no need to leave home to file; fast refunds
• Ubiquity of telephone access vs. Internet
• Issues: address changes, large returns, hard copy
Telephone Filing
11
Data Capture Options
• Accommodates taxpayers more comfortable with paper returns
• Simple concept; relatively inexpensive
• Potentially great savings
Two-dimensional Barcoding Returns
12
Imaging Approach
• First implement imaging without intelligent character recognition (ICR).
• Then introduce limited ICR capability.
• Finally expand ICR capability to accommodate all handwritten returns.
An Approach to Image-Based Solutions
13
1. Handling, bursting, and sorting incoming mail
2. Processing and depositing checks
3. Batch balancing returns and resolving balancing errors
4. Keying return information
5. Resolving taxpayer math errors and keying errors
6. Tracking additional receivable returns caused by errors
7. Resolving purification issues that result from keying errors
8. Retaining or warehousing paper returns
Eight Cost Items
Potential Cost Savings
14
$0
$300
$500
Potential Cost Savings
1. Handling, Bursting, and Sorting Mail
Annual Budget: $3,000,000 Annual Volume: 10,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
Cost per 1,000 returns
15
$0
$1,000
$2,000
2. Processing and Depositing Checks
Annual Budget: $5,000,000 Annual Volume: 5,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
Cost per 1,000 returns
Potential Cost Savings
16
$0
$250
$500
3. Balancing Returns and Solving Errors
Annual Budget: $2,000,000 Annual Volume: 8,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
Cost per 1,000 returns
Potential Cost Savings
17
$0
$100
$500
4. Keying Returns
Annual Budget: $4,000,000 Annual Volume: 8,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
Cost per 1,000 returns
Potential Cost Savings
18
$0
$1,500
$3,000
5. Correcting Math and Keying Errors
Annual Budget: $6,000,000 Annual Volume: 2,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
$150
Cost per 1,000 returns
Potential Cost Savings
19
$0
$5,000
$10,000
6. Tracking Receivable Returns
Annual Budget: $10,000,000 Annual Volume: 1,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
$500
Cost per 1,000 returns
Potential Cost Savings
20
$0
$125
$250
7. Resolving Purification Issues Due to Keying Errors
Annual Budget: $2,000,000 Annual Volume: 8,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
Cost per 1,000 returns
Potential Cost Savings
21
$0
$200
$400
8. Retaining Paper Returns
Annual Budget: $2,000,000 Annual Volume: 10,000,000
Paper Returns
ImageReturns
BarcodeReturns
ElectronicReturns
Cost per 1,000 returns
Potential Cost Savings
22
Potential Cost Savings
Year 3
775
200
200
800
100
2,075
$12.5M
Year 2
1,100
100
100
700
50
2,050
$17.3M
Year 1
1,315
50
50
600
10
2,025
$20.5M
Currently
1,500
0
0
500
0
2,000
$23.3M
Channel
Data Entry
2D Barcode
Telephone
eFiling
Internet
Total Volume
Comparative
Cost
23
• Accounts for half of volume
• Business taxpayer base is much more stable than individual taxpayer base
• Steadier network volumes
• Greater state control
Make Sure You Include Business Tax Processing Into Your Data Capture Strategy
Business Taxes
24
Chuck D. Adelman
(973) 301-4445
chuck.d.adelman@ac.com
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