Inside the SC DOR Data Warehouse Project

Transcription

1 Inside the SC DOR Data Warehouse Project Presented by: Terry Garber, New Applications Manager, South Carolina DOR Paul Morris, Director, Revenue Solutions, Inc. (RSI)

2 Agenda Introduction Project Overview Project Objectives Implementation Approach Project Timeline Key Outcomes Warehouse Build and Compliance Programs Data Sources Compliance Programs Warehouse Uses & Framework Management Considerations Benefits Based Project Considerations Questions 1

3 Project Overview 2

4 Project Objectives Implement an agency-wide data warehouse to utilize internal and external data sources to perform queries to: produce audit selections and identify taxpayers reporting and/or non-reporting patterns enhance tax collections by identifying taxpayer profiles of payment and/or non-payment support revenue estimation and forecasting identify taxpayer education needs in areas of non-compliance and/or as an effect of law change(s) Establish a benefits based (revenue sharing) contract using South Carolina proviso to fund the project 3

5 Implementation Approach A Phases Focus on Warehouse Build and Discovery Install and Configure RSI s DiscoverTax Data Warehouse Product Load Internal and External Agency Data Configure and Implement Business Non-Registrant, Individual Non- Filer, Individual Discrepancy and Individual Lifestyle Compliance Programs (high volume desk audits) Establish a New Filing Enforcement Group to Manage Program B Phases Focus on Audit and Collections Management Business Process Improvement ( As Is and Could Be ) Risk Scoring for Audit, Collections & Taxpayer Education Implementation of Centralized Audit Case Management & Field Audit Workbench Business Intelligence 4

6 Implementation Approach Project Duration Project Management Key Stakeholder Briefings and Reporting Training (User and Operations) Benefits Management Compliance Program Management and Analysis (New Value Added Programs) 5

7 Project Timeline Phase IA Phase IIA Phase IIIA Phase IVA Phase VA Data Warehouse Build & Discovery Phase VIA Phase IB Phase IIB Phase IIIB Audit & Collections Management FY05 FY06 FY07 FY08 FY09 5 Year Contract 6

8 Key Outcomes DOR Tax Systems data loaded and refreshed in the warehouse daily; Multiple external data sources loaded Mailed 84k proposed notices of assessment for since January, 2005 (full production started in June, 2005) Gross collections to date of $18m; Net (of refunds) of $17m Approximately $1.4m a month now being collected; tracking to proposed benefits DOR access to a holistic view of all taxpayers 7

9 Key Outcomes Audit and Collection Divisions BPI studies completed Approximately 200 Lifestyle cases mailed Taxpayer Preparer model completed; Approximately 500 cases mailed Field Audit Sales Tax Judgmental Model implemented Collections Judgmental Model, Scoring (of all accounts receivables) and Treatment Scenarios implemented for both business and individual taxes Empirical Models in progress Field Auditors now have centralized audit case management and access to the data warehouse taxpayer portfolios in the field 8

10 Warehouse Build and Compliance Programs 9

11 Data Sources Utilized - Individual DOR Tax System Data w/ Refresh Demographics Financial Transactions Return/Schedule Line Items SC W-2s US Customs Import Duties ESC Wage Reports Professional Licenses (LLR) IRS IMF/IRTF IRMF CP2000* TAR * planned DMV Individual/Commercial Driver Licenses Individual/Commercial Vehicle Registrations 10

12 Data Sources Utilized - Business DOR Tax System Data w/ Refresh Demographics Financial Transactions Return/Schedule Line Items Audit History IRS BMF/BRTF IRMF (business entities) Corporate Affiliations* SS4 US Customs Import Duties SC Business W-2s (aggregate) ESC Business Wage Reports (aggregate) SOS Corporate Registration* Professional Licenses (LLR) DMV Commercial Vehicle Registrations Lottery Vendors (part of BTR) Alcohol Beverage Licenses (part of BTR) * planned 11

13 Compliance Programs - Individual Non-Filers IRTF (Filed federally, but not state) IRMF (Filed neither federally or state) Involves all 19 IRMF forms, plus state W-2, Wage, DMV, etc. K-1 Based Income* Deficiency Analysis Fed to State Line Item Comparison (e.g., AGI, State Add Back, etc.) CP2000* Lifestyle Analysis Non-Filer (e.g., High mortgage interest, vehicles, etc.) Deficiency (e.g., Schedule C filers & lifestyle analysis)* Tax Preparer Ratio Analysis Others (Use tax, excess out of state credits, etc.)* * planned 12

14 Compliance Programs - Business Focus on non-registrants and deficiency; Non-filing is handled by DOR s Tax System (SCATS) Non-Registrants Business Corp (BMF/BRTF, SS4, etc.) Use Tax (US Customs Import Duties) Business Withholding* Professional Licenses* Others * planned 13

15 Compliance Programs - Business Audit Selection (Sales Tax Deficiency) Desk Audit Programs - Selections Deductions as a percentage of gross sales Others Field Audit Programs - Scoring Judgmental Models (by tax, size, industry ) Predictive Models (by tax, size, industry ) 14

16 Warehouse Uses and Framework 15

17 Grow to a Multi-Purpose, Agency- Wide Warehouse: crawl, walk, run Collections Legislative Services Audit Information Resource Mgmt Taxpayer Services Processing & Document Mgmt 16

18 Potential Uses Legislative Services Division (Tax Policy and Analysis) Revenue Analysis and Legislative Inquiries ( What if ) Executive Management Dashboard Agency Operation, Revenue and Performance Metrics Cradle to Grave Reporting Collections Division Risk Assessment & Decision Strategy for Correct Treatment Skip Tracing Responsible Officer Offsets Additional Levy Sources Processing and Document Management Division Refined Forms Edits (e.g., Repeat Refund Filer Model) Taxpayer Education Needs Analysis 17

19 Data Warehouse Framework OLAP OLAP Cubes Ad Hoc Query and Reporting Reporting Reporting Data Marts Marts Data Marts Analytical Tools Tax Changes Analysis Data Mart Data Mining Predictive Modeling Audit, Collections, Discovery Analysis Data Mart Portfolio Viewer Aggregation/Refresh Engines Query Warehouse Ad Hoc Query Calculate Tax Assessments Data Warehouse Calculate Model Scores Portfolio Matching & Building Engines Compliance Programs and Decision Engine Extract, Transform, Load Web Systems Web Systems Web Systems External Tapes Legacy Systems Legacy Systems Legacy Systems 18

20 DiscoverTax Data Warehouse Framework 19

21 Key Principles Get the Foundation Right All Functionality Requires Accuracy, Currency and Availability Getting Value from Business Intelligence Tools Often Requires Back-end Work De-normalized Data Structures OLAP Structures Performance Tuning Design and Plan for Expansion Extensible Data Model & Hardware Infrastructure Involve all Divisions in Planning & Design Add New Data Sources and Initiatives Over Time 20

22 Management Considerations 21

23 Management Considerations Top level executive support is essential for consistent project progression Communications strategy is critical Be open with Governor, Legislature, and public Be sensitive to taxpayer reaction Educate entire agency because they will be impacted! Prepare for increased noticing, calls, letters, returns, payments, and returned mail Processing Contact Center Taxpayer Assistance Filing Enforcement 22

24 Management Considerations Manage anticipated increase in receivables Increased noticing from Discovery front-loads receivables Collections lag interval and net increase Potential impact on state balance sheet Techniques to manage risk Pilot all programs Refine estimating techniques with best data available Throttle all programs and manage sub-populations Staffing Non-Filer recovery in Desk Audit (Filing Enforcement), Collections, Processing and Taxpayer Services IT resources Field Audit (centralized audit selection) 23

25 Benefits Based Project Considerations 24

26 Benefits Based Project - Definition A benefits based (or revenue sharing) project is funded by the incremental benefits or direct revenue derived by the project. The incremental benefits can be used to pay for some or all of the costs associated with the project, including agency staff, hardware, software and vendor services. 25

27 Revenue Sharing Types Fixed fee payment (including interest/risk premium) schedule paid out of the benefits pool Percentage Fixed percentage of incremental revenue Variable, or tiered, percentage of incremental revenue based on collection thresholds 26

28 Benefits Baseline Calculations How do you measure benefits? Track leads from identification through payment Used if no similar compliance programs are in place Viable option for non-registration, non-filers and some deficiencies Measure benefits above a historical baseline Used if similar compliance programs are in place and continue to be run Viable option for some deficiencies and programs targeted on increasing productivity such as collection treatment and audit selection & management Hybrid Consider benefits from increased voluntary compliance 27

29 DOR Considerations Do you have benefits based legislation? Determine type of sharing formula & what can be included (e.g., P&I, indirect revenue, etc.) Vendor front-loaded or pre-payment to cover cost outlay Be prepared for disclosure on current compliance programs and historical data Allow for vendor visits and Q&A Establish vendor selection criteria based on proven results and accurate estimates Evaluate benefits projection studies 28

30 Benefits Based Lessons Learned Work to SOW deliverables and vision as well as collection goals Significant effort to determine benefits baseline Effort to report/verify benefits monthly Analysis Paralysis Factor in agency internal costs - create ability to pay yourself back as well from benefits realized 29

31 South Carolina Proviso The Department of Revenue is authorized to contract with private industry to establish data mining and data warehousing capabilities within the department, to enhance compliance and collections. Such arrangements may include payment from the increased revenue generated by such capabilities. The Department shall be allowed reimbursement of costs associated with administration of this proviso from the data warehouse generated collections. This amount may be retained and expended for budgeted operations. 30

32 Questions 31

33 Contact Information 32