Tax processing system upgrade delays refunds

Tax processing system upgrade delays refunds

By Donna Young

GCN Staff

This has not been a good year for the North Carolina Revenue Department. A shortage of employees, combined with a heavy snowfall in January that kept some workers home for several days, got the state off to a slow start in processing 1999 income tax returns.

Also, a newly installed data capturing system to process returns required the state to redesign its tax forms. Adding to the problem was the state's target date for implementing its new system'the April tax season.

The result: a delay in individual refunds for 160,000 taxpayers, as well as several hundred delayed refunds on corporate taxes, and about $15 million in interest paid out by the state.

The new system consists of two E-Series item-processing transports from BancTec Inc. of Dallas, eight BancTec S-Series document scanners, IBM's Intelligent Forms Processing Solution 6.2 and Image Vision remittance software from Advanced Financial Solutions of Oklahoma City.

Randy Barnes, the department's assistant secretary of planning, development and technology, said the new system works more efficiently than the old one. State officials defended their technology choice and blamed taxpayers and the media for many of the delays.

'The problem has not been with the system itself,' Barnes said. 'The newly installed equipment is working well, and we are very proud of our new system.'

Scanners, working at a quicker pace than the department is used to, coupled with a higher volume of errors on the forms has caused a backlog for corrective actions, she said. 'We are now able to process a higher volume of remittances, and the new scanners have compressed more data into what we normally process during April and May,' Barnes said.

The department began the process of overhauling its system in February of last year by bringing in IBM consultants to oversee the system's integration and user training. IBM also helped the state redesign its tax filing forms.

Barnes said another problem the state ran into when processing the forms was with taxpayers using red ink. The forms use red ink fields'invisible to the scanners'for better character recognition; the readers and scanners can only read black and blue ink.

Get the red out

'We tried to make it clear on the form to use blue or black ink only,' Barnes said. 'We used the drop red ink because it improves readability and takes away the clutter when the machines are reading the forms, and it gives the taxpayer larger boxes to write in.'

The department tried and failed to communicate the special form filling requirements to taxpayers, spokeswoman Kim Brooks said. She said local media ignored her efforts to publicize information about the new forms. As a result, she said, taxpayers made thousands of errors on them.

Late in the tax season, the department assigned more employees to help taxpayers complete the new forms. By mid-August, the state had processed 2.4 million individual tax returns and had mailed out most of the delayed refunds.

'Next year will be better,' Barnes said. 'We will get an earlier start, and we expect things to go smoother with the process. You can't expect things to be perfect the first time.'


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