Tax app boosts states' revenues

Tax app boosts states' revenues

Four states have saved a total of more than $900 million since 1994 by using systems to boost the efficiency of their tax collection efforts.

California, Hawaii, Kansas and Virginia use software from American Management Systems Inc. of Fairfax, Va. The company's Computer Assisted Collection System administers accounts receivable, and its Strata software analyzes data about taxpayers who owe payments and ranks them according to financial risk.

States generally have few auditors and tax collectors, said John Lafaver, vice president of AMS' tax and revenue administration practice. They send out collectors only to taxpayers at high risk of defaulting, he said.

Virginia has collected $88 million in tax revenue as a result of enhancements officials made to their audit and collections systems, said Robert Schultze, executive commissioner for the Virginia Taxation Department's customer relations office. Of this $88 million, the Strata software accounts for $52.2 million, Schultze said.

Strata is based on the banking industry's credit scoring, Schultze said. 'Just as banks evaluate whether a prospective loan will be paid by an applicant, Strata evaluates each new delinquent tax account and assigns it a risk score'the probability the delinquency will eventually be paid,' he said.

A low-risk, low-balance account has an excellent chance of being paid, he said. 'We allow it to 'self-cure.' ' Strata also helps officials decide whether the debt should be pursued by telephone calls, letters or 'a more aggressive approach such as garnishing wages or liening bank accounts,' Schultze said.

California took in an extra $338 million in taxes since implementing Strata software in August 2000, said John Barrett, public affairs spokesman for the California Franchise Tax Board.

Checking up

The board's Accounts Receivable Collection System uses AMS Computer Assisted Collection System for Government (CACS-G). Barrett said the board also used AMS software to check when taxpayers declared bankruptcy or came out of it.

It's 'difficult to put a price on the savings' from using Strata software, said Gayle Martin, the Kansas Revenue Department's communications director. Officials estimate that Kansas took in about $181 million in tax revenue thanks to the AMS project in the past three years. Officials used Strata to analyze risk in delinquent accounts over a three-year period, she said.

Paradise find

Hawaii began using CACS-G in December 1999, said Kerry Yoneshige, taxation services administrator and project manager for the Taxation Department. 'We've definitely increased our revenue base,' Yoneshige said.

AMS officials say the company's tax collection software helps states reduce the default rate'the percentage of taxpayers who file returns but can't pay all they owe.

Strata software's business logic and batch programs are written in Cobol. The graphical user interface is written in PowerBuilder from Sybase Inc. with some C++ and Microsoft ActiveX.
Most states run Strata on a client-server platform. California and Virginia also use a Web function for some taxpayer services. Most states use Oracle database products with the software, but the FTB uses Sybase as its database standard.

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