TaxBrain: Open source economic forecasting

More data means more revenue for California tax collectors

"It actually was probably one of the most advanced technology projects this state has undertaken from a number of products and integration perspective," Greg Hussey, a vice president of consulting at CGI, said about modernizing California's Franchise Tax Board legacy and data systems.

Cathy Cleek, the CIO for California FTB, clarified by saying it's not the largest technology project in the state.  There might be one larger, she said.

But looking at the number of different technologies involved in this project and the amount of data collected by FTB, it's easy to see why Hussey placed it in the state's top tier of tech projects. FTB processes 17 million personal and business tax returns and handles 3 million calls every year. This year, 11 million returns were processed in the new system and it has helped the agency collect an additional $2.8 billion in new revenue.

It all started with a business problem analysis, Cleek said. This allowed FTB officials to narrow in on the problems they wanted to solve and think about how they could leverage technology to fix them. From there, an request for proposals was drafted, and CGI ultimately secured the project.

Looking at the list of new technologies — IBM's Initiate product, a new business process management system for case management, a taxpayer portal and other — it's easy to think this was a rip and replace project. But that wasn't the case, Cleek and Hussey said.

 "It really was a rapid renew when you think from a legacy perspective," Hussey said.

It started with IBM's Initiate product, which he said allows for better data management and matching, and helps bring multiple data sources together for multiple taxpayers. This allows for new taxpayer "folders" for internal FTB use, and a new MyFTB system for citizens.  Both place all of the data on an individual account in one place. Previously, this data either was scattered across multiple locations, with some information unavailable entirely.

"It's not our data, it's the taxpayer's data. If they owe us money we want to show them what payments we have processed and how much they owe us currently," Cleek said.

A popular buzzword in government IT is "silo," specifically in the context of needing to get rid of them. This was a core goal with the FTB project as well, Hussey said; both the internal and external portals now provide a "360-degree view of the taxpayer."

The new system also incorporates Pega's BPM tool. This created more visibility within case management, and helped FTB to organize correspondence and returns. There is also a new business rules engine to allow for more flexibility, which Hussey said is necessary for an organization whose rules can change year-to-year depending on legislation.

And, of course, there were updated data systems. A new data warehouse was put in place that uses IBM's DataStage for transferring and converging data, and incorporates predictive analytics from IBM's SPSS software to support collection and fraud models, Hussey said.

Oracle's security stack is also a key part of the project.

But this wasn't just about technology; Cleek said FTB also put 350 new tax rules into practice. These were helpful in bringing in more revenue, she said, because FTB found errors in people's filings they hadn't found in prior years. The agency was also able to collect more address information from other government agencies, allowing FTB to send bills to people it haven't collected from in the past.

Work was also done with a third party to get bank data related to Social Security numbers FTB would provide. This would allow the agency to ask for a hold on certain accounts and for the money to be sent to FTB, Cleek said.

Both Cleek and Hussey said the project was meant to collect more data upstream so FTB could then use it downstream. And increased revenue suggests that effort is succeeding.

There are two more parts of this project, Cleek said. First, FTB plans to look at improving case management for audits, collections and people who don't file. Then the agency intends to focus on its accounting system.

"We feel like there is still lots of work to do," she said. "Once you start modeling and have more data, you have more ideas on how you can model more."

About the Author

Matt Leonard is a former reporter for GCN.


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