If you’re like most government leaders responsible for tax and revenue operations, you’re faced with increasing pressure and challenges surrounding the process of optimizing collections, compliance, and the forecasting of tax revenue.
Many revenue managers assume that dealing with manual spreadsheet-based data processes to collect, prep, and blend data is just another cost of doing business. In fact, through our work and research, it’s estimated that many organizations are losing an average of seven hours per week per employee in productivity due to manual, legacy data prep issues.
What if there was a way to regain those lost hours of productivity, reduce complexity, and enhance your ability to fully analyze the generation and collection of tax revenues both within and outside of your jurisdiction?
(Spoiler alert: There is.)
Imagine a tax and revenue organization that has two very qualified business analysts who know the operation and how to get things done. The leader of this organization could not fathom being able to function without the contributions of these skilled humans, but the line of business leader knows that at the end of every reporting cycle, they’re drained and dread having to repeat the same process again next month.
In this scenario, the tax organization is losing 56 hours of productivity a month, the analysts are tired and frustrated, and because of this, there’s always risk of them leaving and taking their domain knowledge with them. Not only are they burnt out from the current process, organizations like this are not able to fully analyze the entire spectrum of data to find additional opportunities to improve compliance and collections. As a result, their jurisdictions could be losing out on hundreds of thousands of dollars in additional tax revenues.
Recently, we worked with a tax organization for a city in California that faced a very similar situation. In this case, this office was responsible for monthly reporting and forecasting on the status of city tax revenue. The tedious legacy analytics process they had in place required the download of seven files monthly from the California Department of Tax and Fee Administration (CFDTA) to analyze the city’s portion of state and county taxes collected.
The analysts would manually prep and blend that data, creating another file that was then uploaded to a SQL database using Access. The SQL database was appended monthly with new data. Excel templates were then used to extract and create necessary reports. In many cases, due to time restraints and the complexity of the data, three of the seven files were never analyzed or included in the blended file, leading to an incomplete view of projected revenues. The files that were not analyzed mostly dealt with new sales tax permits for organizations who resided outside city limits. These organizations may have had a tax liability owed to the city, but with no analysis, the amount of taxes owed couldn’t be measured, collected, or forecasted.
On a national scale, “The Wall Street Journal” reports that state and local governments are losing upwards of $33.9 billion annually in uncollected sales taxes. These uncollected taxes are sapping resources for essential public services while distorting the marketplace by benefitting remote sellers over those anchored in the community.
While the U.S. Supreme Court has ruled state and local governments have a right to collect sales tax from online businesses, many government organizations lack the resources, technology, and bandwidth to effectively measure and enforce compliance.
Many government tax and revenue organizations are realizing that in order to maximize collections and ensure their constituent services and programs are funded appropriately, they need to more fully analyze tax records and identify areas to focus compliance and collections. In response, jurisdictions like yours across the county are turning to advanced analytics to improve analytics productivity and enhance revenue compliance and collection operations.
According to Govtech, Big Data and analytics increased tax revenue collection by $1 billion in California, cut tax fraud by $30 million in Georgia, and identified $5 million in unpaid property tax in Miami-Dade County, Florida.
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