The California State Board of Equalization (BOE) collects taxes and fees that provide more than 34 percent of the annual revenue for the state government as well as essential funding for local government. Fees administered by the BOE produce funding for programs supporting education, health care, public safety, transportation, social services, housing and natural resource management programs. BOE responsibilities include the administration of the state's sales and use, fuel, alcohol, tobacco and other taxes as well as the collection of fees that fund specific state programs.

California has nearly 1 million sales tax payers. We receive 250,000 paper forms per month that are manually entered into our mainframe database. We wanted to allow filers a more convenient method of submitting tax information and concluded that e-filing would provide taxpayers a convenient way to send their tax information and payment to the BOE.

We decided that documents would be sent across the Web in XML (extensible markup language) format and that we would keep that format as an unaltered version of the tax filing. Initially, we looked at XML primarily for its ability to provide meaning to the data elements. However, we also discovered that the hierarchical structure of XML fits perfectly with the hierarchical nature of the tax return.

During system design, we selected Software AG's Tamino XML server for evaluation as a potential data repository for our XML return documents. We use Software AG's Adabas for our mainframe corporate database. After receiving an evaluation copy of Tamino and performing an extensive in- house evaluation, we determined XML and Tamino would best meet our data transfer and storage needs.

The electronic filing system is comprised of an Internet component, a mid-tier server and a mainframe component. Third- party Electronic Return Originators (EROs) develop the Internet taxpayer interface and communicate in real time with our corporate database for taxpayer confirmation and return filing via the mid-tier server. The mid-tier server is composed of a Web server and an application server. Dual firewalls protect the mid-tier server. Communication between the mid-tier and the mainframe is accomplished with Software AG's EntireX middleware. Using existing corporate objects, the data is loaded to the BOE's integrated corporate database. Once filed, the tax information is immediately available to the BOE's Integrated Revenue Information System (IRIS).

Our solution allows for real-time editing and completion of tax return information and transmits to the taxpayer a real-time confirmation of the acceptance of the tax return filing for normal processing. The taxpayer is also given the option to warehouse the payment through an integrated payment system, which automatically forwards information to Union Bank of California for payment processing. This allows taxpayers to complete their tax returns ahead of time, knowing that the payment will be held until the due date.

Taxpayers register with the EROs to electronically file their tax returns, which then send an immediate message to the BOE via the Internet. The BOE then validates whether the taxpayer is eligible to file a tax return and determines the current open filing period. An XML document containing information on the taxpayer eligibility and filing period is then transmitted to the ERO from the BOE. Data entered by the taxpayer is edited for errors and calculated fields are automatically provided, reducing many of the errors inherent in paper filing.

The project design was conducted using Joint Application Development (JAD) teams staffed with business and technology team members. These multidiscipline teams developed the business requirements and the system's logical design. The EROs' Internet interfaces and our mid-tier and mainframe applications were developed in parallel. This solution did not replace an existing system, but rather established a system that is fully integrated with our corporate database, providing an additional channel through which taxpayers can file their tax returns.

With the implementation of this system, approximately 500,000 taxpayers are now eligible to file their tax returns via the Internet. The system provides California taxpayers a more convenient, timely and accurate method of filing and paying tax returns.

Tamino XML Server from Software AG is the first and market-leading native XML server for Internet database management. Tamino is used by over 300 organizations worldwide and endorsed by four of the largest Web application server providers ­ IBM, BEA, HP and iPlanet. Capable of storing XML documents natively without transformation to other formats, Tamino facilitates the management of critical e-business data, graphics and audio.

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