CATEGORY: Analytic Applications
REVIEWER: Billy Hamilton, deputy comptroller for the State of Texas.
BACKGROUND: The State of Texas comptroller of public accounts ensures that the tax laws of the state are administered fairly and effectively which includes auditing existing taxpayers and nonfilers. Franchise tax and sales tax collections total $1.9 billion per year from 400,000 payers.
PLATFORMS: WebSPOTLIGHT and TaxSPOTLIGHT from Intelligent Technologies Corporation (ITC) utilize an n- tier architecture in Windows NT/95/98 and standard UNIX environments. The SPOTLIGHT applications were layered over an NCR Teradata data warehouse.
PROBLEM SOLVED: As the state's chief tax administrator, the comptroller has responsibility for collecting the state's major taxes. The audit function figures prominently in sound tax administration, and one of the key audit functions is to identify taxpayers who may be underpaying or not reporting tax that is due to the state. Leads are derived from several sources by analyzing Texas Workforce Commission records, franchise tax returns, sales tax permits and returns, procurement records of items bought by the state and U.S. Customs reports. These sources produce hundreds of thousands of potential leads which go well beyond our current auditor resources. The comptroller's office needed a method to rank the leads based on expected financial return and a tool to manage and prioritize workloads for the auditors.
PRODUCT FUNCTIONALITY: ITC's TaxSPOTLIGHT is used to develop predictive models that prioritize lead lists for both under-filers and nonfilers. Each model generates a tax liability score from the available information about the lead. Because lead sources vary in the amount and type of information that they provide, a separate tax model is generated for each lead source and tax type. We currently employ six different TaxSPOTLIGHT tax models to score leads. ITC's WebSPOTLIGHT is the browser-based interface that gives our investigators access to the full range of data that they need to effectively and efficiently analyze leads. Investigators can sort leads by the tax model score, drill down into the detailed information about the lead and prioritize leads for specific auditors. Through WebSPOTLIGHT, investigators can also tailor standard queries to their specific questions to further explore the data. Through the use of the product, the comptroller's office has identified several million dollars in taxes that might otherwise have gone unreported. We also believe the program has a positive impact on voluntary compliance by taxpayers. We expect to deploy additional models through TaxSPOTLIGHT as we explore new lead sources and tax types. As new models have been developed, we have found it straightforward to integrate their results into WebSPOTLIGHT.
STRENGTHS: WebSPOTLIGHT provides an elegant and efficient tool to view and manage many different data sources. The interface has a familiar "browser-like" feel that makes it very easy to use. By simply clicking on links, investigators can easily drill down into the data, summarize information in the data and access detailed reports.
WEAKNESSES: The online help and printing utilities could be improved. It was also a challenge to match our password expiration rules with WebSPOTLIGHT's password management utility.
SELECTION CRITERIA: ITC had previously demonstrated the utility of its SPOTLIGHT family of products to the State of Texas by uncovering over $70 million in Medicaid fraud and abuse. This success led to our initial consideration; and after comparing offerings from other vendors, we determined that WebSPOTLIGHT and TaxSPOTLIGHT provided the best solution.
DELIVERABLES: TaxSPOTLIGHT produces predictive models that generate tax scores for six specific tax types. WebSPOTLIGHT summarizes the results of the lead scoring and can generate reports for use in other applications.
VENDOR SUPPORT: ITC has consistently responded in a timely manner to our questions and issues throughout the implementation and operation phases of the project. During business hours, they are always available via e-mail or phone. In addition to supporting the existing project, ITC has also helped us identify other areas of our business process where their solutions can help.
DOCUMENTATION: The browser-based interface of WebSPOTLIGHT is very intuitive and easy to learn. The delivered documentation should allow any user to easily learn how to navigate data, summarize information and generate reports. ITC also provided on-site training that allowed our investigators to quickly achieve high efficiency.
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