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States Use BI, Data Warehousing To Recoup Unpaid Taxes

Ohio, which already uses Cognos business intelligence tools, will add a Teradata data warehouse and additional data mining tools to its tax collection arsenal.

Missouri's story is an analogue to current economic woes. In 2004, the state was being forced to make deep budget cuts as the result of a state fiscal crisis, and the legislature was looking for ways to bring in more money without raising taxes. One way to do so was to more efficiently collect taxes that were delinquent.

"I couldn't look at business taxpayers and see if they had an individual tax compliance problem," Lesa Morrow, administrator for personal and business taxes at the Missouri department of revenue, said in an interview. Now, Missouri uses Teradata and WebFocus to process and sift through data dating back to 2001.

Ohio's new data warehouse will pull in data from the Internal Revenue Service, State of Ohio Bureau of Motor Vehicles, State of Ohio Bureau of Workers’ Compensation, as well as a number of Ohio tax systems. It eventually will include data on all taxes collected by the state of Ohio, according to a request for proposals. Teradata won the Ohio bid over three other bidders, and now counts Ohio as one of eight states using Teradata data warehouses for tax discovery.

Ohio wants the combined data warehouse and business intelligence tools to improve the reliability of results by employing "lead scoring" to rate possibly noncompliant taxpayers, reduce the need to key queries into multiple systems, reduce redundant data, and allow the state to perform new, complex queries that can do things such as identify taxpayer education needs in common areas of noncompliance, according to the request for proposals.

In addition to the data warehouse, Teradata also sells a discovery module that includes a set of queries to help states discover noncompliant taxpayers, a case management system that provides a tool to manage leads and help prioritize cases, and an information dashboard.

In most cases with state taxation systems, Teradata doesn't begin receiving any payment until the project actually begins producing results in the form of increased tax revenue, and then states pay a percentage of that increase up to a fixed amount.

InformationWeek Analytics has published an independent analysis on government IT priorities. Download the report here (registration required).

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