Virginia Department of Taxation

Since 2001, the Virginia Department of Taxation (VATax) has been consistently recognized as an innovator in using technology to improve the efficiency of state tax return processing. In that year, CGI installed IBM Datacap Taskmaster Capture at the Richmond processing center, replacing a manual data entry system. In doing so, Virginia became one of the first states to implement two dimensional (2-D) barcode capture capabilities to further automate the processing of what is now about 1.8 million tax returns annually. As a result, VATax won the coveted Federation of Tax Administrators’ 2001 Management and Organizational Initiative Award.

The Challenge

While the use of electronic filing is growing, large data entry departments in federal, state, and local government are still needed to handle the significant number of paper returns. The use of software to compute tax returns continues to grow, but most software users still file returns by sending a paper return through the mail.

In fact, today, approximately 65% of the paper forms received by Virginia Tax are computer-generated. Even though the information was originated electronically, this still requires tax processors to re-key the form, which introduces errors, delays the processing, and consumes data entry time and money.

However, most consumer tax preparation software, such as H&R Block and TurboTax, prints a 2D barcode when it prints the final return. This 2D barcode contains all the detailed information from the completed return. If this barcode is properly scanned and captured by the tax department, significant data entry time and effort is saved.

Unlike the one dimensional barcodes typically used to store SKU information in retail applications, a 2-D barcode stores information along the height as well as the length of the symbol. Since both dimensions contain information, techniques must be used to prevent misreads. Error prevention is relatively easy when used in conjunction with optical character recognition (OCR), which compares the 2D barcode data against the printed information on the return.

The Solution

By implementing Datacap Taskmaster Capture for the data capture of printed tax returns with OCR, VATax was able to automate data entry and utilize 2-D barcode capture wherever possible to streamline the process. Currently, Taskmaster is being used to automate the capture of about 1.2 million individual full-time resident tax returns for the Commonwealth.

The process begins with 3 ImageTrac high-speed scanners from Imaging Business Machines Ltd. (IBML), which scan returns, W2 forms, correspondence and even checks without any special pre-scan preparation. If there is 2-D barcode on the return, the ImageTrac reads and decodes it, then forwards a TIFF image to Datacap Taskmaster Capture.

There are actually two parallel Taskmaster solutions. The first, called Total Automated Capture System,, TACS, is the simultaneous reading of bar code and text, and the other is a Key From Image solution for low quality claims, with illegible handprint or no bar code.

For TACS, Taskmaster reads the 2D barcode and also extracts printed and handprint data off the forms and attachments, using intelligent character recognition (ICR) for handprint and optical character recognition (OCR) for machine print. If the 2-D barcode is flawed (about 15% of returns have an issue with the barcode), Taskmaster will rely on the printed data.

In the Key From Image solution, Taskmaster presents the scanned image and the required fields for fast manual data entry of tax returns without a 2 D barcode. If any part of the return fails a business rule, then it is presented to another operator for verification and repair.

In both solutions, after data has been extracted, Taskmaster employs automated validations to make sure that data is accurate, such as table lookups for zip code and Social Security Numbers, math calculations (if the math doesn’t add up, maybe one of the numbers was recognized incorrectly) and cross-field checks to verify that totals are accurately carried over from one page to another or correctly entered from an attached schedule.

In 2008, VaTax added Taskmaster Web for browser-based verification. The Commonwealth of Virginia had issued an order to all State agencies to find ways to bring employment to low income areas of the state. “We realized we could use Taskmaster’s thin client verify system and have at-home workers do data entry and verification of returns,” said Nancy Wilson, VaTax’s Manager of Automated Processing Systems.

At peak tax season, Va Tax has about 90 tax return verifiers working full time with 40 to 50 seasonal workers added, filling two shifts. For the 2009 tax season, the first one with the thin client verify panel, about 10% of verifiers were working remotely from a home office, but all verifiers were using the browser implementation, even if they were still in the Richmond processing center. Browser-based verification reduces administrative work for the VaTax IT department, since no software needs to be installed or maintained on each client; updates are made only on the web server.

Once the images are completely processed, and data is accurate, tax information is routed to the VATax accounting system, called Tax Advantage, and each return and attachment is indexed for archival purposes in an IBM FileNet P8 document management system.

The Results

The Datacap Taskmaster Capture tax processing system was built for productivity. When compared to tax returns that are entered manually into the system, such as non-resident returns and prior year filings, manual data entry takes nearly twice as long. Yet there are other benefits, as Nancy Wilson attests, including a full complement of reports that can indicate how the department is doing. In addition to overall average throughput metrics, Wilson can call reports that indicate how individual operators are doing and how long individual returns are in the system. “The reports are very detailed. If a tax payer calls and wants to ask about an individual return, we can locate it, call it up and answer the question.”Solution Components: • Datacap Taskmaster Capture• Taskmaster Web for browser-based verification• IBM FileNet• Imaging Business Machines Ltd. ImageTrac high-speed scanner

For more information

Contact your IBM sales representative or IBM Business Partner, or visit us at:
http://www.ibm.com/software/data/content-management/datacap

About Datacap Inc, an IBM Company

Datacap provides award-winning ECM software for document capture and paper forms processing. These solutions help organizations worldwide improve the speed, accuracy and cost-efficiency of data extraction, making information more accessible. Using the latest technologies and innovations, Datacap solutions help automate a broad range of document-centric business processes in a wide variety of industries.