Taxation presents a difficult challenge for governments. Revenue departments must collect all money due, enforcing tax laws fairly and firmly, while accurately and diligently identifying non-compliant taxpayers. Yet these public agencies must also provide professional constituent service, offering individualized assistance to each customer.

The Missouri Department of Revenue (DOR) recognized that its Division of Taxation had room to improve on these goals. In 2004, the DOR partnered with Teradata to deploy enterprise data warehouse (EDW) technology that matches data from several outside sources to the department's internal data. These matches help identify businesses and individuals who are not properly registered, not filing or not correctly reporting their tax liabilities. The DOR's new "compliance data warehouse" also provides a complete source of information that helps increase revenue collection and improves service to each customer.

In the first three years of the program, the DOR recovered nearly $21 million of unpaid and underreported taxes from non-compliant filers. "This is actual money that the state has received and can add to the budget," says Jim Brentlinger, administrator of the DOR and the executive owner of Missouri's compliance data warehouse. "Without the Teradata warehouse, we probably would not have ever retrieved these funds, since we were unaware that the money was due to the state."

The agency also improved the service it provides to compliant and non-compliant taxpayers alike. "We want to teach taxpayers how to prevent this mistake from happening again and keep them from becoming a non-compliance case," Brentlinger explains.

Balancing collections efficiency with service quality
DOR operations include 118 discrete tax systems, which cannot communicate or share information. These systems process various taxes, including those levied against corporations and franchises, sales, employee withholding and personal income.

Before the Teradata warehouse was deployed, the agency could not easily analyze or assess data from the various systems. Individuals could manually generate a small number of reports, which staff members used to compare a few items. However, creating these reports was time-consuming and labor-intensive, leaving many delinquent taxpayers undiscovered.

"Since these amounts were underreported or unreported, we literally didn't know what we were missing," says Brentlinger, a nine-year veteran of the department. "Even so, from the businesses we've audited and assessed, we know there is more than $1 billion owed to the state of Missouri. We can only imagine how much more is out there." The DOR uses the data warehouse to turn what the department can imagine into knowledge of what revenues are owed.

Collecting delinquent revenues requires a deft touch, though. "We are sometimes viewed as the big bad department of revenue, the agency that just wants the taxpayer's money," says Brentlinger. "At the same time, the taxpayer is also our customer—whether that's a corporation, a small mom-and-pop store or an individual citizen. They're all customers of the state because they all use the services that the tax dollars provide. We need to collect the money in a way that allows us to provide good customer service."

Choosing performance and affordability
To enable cross-system information exchange, the DOR decided to create an EDW that would support data mining, analysis and business intelligence (BI) capabilities. The agency wanted to centrally compile all of its data and use that information in back-office systems as well. Moreover, the system had to be cost-effective to run and administer.

The DOR created an extensive list of requirements but expected to compromise to stay within budget. Upon reviewing the Teradata proposal, however, the agency realized it could meet all of its goals.

"We looked at the Teradata solution and quickly realized it was the best option," Brentlinger says. The powerful technology, excellent system performance, ability to share data and overall affordability made the Teradata solution an easy choice. System administration was a particular bonus. Brentlinger contacted other states that were customers of Teradata and confirmed that system administration could be handled easily by only one or two database administrators.

Meeting the needs
Also in development is the DOR's case audit management system, an application that will be used to automate the auditing of taxpayer accounts. When the system is complete, the audit department will replace manual processes with electronic data that can be fed into the data warehouse. The data will be shared with legacy back-office systems.

Additionally, the new system will feature an interaction tool that will allow users from different departments to communicate. "If it's a discovery lead, the discovery unit might contact the taxpayer and leave notes about the interaction," explains Brentlinger. "The audit department could review those notes and better understand the steps that have already been taken to encourage compliance. This tool will allow everyone in the DOR to have visibility into the history of the interactions with any taxpayer."

Integration on this scale is a huge improvement for the agency. "In the past, each case audit file was stored in a file cabinet, inaccessible to any other department," he adds. "The Teradata solution will deliver a single view of the taxpayer across all departments."

Pursuing revenue and education opportunities
As the early results come in, the DOR is impressed with the benefits being realized. "The business value delivered by Teradata has been exceptional," says Brentlinger. "We interact with the Teradata team daily, and they've been wonderful to work with. We're collecting money that we didn't know we were missing, and we're succeeding in our goals."

In the last two weeks of March 2007 alone, the DOR collected more than $2.2 million in unpaid and under-reported taxes. Considering the $21 million collected since the program's inception, the state's newly realized income potential is staggering.

"We're very excited about this opportunity," Brentlinger explains. "We can use the Teradata solution not only to bring everyone into one view, but also to use our discovery programs to create leads and find additional taxpayers that owe us money."

Once identified, delinquent taxpayers are contacted and treated with care. Most non-compliant customers simply are not aware that they have filed their taxes improperly. "We approach it saying, 'We think you made a mistake and you owe the state some money,'" says Brentlinger. "It's an opportunity for communication, not strictly a debt collection effort."

In the meantime, new data sources and discovery areas await. "I am always asked whether the pool of outstanding tax revenues is drying up," Brentlinger says. "It's quite the opposite. As the available leads are handled, we launch another discovery program and find more non-compliant taxpayers and even more unpaid monies."

Providing public value
In the near future, the DOR will continue adding data to the data warehouse from additional sources—including the motor vehicle department and the drivers license bureau—that will make compliance searches even more fruitful.

"By doing that, we'll make the Teradata warehouse an even more valuable resource for generating that single view of the customer," says Brentlinger. "We'll use the system to share that information and expand the solution far beyond what we are doing today. With additional information about a taxpayer, we'll have actionable intelligence that will help the DOR to move forward confidently. We'll be able to take action knowing that we have all of the facts we need to make us successful."

Even at this early stage of the deployment, the solution has demonstrated tremendous value. "As a department, we must be good stewards of the taxpayer dollar," Brentlinger states. "The Teradata warehouse not only paid for itself, but it has provided us with a new budget line item of revenue that will come into the state coffers. It's been an exceptional value." T

Behind the solution: Missouri Department of Revenue Database: Teradata Database V2R6.1.1 Server: Production systems: Single-node Teradata 4980 Server and a Teradata 540S Server Development system: Single-node Teradata 4480 Server Users: 100 (20 concurrent)) Data model: Third Normal Form (3NF) Operating system: Microsoft Windows 2000 and NT Storage: Total for all systems: 4.9TB Teradata utilities: Teradata Tools and Utilities 8.1: FastExport, FastLoad, MultiLoad, Teradata Dynamic Query Manager, Teradata Manager; Teradata Utility Pack: ODBC Driver, JDBC Driver, OLE DB, MultiTool, Administrator, BETQ, CLI; Priority Scheduler; Teradata Analyst Pack - Visual Explain and Statistics Wizard Tools/applications: Teradata Warehouse Miner and products from Atanasoft, ColdFusion and Information Builders (WebFocus)

Cheryl D. Krivda has written for more than 20 years about the intersection of high technology and business practices for publications and corporations around the world.

Teradata Magazine-March 2008