IBM, Wisconsin Team on Tax System

IBM, Wisconsin Team on Tax System

By John Makulowich
Senior Writer

In a move that is becoming more common between states and commercial vendors, Wisconsin signed a contract with IBM Corp. to partner with the state's Department of Revenue in developing a five-year master plan for an integrated tax system.

The goal is to improve the state's customer service as well as its ability to respond to changing information technology and Internet environments.

The project, which has an initial budget of $1.46 million, calls for IBM to produce a technology blueprint to take the program from design through integration.

Under the IT services contract, the Armonk, N.Y.-based company will consult and provide integration services so the Department of Revenue can transform the 30 separate computer systems for tax and revenue administration into one system. This will allow resources to be shared and data centrally accessed.

Wisconsin Revenue Secretary Cate Zeuske said the benefits expected from the project include 24-hour electronic customer service, tax filing from home and office computers, faster tax processing and speedier refund checks.

She also said the project should increase revenue by making tax administration more efficient, with a 1 percent increase in revenue raising $90 million annually.

"We have a revenue department with a system of 30 separate computers and tax systems that don't talk or relate to one another. From a customer standpoint, that's a problem," Zeuske said. "Clearly, there was a need to integrate the entire system.

Bryan Barton

Zeuske said 28 other states have implemented an integrated tax system. The difference in Wisconsin's approach will be the full deployment of Internet technology. She said she hopes to see the state become a national leader among revenue agencies in using the technology.

"We have not really changed our sales tax computer, that is, for local and stadium taxes. This gives us a chance to make improvements in all areas of revenues," Zeuske said.

During the first phase of the five-year contract, IBM will prepare a master plan for all future phases. The company will also conduct requirements sessions for the Internet Sales Tax Filing Pilot and the Decision Support/Audit Selection Pilot. It will analyze the revenue department's tax systems and processes in order to offer an approach to re-engineering and provide initial cost and benefits estimates.

For Zeuske, the project amounts to embarking on a mission that will completely change the way the state does business, the way it processes its operations and the way it works with customers.

"Right now, we work with paper. As we speak, we are designing a new building with this project in mind, planning for an electronic and paperless future," Zeuske said. "The timing is indeed fortunate."

According to Josh DeJong, IBM solution executive for revenue management systems, Wisconsin distributed its revenue study to vendors during a meeting last year. In that report, known as the Red Book, three options for pursuing the tax integration were outlined: re-engineer the systems internally; outsource the integration; or seek a partnership in the design and implementation.

"Wisconsin not only has a host of very capable IT professionals, but the state takes pride in the level of its technology sophistication. That makes the contract a welcome challenge," DeJong said.

Bryan Barton, IBM's managing executive for the revenue and finance management solution team, noted the company has targeted global government finance and revenue agencies as an important segment to service.

"The decision was made that this was an important market that we wanted to invest in. Government finance was an area in which we feel we can create added value for customers by providing subject matter experts and solution developers," Barton said. "At this point, we have a global team, a global practice that allows us to bring our experience to bear in working on the Wisconsin Master Plan."

Barton segments the global market into two categories: those with older systems that require improved processes and more efficient operations and emerging markets, and those countries in transition from a market-based economy seeking to establish a first-class tax system. In the latter category are countries in central Europe and Russia.

For IBM, the challenge and reward in the Wisconsin contract is to fashion a plan that addresses the interface with the taxpayer as well as compliance. This is seen in the number of states that are moving toward a commercial - type model in how they work with their customers.

"In the past, many government agencies had passive World Wide Web sites with a limited amount of interactivity. We want to fashion a system that is as simple as possible to use but contains all the sophistication available today," DeJong said.

For example, IBM wants to have all the management of forms reside on a server at the tax agency accessible through the Internet without anything else. "You want to present a coherent picture to the user. Once you have reorganized the data, you need to address the user's terminal, taking into account the new generation of tools, the ease of access within security."

IBM is analyzing how much of what the private sector does can be imported into the government. Staying ahead of the level of sophistication of the taxpayer is one challenge IT companies will be facing more in the future.