Friday, August 1, 2014

IBJ Reports State Eases into Rollout of Software in Tax Fix

From the Indianapolis Business Journal:

The Indiana Department of Revenue is five to seven years from replacing the 1990s software that processes the bulk of the state’s tax dollars and that auditors cited in the wake of massive accounting errors.

Auditors who reviewed the DOR in 2012 said antiquated, piecemeal technology contributed to the two mistakes, together worth a half billion dollars, and recommended that the state adopt an integrated tax system. Revenue Commissioner Mike Alley said it’s too risky to move more than $17 billion in tax collections to a single system in one leap.

“If something goes awry, all [of a] sudden you’ve lost the capability of collecting revenue for the state of Indiana,” Alley said.
After spending two years focused on people and processes, Alley said, the department is “dipping a toe” into new software with a small pilot program this year. The DOR will use software by Massachusetts-based Revenue Sources Inc., which specializes in state governments, to handle three specialty taxes. Revenue Sources Inc. is also providing audit-management software, and the department expects to spend a total of $6.56 million.

If the company’s product works well, the DOR might choose to buy it, or some other off-the-shelf software, to handle everything. Next year, the department will conduct a study of its options, which could also include a custom-built system.

A banker appointed by former Gov. Mitch Daniels in the wake of the accounting crisis, Alley hopes that when the time comes for a major software purchase, the DOR will have generated enough additional revenue to pay for it.

Equipped with better report-generating tools, the DOR’s delinquent-accounts team boosted collections of overdue taxes 48 percent, to $260.9 million, in the fiscal year that ended June 30