Va., AMS system less taxing

A partnership between the Virginia Department of Taxation and American Management Systems Inc. has spawned not only a new tax accounting and revenue computer system, but also a more efficient, cost-effective and consumer-friendly business environment, department officials say.

Despite a recommendation in the early 1990s to replace Virginia's outdated tax accounting and revenue computer system, the state couldn't find the money to install a new system. The state tax department tried to get funding and sought other options when, in 1998, it embarked on a then-new funding concept that meant partnering with a private-sector company.

With the blessing of the General Assembly, the department ( and Fairfax, Va.-based AMS entered into a "benefits funding" agreement.

Under the plan, AMS financed the new hardware and software for the department. In return, AMS would recoup funds through the department's revenue gains -- above and beyond what it normally collected—from the implementation. No additional state funds would be used. State officials said they have 10 years to repay AMS.

The approach—which has included re-engineering business practices -- has worked so well that the department has collected $54 million since September 1998, said tax department officials. The total price of the overhaul is estimated at $135.5 million. The National Association of State Chief Information Officers recently recognized the innovative public/private partnership with one of its an annual information technology awards.

The partnership processes about 3.2 million returns annually. Some improvements include:

* Internet filing by businesses. As of August 2001, more than 4,400 businesses signed up to file sales, use and withholding taxes via the Internet. More than 12,300 returns were filed, with $71 million in payments. Businesses can view their payment history during the previous 12 months, can pay electronically and can also be sent e-mail reminders to pay taxes five days before the due date.

* Online business registration. More than 3,100 businesses have used the application.

* A better customer-service answer center, developed by Siebel Systems Inc., which links all taxpayer correspondence to returns. Previously, it took two weeks to request a paper return, analyze it and return with an answer. Electronic scripting is also used, in which call-center employees ask questions and based on the caller's responses, can be directed to the correct answer.

* A redesign of Form 760, the individual state income tax form, for the first time since 1972. This is expected to improve efficiency, ease burden of filing and eliminate paper.

* Increased online filing. More than 20,000 residents have filed their 2000 individual income taxes over the Internet this year, while 160,000 taxpayers used the telefile version, which is in its second year.

* Faster audits. With new computer hardware and software, the department is completing audits 12.5 percent faster on average.


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