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
"If something goes awry, all [of a] sudden you've lost the capability of collecting revenue for the state of
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
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.
Equipped with better report-generating tools, the DOR's delinquent-accounts team boosted collections of overdue taxes 48 percent, to
Outdated technology contributed to the DOR's errors, but the root problem, according to a 2012 audit by Deloitte & Touche, was a lack of internal controls, which is a function of management. Alley said those problems had to be fixed first.
"We've reinstated a number of controls that have been dropped," he said. "They weren't perceived to be important."
In their report, Deloitte & Touche auditors said the department "seemed much more focused on efficiency of tax processing than they were on ensuring a strong system of control and accountability over taxpayer funds."
Alley and Chief Information Officer
Among 20 new IT professionals is a chief information security officer, who is in charge of keeping taxpayer data locked down. That didn't appear to be a high priority before the audit, which found multiple ways that taxpayers were left vulnerable to fraud or identity theft.
Reconciling funds is one of the basic accounting functions that fell by the wayside as DOR focused on processing income-tax refunds, which are turned around in an average of 14 days.
The DOR is now running reports on a monthly basis, and it has a second internal auditor. A recently released audit from the
"We feel highly confident the big items have been highlighted, addressed and dealt with," Alley said.
Democratic state auditor candidate
"The auditor would be another check on the system," Claytor said.
Alley said the DOR has addressed half the problems detailed in the Deloitte report, and 27 percent more will be fixed in 2014. The rest will have to wait until the department can acquire an integrated system, he said.
The main tax-return processing system, custom-built in the mid-1990s, handles the state's six major revenue sources, but there are 35 miscellaneous taxes that were accounted for in separate databases and spreadsheets. The piecemeal system created multiple opportunities for errors, as it required a lot of manual workarounds, according to the Deloitte & Touche audit.
The DOR has fixed or retired many of those stand-alone systems, Alley said. This year, it will start using
The RSI system is off-the-shelf, but the company will transfer the knowledge DOR officials will need to customize it and make it work with other software in the future, Alley said. The DOR's strategy is to find a product that works well, and then expand its capacity to handle more and more functions.
The whole process is expected to take another five to seven years.
Two states that tried to make a wholesale switch ran into major problems, Panariello said.
"What people don't understand is how complex these systems are," he said.
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
OCTOBER 30, 2014
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