The document discusses challenges faced by governments in tax collection and revenue management. It presents opportunities to improve efficiency, reduce fraud and waste, and increase tax compliance through modernization of tax administration systems. Key strategies discussed include implementing a single view of taxpayers, predictive analytics for fraud detection, tax system modernization, and financial performance management to improve transparency and accountability. The presentation considers alternative approaches and implementation options to address these challenges.

1. Presented by
Date
Smarter Government –Tax and Revenue
Improving the economic health, welfare and safety
of society
© 2012 IBM Corporation

2. Smarter Government – Tax and Revenue
Providing leadership in the face of global challenges.
Changing demographics increase Government finances
the cost of social protection significantly weakened by
the global financial crisis
Citizens expect better and more responsive
government services Rising energy costs, water
supplies at risk
Every major country affected by
terrorism and regional conflicts
2 © 2012 IBM Corporation

3. Smarter Government – Tax and Revenue
Governments face challenges – and opportunities -- in every
functional area.
Increase outcome Savings from reduced Conserving energy,
effectiveness fraud and error increasing productivity
26% to 58% £ 3.1 billion 4.8 billion hours
Percent of government Estimates of fraud and error Additional hours that traffic
spending allocated to social across all benefits during congestion forced Americans to
protection 2009/10 in Great Britain spend on the roadways, a loss
of 3.9 billion gallons of fuel
worth $115 billion
Savings from improved tax Reducing crime’s
compliance true cost
$1.2 billion $943 per person
Amount New York State The tangible social and
Department of Taxation and economic cost of crime in
Finance has saved through tax Canada -- $31.4 billion, or
compliance $943 for each man, woman
and child
3 © 2012 IBM Corporation

4. Smarter Government – Tax and Revenue
To ensure the economic health, welfare and security of their citizens,
government leaders are prioritizing these imperatives.
Improve Citizen and Business Services Build Intelligent Transportation Systems Strengthen National Security
Manage Resources More Effectively Improve Public Safety
4 © 2012 IBM Corporation

5. Smarter Government – Tax and Revenue
The challenge: increasing operational efficiency, reducing fraud
and waste.
Tax avoidance and tax evasion threaten government revenues.
The US Senate estimates revenue losses from tax evasion by
U.S.-based firms and individuals at around 100 billion dollars a
year. In many other countries, the sums run into billions of euros.
This means fewer resources for infrastructure and services such
as education and health, lowering standards of living in both
developed and developing economies.
5 © 2012 IBM Corporation

6. Smarter Government – Tax and Revenue
How can improving taxpayer services and tax compliance help
governments spend less money to collect money?
Increase efficiency, fairness, Lowering levels of fraud,
waste and error
reduce cost of compliance by:
Smarter
Services
Improving operational Making it easier to interact
efficiency with your Agency
Your result
• Improved identification of fraudulent activity
• Compliance and auditability
• Improved case management
• Enhanced tax modernization and policy alignment
• Increased decision making in shorter timeframes
6 © 2012 IBM Corporation

7. Smarter Government – Tax and Revenue
Servicio de Administracion Tributaria (SAT) Mexico modernizes their
legacy tax collection system to raise collections and cut costs.
The total real tax collection
for SAT
grew 8.1%
The income tax collection
grew 12.9%
The added value tax collection
grew 3.4% Business problem: Tax collection as a percentage of GDP has been historically
low in this country because the tax law is very complex, and it was a time
consuming process for citizens register for—let alone pay taxes
Solution: “Solucion Integral,” a collection of services supported by an
heterogeneous technological platform, and developed on a SOA platform
7 © 2012 IBM Corporation

8. Smarter Government – Tax and Revenue
New York State Department of Taxation and Finance applies
advanced analytics to strengthen tax compliance and increase gap.
Since its inception,
the agency
has decreased improper
payments by
$1.2 billion
Business problem: investigations revealing widespread tax evasion, and highly
unreliable and more expensive “pay-and-chase” policies drove the agency to the
realization that they needed to predict in order to prevent
Solution: Reposition the role of analytics (the Case Identification Selection
System, or CISS) directly into the mainstream review process, making it predictive
“The fact that we’ve been able to evolve it to where it is now – when it’s so
desperately needed – has made it an important fiscal tool for the state. … When I
hear anecdotally that New York is getting to become a much more difficult place
to cheat, I know we’re making the impact that we set out to make – which isn’t to
increase our enforcement actions, but to change mindsets.”
—William Comiskey, Deputy Commissioner, Office of Tax Enforcement,
8 NYS Department of Taxation and Finance © 2012 IBM Corporation

9. Smarter Government – Tax and Revenue
Belgium Ministry of Finance automates and optimizes their
processes to expedite case file management decisions.
Reduces
Case File Management
Decisions from
6 months
to
days
Business problem: The physical nature of paper-based files did not allow for
effective communication between regions, tax departments or citizens, caused
delays in answering claims, resolving litigation or distributing work
Solution: Automate and optimize processes to improve visibility, balance and
control, and build accountability
“We can follow up on each file, quickly respond to citizen calls, and even connect
them directly with the agent handling the case at that particular time.”
—Anemie Clasen, Inspector at Antwerp, BMoF
9 © 2012 IBM Corporation

10. Smarter Government – Tax and Revenue
Efficient, effective and fair tax administration. How do you build a
trusted experience? Where do you want to begin?
Business outcomes
• Identification of fraudulent activity • Enhanced tax modernization and policy alignment
• Compliance and auditability • Increased decision making in shorter timeframes
• Improved case management
Transformational stages
Improve Revenue Improve Fiscal Enhance Public
Value
Improve Access Single View of
to Information Constituent Collection, Management Trusts
And Resources Compliance &
Oversight
Optimize
outcomes
Analyze
patterns
Manage
data
Maturity
10 © 2012 IBM Corporation

11. Smarter Government – Tax and Revenue
We can help you plan and execute critical aspects of your journey.
IBM solution area:Tax and Revenue Management
• Single View of Client • Financial Performance Management
• Tax Modernization • Budgeting and Risk Management
• Fraud, Abuse and Waste Prevention
Transformational stages
Improve Revenue Improve Fiscal Enhance Public
Value
Improve Access Single View of
to Information Constituent Collection, Management Trusts
And Resources Compliance &
Oversight
Optimize
outcomes
Analyze
patterns
Manage
data
Maturity
11 © 2012 IBM Corporation

12. Smarter Government – Tax and Revenue
We apply systems thinking, tools and expertise to help you manage
complexity and the innovation process.
Process transformation
Business Componentized target operating model
Architecture that enables mission definition and
transformation
Application transformation
Application Tax administration processes, services and
Architecture data, structured to enable the speed and
flexibility required to be efficient and effective
Operating environment transformation
Infrastructure
Systems that underpin process,
Architecture
application and technology blueprints
12 © 2012 IBM Corporation

13. Smarter Government – Tax and Revenue
Single View of Tax Payer
Provides single view of trusted information to downstream processes.
• Understand • Condensed Enables you to…
Up-to-date Case
• Assemble
citizen/ Mgmt
• Cleanse • Improve rate of correctly identifying tax payers
client hub
• Normalize
Internal
Citizen • Improve targeting of audit and collection cases
Access
data
• Improve and streamline processes to manage
audit and collection cases
Trusted ID
• Make information-driven, fact-based decisions
instead of anecdotal or sample-based
External
data Fraud Mgmt
• Identify • Harmonize
multicultural • Citizen
names • Service
• Relationship • Customer
Location Service
awareness
• Provider
• Provision
13 © 2012 IBM Corporation

14. Smarter Government – Tax and Revenue
Detecting and Preventing Fraud, Waste and Abuse.
Applies advanced analytics to improve tax compliance, fairness and revenue
collection
Enables you to…
• Increase overall tax revenue
• Enforce fairness of the tax code
• Predict fraud based on historical behavior
Stop fraudulent Prioritize Predictive
income tax delinquent Compliance
returns tax debts
14 © 2012 IBM Corporation

15. Smarter Government – Tax and Revenue
Tax Modernization
Creates a taxpayer-centered Information Hub
Tax Enables you to…
• Maximize flexibility and adaptability
Employers and to change with SOA Architecture
Property data financial institutions
• Enable tax agencies to focus on core functions
of taxpayer service and compliance with SOA
• SOA architecture • Improve customer service and lower costs with
• Multi channel access
• Tax audit and
compliance Multi-Channel Access
• Improve compliance while lowering cost of
audit and control with tax audit and compliance
Employment External solution
information
Citizen
15 © 2012 IBM Corporation

16. Smarter Government – Tax and Revenue
Financial Performance Management
Improves the transparency and accountability of government entities
Enables you to…
Breakaway
Prescriptive, real-time, pattern-based
strategies with situational context
• Enhance public trust
• Improve capital efficiency
Business process Differentiating Predictions, • Analyze compliance and outcomes
contextual business
integration
rules and patterns • Manage audit and collections cases
Master data
Process automation Competitive
management,
and workflow dashboards
and scoreboards
Foundational Data warehouses
Task integration governance and
production reporting
Command and Ad hoc Spreadsheets and
control extracts
16 © 2012 IBM Corporation

17. Smarter Government – Tax and Revenue
What is your preferred starting point?
BAO Jumpstart for Information Management
Foundation
Connect people with trusted information, enabling them to
make real-time decisions and act with confidence to deliver
better outcomes.
BAO Jumpstart for Risk, Finance and Fraud
Assess performance and fraud management capabilities,
gain greater value from current enterprise analytics
investments.
Business Process Management (BPM)
Visioning and Roadmap
Optimize the performance, visibility, and agility
of business processes.
17 © 2012 IBM Corporation

18. Smarter Government – Tax and Revenue
Which implementation approach best supports your business
objectives?
Business outcomes
• Identification of fraudulent activity • Enhanced tax modernization and policy alignment
• Compliance and auditability • Increased decision making in shorter timeframes
• Improved case management
Considerations
Business Design Service Levels Deployment Models Funding Options
Options
Get the parts, build it yourself Work with a vendor to design Count on a strategic partner to
and build it for you implement and run the solution
Access to skills, best practices, technology and financing must be
evaluated from the beginning to deliver desired results.
18 © 2012 IBM Corporation