With an investment of less than $4 million in state funds, the Department of Revenue has collected more than $100 million in taxes from individuals and corporations that did not file tax returns or under reported their income, Revenue Commissioner Alan LeBovidge announced today.
DOR used the Commonwealth's Information Technology bond money to develop and implement a data warehousing system that efficiently tracks down taxpayers who have attempted to avoid paying the full amount of taxes due. With more than 200 million pieces of data from 34 databases loaded in its system, the program matches diverse bits of information to produce taxpayer portfolios. From there business rules are created to identify potential non-filers and/or under-reporters. The program actually identifies the taxpayer, computes the proper tax owed and generates a bill.
"When we ran the Tax Amnesty program two years ago we asked taxpayers to come forward and pay their back taxes," LeBovidge said. "Our slogan then was 'Find us before we find you'. Well, you can't say we didn't warn them."
Since June 1, 2002 when DOR started using the data warehousing technology, the department has collected $65 million in business taxes and more than $46 million in personal income taxes from people who were either not reporting their taxes or were under-paying. The program also has led to more than $10 million in refunds to taxpayers who over paid. The net result is more than $100 million in collections.
"We've spent less than $4 million on the technology and have produced a net gain of more than $100 million," LeBovidge said. "That's a pretty good return on investment for the Commonwealth."
LeBovidge also noted that because so much of the program is automated -- from identifying the tax liability to mailing the bill - it frees DOR's auditors and collectors to concentrate on other projects.
The data-warehousing program is really in its infancy. The technology allows for an unlimited number of databases to be loaded. The more information collected and stored the easier it will be for DOR to follow through on its promise to find tax scofflaws.