FTA
Technology
Conference
North Carolina Department of Revenue
Tax Systems Integration
Impact of Implementation on Users
1
Introduction of Speakers
Charlie Helms, Manager, Field
Operations Administrative Section
Mary Johnson, Director, Business
Systems Development & Support
Division
2
Objectives

Discuss North Carolina's reasons for
implementing an Integrated Tax
Administration System (ITAS)

Review implementation and resulting
impact to basic business processes

Present “lessons learned” that North
Carolina is applying to current projects
3
NC Department of Revenue

1243 employees
(fiscal year 1998-99)
– 39 field collection offices
– 14 in-state field audit offices
– 26 interstate field audit offices
4
NC Department of Revenue
Muriel K. Offerman
Secretary
Michael Hannah
Assistant Secretary
Legal and Financial Svcs.
Margaret (Randy) Barnes
Assistant Secretary
Planning, Development &
Technology
Michael S. Hodges
Deputy Secretary
B. W. Thomas
Assistant Secretary
Tax Compliance
Sabra Faires
Assistant Secretary
Tax Administration
D. N. Sanders
Assistant Secretary
Field Operations
5
Why Go
to All the
Trouble?
6
We Are A
CUSTOMER
SERVICE
Focused
Organization
7
Functional Reorganization

Prior to functional reorganization each
tax schedule was administered by a self
sufficient division

This created duplications of efforts and
multiple hand-offs

After the reorganization, like functions
were grouped together
8
Y2K

Legacy systems
on IBM 4381
mainframe
became extinct
on June 30,
1999
9
Y2K
Yes !
ITAS is Y2K compliant
10
Improve Compliance

Through audit selection and data cross
referencing

Track work assignments using an
integrated case management system

Allow for automation of processes
– Noticing
– Interface programs
» IRS CP 2000 matching program
» Wage matching for garnishments
11
Enhance Customer Service

We wanted to provide faster response time
to taxpayer inquiries to questions
concerning refunds, payments and other
account related information

The new system should enable personnel
to resolve taxpayer identified problems
quickly from any location

The system should allow for registration of
business taxpayers from local field offices
12
Implementation
(or, how
did we
get here
from
there?!)
13
Implementation Process

A team of functional representatives led
the implementation
– Reported to the Executive Council
– Empowered to make decisions and
procure resources
– Team members were chosen by assistant
secretaries
14
Implementation Process

Vendor selection and involvement
– Andersen Consulting’s (AC) “TAS” system
– AC staff onsite - worked with functional
users to implement initial tax schedules

DOR applications staff involvement
– Conversion from existing systems to ITAS
– Transition of support to DOR applications
development staff after implementation
– Responsible for developing interface
programs
15
Implementation Process

Computer equipment roll-out
– A PC network was established for the 40 +
field offices over a 9 month period
– Equipment and communications links were
ordered and rolled out state-wide
– Users were trained on use of the new
equipment
16
Implementation Process

A training management team (TMT) was
formed by the Executive Council
– Trainers were identified from each functional
area
– A train-the-trainer philosophy was utilized
– Functional trainers were able convey how the
material should be applied in the work-place
– User-guides and other training materials were
developed by trainers and TMT members
– A just-in-time training philosophy was utilized
17
Initial Implementation Issues

We were given an aggressive
implementation schedule

We had problems with converted data
– Data purification
– Data mapping

Users had to learn and un-learn manual
“work-arounds”

We were confronted with unintended
results of system changes
18
Initial Implementation Issues

A number of resource issues challenged
us

Some of our employees were resistant
to change
19
Overcoming Employee
Resistance

Train - Train - Train
ITAS User Guide
 Key user network
 Electronic shared directories
for communicating ITAS
issues & procedures
 Departmental e-mail network
for “hot” issues

20
Results
(or, we
did it,
didn’t
we?!)
21
Business Processing:
Improvements

Case management function is integrated

Business registrations and adjustments
can be performed by field staff

Interfaces between ITAS and other
agencies are automated

Taxpayer account information is available
online, real-time to authorized users

Noticing function is automated
22
Business Processing:
Added Bonuses

DOR gained a PC network through-out
the state that is now multi-purpose

All DOR staff gained an increased
awareness of the importance of training
and communication

Many processes and procedures were reengineered to provide greater efficiency

Y2K problems were resolved!
23
Business Processing:
Impacts to Staff

20+ years of process and system
familiarity were impacted overnight

Related procedures needed to be changed

A majority of the work force quickly
needed education and training

Methods to rapidly communicate changes
to all employees needed to be developed
24
Business Processing:
New Challenges

Processing Development Requests
– Priorities and schedules must consider
needs across tax schedules
– Changes for one tax schedule may impact
another, so increased design and testing
time is required to ensure overall quality
– Legislative changes continue to require
short lead times
25
Business Processing:
New Challenges

More Resources Required
– Capture of higher number of data elements
requires more data entry personnel
– Since more data is captured, the cost of
storing and processing data has increased
– Using the increased information to improve
compliance, manage more efficiently, and
increase revenue requires more trained staff
– Equipment maintenance is more costly
26
Largest Schedules on ITAS:
Implementation
TAX SCHEDULE
PRODUCTION
Individual Income
Employer Withholding
Corporate
Sales and Use
Privilege License
Motor Fuels
October, 1994
August, 1995
October, 1995
February, 1996
March, 1999
ETC 10/99
27
Largest Schedules on ITAS:
Production Volumes
TAX SCHEDULE
ACTIVE
ACCOUNTS
Individual Income
3,500,000
Employer Withholding
185,000
Corporate
294,000
Sales and Use
184,000
Privilege License
79,000
ANNUAL
RETURNS
3,500,000
1,735,000
306,000
1,825,000
79,000
28
ITAS Production Volumes
(January 1, 1998 - December 31, 1998)
10 Million Total Batch Transactions
 1,091,500 Assessments
 460,000 Delinquent Filing Notices
 76,500 New Business Registrations
 Individual Income Tax

– 2,424,500 Refunds Issued
– 600,000+ ELF Returns
29
Where
Do We
Go From
Here?
30
Applying Lessons Learned:
Business Planning

ITAS Planning Team
– Set strategic direction for
ITAS operations
– Prioritize and schedule
development requests
– Facilitate continuous business
process improvement
– Manage consistent use of
ITAS
31
Applying Lessons Learned:
Change Control
 ITAS
“Releases”
– With an integrated system, migrating single
changes to production that were not tested
independently caused unpredictable results
– A “release” is a group of changes that are
designed, developed, tested, and migrated
to production as a unit
– We have increased the overall quality of
our implementations and greatly improved
development efficiency
32
Applying Lessons Learned:
Support Staff
 Business
Liaison
– Created a new division in I/T to ensure
overall system integrity
– Division coordinates development and
acceptance testing with functional users
 Applications
Development
– Reorganize from tax schedule to function
(similar to business re-organization)
– Additional contractor staff required
33
Applying Lessons Learned:
Future Development
 JETS
(Java-Enabled Tax System)
– Don’t reinvent the wheel with design and
data structures
– When developing in-house, be sure to bring
in expertise where needed
– Provide adequate training for IT staff
– Identify and involve key users early in the
process
34
Applying Lessons Learned:
Future Development
 Data
Capture Project
– DOR worked closely with IBM to develop a
project plan, and is managing the project
using that plan
– Key functional users and DOR technical staff
have been involved in all activities since the
beginning of the project
– A variety of communication is regularly
distributed to promote employee acceptance
– A formal training plan is under way
35
Additional Questions:
Charlie Helms:
helmsdor@ncdial.net
(919) 733-3510
Mary Johnson:
mgjdor@ncdial.net
(919) 715-9884
Website: http://www.state.nc.us/dor
36