IBM today announced an expansion of its fraud and abuse management portfolio with a new offering aimed at optimizing the collection of delinquent tax debts for governments around the world. The IBM Tax Collections Optimizer uses new IBM patented analytics technology to help governments identify the most effective and efficient methods to collect taxes from delinquent debtors.

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With government budgets feeling the impact of the current economic climate, tax collections are quickly emerging as a renewed focus area. It is estimated that the average state has billions of dollars in delinquent taxes. As governments worldwide continue to focus on increasing revenue, they are looking at new and innovative approaches to improving collections with fewer resources.

IBM Research and consultants from IBM Global Business Services collaborated to develop the IBM Tax Collections Optimizer which uses a unique combination of data analytics and other models to create action plans for each case. The plan optimizes the order of activities agents will take in order to maximize the total amount of debts collected while taking in to consideration the case load, personnel resources, and the anticipated effectiveness of the suggested actions.

The New York State Department of Taxation and Finance is at the forefront of innovation in using technology to improve effectiveness. The Department is responsible for collecting more than $3 billion in annual tax revenue through its compliance efforts. IBM has collaborated with the Department since 1999 to apply advanced analytics to their operations. Through this collaboration IBM and the State developed analytical applications to identify questionable refund claims which since 2004 have resulted in savings of $1.043 billion.

The State of New York added the IBM Tax Collections Optimizer to its innovative approaches around tax compliance and collections last year after a close collaboration with IBM to develop the system. The Department's insight was critical in the development of this new tool, which is expected to help bring in an additional $100 million over a three-year period.

"The project uses leading edge technology and it took a strong, dedicated team to make it a success," says Timothy Gardinier, Manager, Data Warehouse Solutions, New York State Department of Taxation and Finance. "New York is considered a leader in the field of tax administration. I believe this project keeps us on the forefront of technology and gives us the edge we need to collect taxes in these tough times. More importantly, it will provide another mechanism for us to administer a fair and equitable taxing system, for all taxpayers of the state of New York."

The solution optimizes the collection actions of agents by taking into account the complex dependencies between resources, business needs and legal constraints. Using a variety of taxpayer data, such as the amount owed and past payment history, the system develops a plan for collecting from the entire population of delinquent taxpayers. The IBM system creates a work flow that automatically looks for the focus areas that would represent the best use of an agent's time. For example, the system determines whether the next collection attempt should be a letter, a phone call or a personal visit while weighing those actions against the potential result of that action. This use of advanced analytics will help improve the collections results and help enhance the productivity of agents.

"The current processes used to recover unpaid funds by tax agencies around the world are complex, outdated, costly, and generally ineffective," said Michael Schroeck, vice president, Business Analytics and Optimization Services, IBM Global Business Services. "Organizations are handling more information and data than ever before, but at the same time they know they are not keeping pace. By deploying this analytics technology, government agencies can efficiently collect tax revenue from major debtors. This engagement reflects IBM's goal of helping clients pull useful information out of mountains of existing data in many different industries."

The Tax Collections Optimizer is available through IBM Business Analytics and Optimization consulting practice. This asset is the latest in a long line of technologies developed in collaboration with IBM Research for IBM's fraud detection portfolio of offerings. For example, IBM's Tax Audit and Compliance System (TACS) is another New York project that is now used by a number of governments to improve their audit process by using advanced models to identify which taxpayers might have compliance issues and require further investigation.

IBM offers a number of technology deployment options for the Tax Collections Optimizer, including scalable systems for data intensive government operations. The solution also takes advantage of IBM software like Cognos, DB2, and WebSphere which New York State is using in their deployment to help manage their taxpayer information.

IBM leads in the development of analytics-based solutions which help clients improve decision making across their operations. The company leverages its consulting, technology, and research resources to drive tangible benefits for clients by taking advantage of the industry's broadest portfolio of hardware, software and services optimized for analytics.

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SOURCE: IBM Corporation