Challenge
When it comes to processing tax returns, people expect the government to respond in a timely and efficient manner. Many local and state governmental organizations still rely on outdated, physical paper-based workflows when processing consumer tax returns—opening the door for processing delays and errors, not to mention risk from a lack of standardization across departmental systems. Without automation, agencies struggle to: keep up with evolving compliance and security regulations; handle seasonal peaks in volume; absorb added labor costs; and implement uniform quality control procedures. New mandates from U.S. law-makers for wide spread, systemic changes are propelling agencies towards a complete over-haul of existing forms processing operations.
Alabama’s Department of Revenue (the Agency) was just one of hundreds of governmental organizations looking for outside help to modernize its forms processing environment. It was struggling to absorb costs associated with hiring and supervising seasonal workers to handle peak season tax return volumes, as well as labor required for data-entry and mailroom functions. To add to this, a new change to the hiring process was implemented, which required background checks for all temporary workers. The agency was experiencing a huge bottle neck and long processing delays during tax return preparation, caused by older remittance processing hardware and software; and large paper backlogs. Tax payers were beginning to send in duplicate checks with their returns, which was a big source of the problem. Because its remittance process was entirely paper-based, it could take more than 14 days for customers to receive refund payments. Due to the sensitive nature of information, and the growing potential for tax fraud, it was also important to have stringent security and risk mitigation procedures in place. Finally, the agency needed to update its current system to enable electronic and web-based reporting; for greater transaction transparency and workflow governance.
Solution
With taxpayers dissatisfied with long processing delays; the limited storage capacity and inconvenient location of its stand-alone warehouse; and mounting hiring and facility maintenance costs, the Agency decided that it was time to make a change. After weighing the options, the Agency determined that outsourcing to a seasoned provider was the best and only option. It selected Exela as its outsourcing partner because of its decades-long history of providing remittance services to large governmental organizations.
Leveraging Exela’s expertise and proprietary digital technology, the Agency could now streamline and modernize all aspects of its remittance operations. Replacing manual workflows would significantly improve the customer experience by reducing payment cycle times and minimizing security risk. To help further reduce over-head costs, and create more jobs for Alabama residents, Exela worked with the State to construct a brand new facility that would replace the Agency’s on-site warehouse. All of the Agency’s remittance operations would be transferred to this facility.
The partnership with Exela began in the year 2000 with the implementation of keying services, with additional services added incrementally over time to ensure a seamless transition. Today, Exela manages the entire spectrum of the Agency’s remittance operations including:
- - Opening envelopes and removing contents
- - Preparing and scanning returns
- - Data keying
- - Image capture and storage
- - Quality review and assurance
- - Document destruction
Exela processes approximately 3,100,000 pieces of mail and 1,000,000 checks during the course of the year. During peak seasons, volumes can reach up to 15,000 transactions within a single day, translating into a capture of more than 1,000,000 keystrokes annually. Documents are converted to digital images utilizing Exela’s proprietary, high speed IBML technology for high quality image output, and to ensure that scanned images are exact (or better) duplicates of original documents.
To date, Exela supports the Agency’s evolving remittance needs by providing:
- - End-to-end tax return processing for: individual income tax; corporate tax; withholding tax; sales and use tax; crash records/accident reports; and other misc. taxes
- - Voucher and tax return payment processing
- - Modernized image hosting and archival platform
- - Web-based remittance and volume reporting
- - Data processing support for refunds, filing extensions, and other exception items and correspondence
- - LockBox services/remittance processing including Check 21 (managing 1.1 million dollars in transactions per year)
- - Middleware Software Security and Testing (MIST); development of techniques and procedures for vulnerability assessment
- - Online customer exceptions management
- - Fraud detection and prevention system
- - Mail room services including, a certified mail receipt tracking system for packages receipt notification
- - 2-D barcoding system
Benefits
Since the full implementation of services, Alabama’s Department of Revenue has benefited from a complete transformation of all aspects of its forms and remittance processing operations. By automating and streamlining its workflows, the Agency has realized significant cost-savings, greater accuracy rates and quicker processing turn-around times. While, implementing stricter security measures and controls enabled the Agency to reduce the number of fraud incidences; resulting in additional savings. With the implementation of Exela’s solution, deposits can be made multiple times a day versus daily or bi-weekly. As a result, insufficient funds can be recognized sooner. This enables the Agency to quickly proceed with communication and collection activities.
Specific accomplishments include:
- - Reduced average tax return turnaround from 14+ days to 24 to 48 hours
- - Implemented 2D barcoding capabilities to capture data with 100% accuracy and same day turn around
- - Executed archival scanning processes for closed withholding and envelopes, among others
- - Reduced state-employed data entry and mailroom staff by 250 full time employees
- - Experienced $2 to $4M annual savings through W-2 fraud detection and prevention
- - Eliminated a 30,000 square foot warehouse
- - Significantly improved revenue collection and float reduction by re-allocating resources towards hiring more collectors and depositing return payments at a faster rate
- - Modernized its reporting system to include, web-based reports, electronic remittance reports, and electronic daily volume reports; creating greater transparency and accountability
- - Eliminated Unisys Check Transports and Software, which saved the state hundreds of thousands of dollars in annual software and maintenance fees
- - Reallocated 165 full time employees to concentrate on critical tax collection activities
- - Redistributed 12,000 square feet of space to employee classrooms and training rooms
- - Achieved processing accuracy rates of no less than 99.5%
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