Luminary Series Franchise Tax Board. Cathy Cleek CIO Franchise Tax Board December 07, 2016

Transcription

1 Luminary Series Franchise Tax Board Cathy Cleek CIO Franchise Tax Board December 07, 2016

2 Introductory Thoughts Know the best way to win with FTB FTB (and most other firms) buy solutions to problems... not software, hardware or services. Luminary Series CIO 2

3 Introductory Thoughts Know the best way to win with FTB CIOs could meet with vendors 24x7x365. I get 100+ vendor s per day. FTB (and most other firms) buy solutions to problems... not software, hardware or services. My interest in solving FTB s biggest, hardest problems. Watch for technology changing exponentially. EDR 2 is my highest priority. Luminary Series CIO 3

4 Introductory Thoughts How humans think. Linearly 1 step = 1 meter 30 steps = 30 meters Incremental (5 percent improvement) 1, 1.05, 1.10, 1.16, 1.22, 1.28, etc. 30 incremental steps = meters Exponentially 1, 2, 4, 8, 16, 32, 64, 128, etc. 30 exponential steps = 1,073,741,824 meters 26X around the earth

5 I ask myself every day, how are we and can we use technology to make a real difference in both taxpayers and FTB employees lives? Cathy Cleek, CIO, Franchise Tax Board Luminary Series CIO 5

6 Agenda Background on FTB Key Problems EDR 2 Timeline Next Steps Questions Luminary Series CIO 6

7 Background On FTB Information to help understand FTB s business & problems Luminary Series CIO 7

8 Background on FTB California has three tax agencies: FTB Income Tax BOE Sales Tax EDD Withholding Luminary Series CIO 8

9 California General Fund Fiscal Year 2015/2016 Total = $115 Billion FTB Revenue $88.4 Billion or 77% of GF

10 Background on FTB FTB organized into three primary programs Filing Auditing Collecting Luminary Series CIO 10

11 Identifying the Systems of Work Customer Centered Tax Business Model Taxpayer Overpaid Taxpayer Files Taxpayer Files Correctly11 Taxpayer Pays the Correct Amount Taxpayer Meets Tax Obligation Taxpayer has Tax Obligation Taxpayer Does Not File Taxpayer Does Not File Correctly Taxpayer Underpaid FILING SYSTEMS Return Filing Filing Enforcement ACCURACY SYSTEMS Return Validation Audit PAYMENT SYSTEMS Payment Processing Underpayment Refund Processing

12 California General Fund Fiscal Year 2015/2016 Total = $115 Billion FTB Revenue $88.4 Billion or 77% of GF Other $11.6 Billion Blue Path $81.3 Billion Red Path $7.1 Billion

13 Background on FTB FTB - People Full Time Employees Temporary Employees 18M Individual Customers/Filers 2M Business Customers/Filers Key Partners - 50K Tax Representatives - 1.1M Employers - 56K+ Financial Institutions 13

14 Background on FTB FTB - Technology 1 Data Center with 2 raised floors 1 Mainframe 1,000+ Servers 8,000 PCs 5 PB s of Data 200+ Business Applications 1,000 Technology Professionals Organized in three sub-divisions: 1. Plan (Budget, Scheduling, Reports, Analytics) 2. Build (Application Design, Development, Test) 3. Run (Service Desk, Command Center, Asset Mgmt., Monitoring) Luminary Series CIO 14

15 Learn a little about the tax business

16 Most taxpayers know the drill: file, file accurately and pay the amount of tax due. 86 percent of taxpayers file, file accurately & pay.

17 Most people think of FTB in Feb - April FTB is a very seasonal business. 35% 30% 25% 20% 15% 10% 5% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 17

18 Data: Most taxpayers efile 84% 82% 83% Percentage Efilers 80% 78% 76% 76% 74% 72% Personal Income Tax Business Income Tax

19 The Other 14 Percent: The Tax Gap. For California, we estimate the tax gap to be $10 billion annually. I like to think of our jobs as:

20 The three musketeers of the tax gap. 10% of taxpayers do not file. 80% of taxpayer do not file accurately. 10% of taxpayers do not pay the amount due. 10% 10% 80% Links: New IRS Study Provides Preliminary Tax Gap Estimate

21 Information returns & withholding help taxpayers file accurately. Amount of Information Reporting & Withholding Typical Types of Income Filing Accurately Rate Substantial information reporting and withholding Wages 99% Substantial information reporting Interest, Dividends, Pensions 92% Some information reporting Partnerships 89% Little or no information reporting Business Income, Rental Income 44%

22 Sooner is better than later. The best tax organizations have learned that sooner is better than later when it comes to taxes! We ve seen this time and time again. Withholding, a pay as you go system results in the highest compliance rate. (See lesson 6.) Our surveys have shown that if we need to contact taxpayers, they prefer to hear from us sooner versus later even if there is an error on a tax return, an audit will take place, or they have not filed a required return.

23 Time is money (aka Shift Left). We ve all heard this saying and it is another way of saying sooner is better than later. FTB Collections has found sooner vs. later results in more taxpayers who are more able to pay.

24 Taxpayers are DIYers. In working with taxpayers, we ve found the majority of taxpayers prefer self-service options. 17 million visits per year and growing; 17 percent growth in 2017!

25 Data is Powerful 7 Million Children Vanish Thanks to Data! One strategy to increase accuracy of tax returns is to require additional data to be provided on the tax return.

26 Why Enterprise Data to Revenue? EDR -- Get data Imaging paper tax returns we receive. Image our correspondence. EDR Use data Master Data Management Predictive models for case selection Predictive models for fraud detection Data exchange quarterly with banks Functionality to use data to find best address for taxpayers New tax return processing system MyFTB where taxpayers can view their data

27 Strategic Plan Key Problems Luminary Series CIO 27

28 FTB Strategic Plan We use technology to help us move closer to our vision articulated in our Strategic Plan. To give you an idea of what I mean, I will share our 4 goals & some of our key efforts. 28

29 Taxpayer Centric Services Effective Enforcement Strong Organization Operational Excellence Mission and Vision Privacy and Security Fiduciary Responsibility Transparent Principles and Values

30 FTB Strategic Plan Goal 1: Taxpayer Centric Service Quality in a service or product is not what you put into it. It is what the client or customer gets out of it. -- Peter Drucker In process MyFTB Power of Attorney 2.0 (Summer 2016, December 2016) Future Amazon-ize our website (search, 100 percent actions done online, speed) Artificial intelligence. Used in call centers to answer more of taxpayers questions. More self-services (taxpayers, banks, employers) 30

31 FTB Strategic Plan Goal 2: Effective Enforcement The income tax has made more liars out of the American people than golf has! -- Will Rogers In process More Predictive Modeling Future EDR 2: Even More Predictive Modeling & More Predictive Modeling Optimization: Expand Data Sharing with Other State Agencies (Address Data) EDR 2: Merge Case Management Systems (Filing, Audit, Collections) 31

32 FTB Strategic Plan Goal 3: Strong Organization Work, Contribute & Learn - Denise Mellor, HR Director FTB In process Talent Management System roll out EDR Knowledge Management Future Shifting workforce to new technologies -- must occur more often and more quickly! 32

33 FTB Strategic Plan Goal 4: Operational Excellence Variance Costs Money! -- Cathy Cleek In process System Decommissioning Replace PBX with VoIP Modern analytics. Tableau & Invariant Future Increase Customer Demands Increased up time of applications on holidays and weekends, more online self service, live chat. Newer Technologies Online processing vs. batch, Java vs. Cobal. 33

34 FTB Strategic Plan Organizational Principles Protect Taxpayer Information & Privacy Everyone at FTB is responsible for security... and it starts with me. -- Selvi Stanislaus Executive Officer, FTB In process Data Security Projects Future Data Security Projects More third party security reviews, scanning, reviewing. 34

35 Tax System Modernization Presentation Title Division or Section 35

36 Technology Vision Phase 1: Enterprise Data to Revenue EDR Imaging, case management, taxpayer folder, return processing, modeling, and MyFTB. Implement key infrastructure and architecture Phase 2: Enterprise Data to Revenue 2 EDR 2 Expand case management, modeling, and MyFTB. Decommission legacy systems for Audit, Filing Enforcement, and Collections. Phase 3: Tax Systems Modernization TSM Phase 3 All major systems are enterprise systems. Modernize accounting systems. Luminary Series CIO 36

37 Technology Vision Luminary Series CIO 37

38 EDR 2 Timeline Now to 3/17 Business Problem Analysis 3/17 S1 BA submitted 10/18 RFP Released 4/20 Contract Award 7/20 12/25 Project Luminary Series CIO 38

39 Challenges to Vendors

40 Introductory Thoughts Know the best way to win with FTB FTB (and most other firms) buy solutions to problems... not software, hardware or services. Luminary Series CIO 40

41 Top 5: Why Do Things in Government Take So Long 1. Government designed to balance power therefore slowness was part of the design. 2. New Project 5 Approvals Needed Department, Agency, Board, CDT, DGS 3. New Money 4 Approvals Needed, 2 recommendations Department, Agency, Board, Legislature (after getting recommendations for DOF and LAO) 4. Troubled technology efforts cause more questions and more delays. 5. Dilbert needs material for next comic strip. Luminary Series CIO 41

42 My Ask to the Vendor Community Bid on EDR2 Help me solve my business problems 1. is not a productive collaboration tool. No insight. E = Evidence. FTB receives 25M per year. How can I increase productivity in folks working together. 2.Coding getting easier, testing getting more complex. How can I make testers more productive and use fewer of them. 3.Bottleneck. Call center LOA. We are limited by the number of calls we can take. 42

43 My Ask to the Vendor Community (cont.) 4. Have more data than every. How do we organize and train staff to take advantage of all this data? 5.Change taxpayer behavior. -- Change paper filers to efilers. -- Have people self-serve vs. call/write us. 6.Report on Internet Usage excluding activity where the site is up on the machine but user is not active. 7.More up time without significant costs. 43

44 My Ask to the Vendor Community (cont.) Desire improvement in the tools we purchase: Master Data Management Need better matching More & more data so need for faster backups Lack of Security Features Logging and Splash Screens IRS 1075 Compliance ADA, 508 and Usability Standards built into tools Get rid of green screens Need to simplify and webify interfaces. 44

45 Questions

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