California Tax Case Study

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Case Study
Mining Data To Increase State Tax Revenues in California

1. What are the benefits of using the new INC system?
-identification of nearly 100,000 non-filers
-an additional net review of $36 million per year
-uses Unique identifier to synchronize the direct and indirect indicators -elimination of 55,000 incorrect actions sent by the Bureau -saving HR the hassle of addressing erroneous notices     -increased functionality and capacity

2. Why didn’t the California Franchise Tax Board do this type of data mining in 1980 or 1990? In those years, there wasn’t a software and hardware good enough to handle all the needs of the IRS for the INC system. The Non-filer Program’s automated non-filer systems were developed during the middle 1970s and are typical “legacy systems”. Those systems don’t have adequate evaluation and decision support capabilities, limited effectiveness and cannot adapt to new tax laws or sources of income data. 3. How well did managers at the Bureau address various political and social challenges? I think that all the challenges were addressed very well. Whenever there was an issue, the Bureau has done something to overcome it.

The challenges that Bureau met were:
Social Challenges
a) Privacy
b) Tax payer relations
Political Challenges
a) Gathering data from government and private agencies b) Tax payer relations

Whenever needed, the Bureau has corrected the style of the language in the letters sent to potential non-filers and it has improved the customer relations. Bureau had worked with the state agencies to work out on the agreement of the data-sharing, so it would be beneficial for the state and won’t cross the privacy of the citizens.

4. What advice would you offer Frank Lanza and Mary Yessen? I think, that Lanza and Yessen have to push the government to adopt a uniform identifier across state and federal agencies. It might take time to get approved, but in the long run...
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