IBM and the State of New York have announced that since IBM analytics technology was deployed in 2010 by the New York State Department of Taxation and Finance, the state has recovered $83 million in delinquent taxes.
This represents an eight percent increase from 2009 is double the average increase in prior years without the new technology capability.
The software involved, the IBM Tax Collections Optimizer, uses a combination of data analytics and other models to create action plans for each tax case. The plan optimizes the order of activities agents will take to maximize the total amount of debts collected while taking into consideration the case load, personnel resources, and the anticipated effectiveness of the suggested actions.
For example, New York State saw significant improvements in the efficiency of their field agents in 2010 versus a year ago, IBM said. Overall collections from field staff increased by 12 percent; the average age of a case when assigned to the field has decreased by almost 10 percent; and dollars per staff day has increased 15 percent across all field offices, and more than 40 percent in the New York City metro office, IBM said.
Meanwhile, another goal of the system is improving the quality of enforcement actions, IBM said. The issuing of -Warrants’ and -Levies’ — while the most effective and widely used enforcement actions — also are the most costly, the company said. Respectively accounting for $250 million and $150 million in revenue each year, efficiency is critical to their use.
More specifically, as a result of the new technology New York State saw increased revenues in 2010 versus year ago:
“??Ã Revenues increased seven percent overall in 2010??Ã Dollars per warrant increased by 22 percent??Ã Overall increase in revenue from warrants rose 13 percent??Ã Dollars per levy increased by 11 percent“
“With IBM’s unique analytics technology, the State of New York has recovered unpaid funds faster, more efficiently and more fairly than ever before,” said Stephen Lafleche, Managing Director of New York State for IBM, in a statement. “In this economic environment, analytics technology is proving its worth by boosting tax collections, enabling states to increase revenue and invest in programs that ensure continued competitiveness.”
The New York State Department of Taxation and Finance 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 its operations. Through this collaboration, IBM and the state developed analytical applications to identify questionable refund claims which — since 2004 — have resulted in savings of over $1 billion.
“Collaborating with IBM we’ve maximized the investments made over the last decade in creating a state of the art collection operation that helps level the playing field for all New Yorkers,” said New York State Department of Taxation and Finance Commissioner Thomas H. Mattox, in a statement. “This system has improved prioritization of actions such as warrants, and enabled field agents to pursue tax debtors more quickly and efficiently. In this difficult economic climate, another very important result for us is that in many cases the analytics inform us that we don’t have to take an aggressive action – a less intrusive path will be as effective. This has allowed us, when appropriate, to lighten our impact on taxpayer credit ratings long term while still collecting outstanding tax liabilities due to New York State. A win for all.”
IBM Research and consultants from IBM Global Business Services developed the IBM Tax Collections Optimizer. The Tax Collections Optimizer is available through IBM Business Analytics and Optimization consulting practice.