IRS data project boosts debt collection

Since the last tax season, the Internal Revenue Service has brought online one of the largest data warehouses in the federal government to store tax information that will help the agency collect debts from taxpayers.

The Compliance Data Warehouse, which cost the IRS only $2 million, already has generated more than $70 million in additional tax revenue by allowing the agency to quickly discover and examine mistakes in taxpayers' claims, said Jeff Kmonk, an information technology manager at the IRS.

As part of the data warehouse, the IRS is using a software tool called E-Portal Suite, from Viador Inc., to help the 10 service centers sift through massive amounts of consolidated tax return, audit and accounts receivable data stored in the data warehouse to gain a better understanding of tax filing trends. The software provides a way to access and analyze information stored on various systems from a central location.

Kmonk said the purpose of the warehouse is to alert taxpayers in a "friendly manner'' that they have made a mistake on their tax forms. Kmonk said mistakes range from innocent to fraudulent.

"This warehouse is in line with [the IRS'] emphasis on improving taxpayers' service,'' Kmonk said. "We do not go after any particular taxpayer. We look at segments of population - we do not target people.''For example, the $70 million collected through the project so far came from such groups as divorced couples who claimed their children on two separate tax forms during the same year, companies and partnerships, Kmonk said. In such cases, the IRS sent letters to the taxpayers informing them of the mistakes.

In the past, it would have taken the IRS at least eight months to trace mistakes in tax claims because each of the service centers worked on independent computer systems, making it nearly impossible for the headquarters to produce trends and analysis in a timely manner.

But now, with the Compliance Data Warehouse, IRS officials are able to produce comprehensive reports in about 20 minutes that allow the agency to cash in on some of its back debt.

"The IRS is working hard to institute special programs to encourage and help people file timely and accurate tax returns,'' said James Corley, project manager of the data warehouse. "Just as an advertiser needs to measure the success of a particular campaign, the IRS needed a solution that could measure our success in increasing what we call voluntary tax compliance.''

Built and managed by the IRS research organization, the Compliance Data Warehouse currently holds more than 1 terabyte of data and is projected to grow to more than three terabytes.

Viador provides IRS users with interactive query, reporting, charting and analysis capabilities all within a familiar point-and-click browser-based environment, said Steven Dille, vice president of marketing at Viador, San Mateo, Calif.

Ester Brock-Jones, an IRS program analyst, said that the Viador software will help her compare data quickly. Before creating the data warehouse, IRS headquarters would receive faxes from the service centers because it was the only way officials could look at the data all at once, she said.

"With Viador and the [Compliance Data Warehouse], we can be consistent in reporting of data. We are the end user of a product that the researchers developed for us to do our jobs,'' Brock-Jones said.Viador's software also helps the IRS identify and correct the misappropriation of resources within the agency and improve organizational performance, Dille said.

The software's performance management reports would highlight the unbalanced workload as an inefficient use of resources. For example, five people could be working on solving a $1,000 tax discrepancy while only one person is working on a $100,000 discrepancy. Prior to the Viador product, the inefficiency could go unnoticed, Dille said.