State of New Jersey Experiences in Tax Processing

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State of New JerseyExperiences in Tax
Processing
State of New Jersey Division of Revenue
Steve Csogi August 17, 1999

• Making Technology Work Statewide

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Outline

• Background
• DPS Project Scope
• System Architecture
• Forms
• Inscript Processing
• Results
• Next Steps

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Background
State of New Jersey Division of Revenue
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New Jersey Division of Revenue

• Formed in January 1997
• Tax and revenue functions transferred from
• Division of Taxation
• Division of Motor Vehicles
• Division of Commercial Recording
• Department of Environmental Protection
• Department of Labor
• States Lock Box for revenue collections
• States Imaging Center
• 1998 Inscript Customer of the Year - Capture 98

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Tax Processing in New Jersey

• New Jersey Division of Revenue processes all tax
  returns and payments from New Jersey taxpayers
• 8.6 million total returns filed each year
• 3.5 million personal income tax returns filed
• 1.6 million personal income tax returns filed in
  April
• Annual processing requires
• 115 Permanent Staff
• 400 Seasonal Staff
• Outside Contractor to extract and prep tax
  returns

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Where we were

• Processes were manual with traditional data entry
• Aging data entry equipment with excessive
  maintenance costs
• Heads Down data entry resulting in Repetitive
  Strain Injuries and lawsuits
• Data entry operators were being paid incentive
• Shrinking labor market of trained data operators
• Increased demand to do more with less
• Paper returns were kept in files and stored

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Front End Modernization Project

• Four Major Project Phases
• Automated Mail Extraction (OPEX Corporation)
• MPE 5.0 / System 150 / MPS 30
• 6,000/hour vs. 150/hour
• Replacement of Data Entry System to open
  architecture (Unisys/DCR)
• Integration of Image Enabled Remittance
  Processing (Unisys/DP500)
• Full Page Image Processing - Document Processing
  System (Logicon/Northrop Grumman)

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Goals Projected Return on Investment

• Reduce seasonal employee hiring and salary
  expense
• Less traditional data entry
• Faster deposit of tax revenue
• Faster refunds to taxpayers
• Leveraging existing technology investment
• DPS throughput of 38,000 income tax returns per
  day
• Expand functionality to add new forms

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DPS Project Scope
State of New Jersey Division of Revenue
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Project Scope - Size Processing

• Process 4 million returns annually
• NJ1040s received in April must be processed
  through DPS by May 31
• DPS will operate over 2 shifts / 14 hrs per day
• 12 person hours are available for manned
  operations such as scanning and verify
• DPS is available 24 hours per day for unmanned
  operations such as deskew, OCR/ICR, system backup
• Net peak DPS requirement is to process 38,000
  NJ1040s per day to achieve a maximum 6-week
  refund turnaround

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System Architecture
State of New Jersey Division of Revenue
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Functional Architecture

• Image Capture
• Data Capture
• Data Export
• System Services

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Functional Architecture

• Image Capture Subsystem
• Scan Tax Documents and Attachments
• Assign a Document Locator Number and Form Codes
• Handle Input Errors and Exceptions
• Maintain Batch Integrity

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Functional Architecture

• Data Capture Subsystem
• Perform OCR on Machine Print Text
• Perform ICR on Hand Print Text
• Perform Review and Repair for Low Confidence
  Recognition, and Math/Edit Errors
• Convert Image Fields to ASCII Data

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Functional Architecture

• Data Export Subsystem
• Accepts Tax Form Data from the Data Capture
  Function
• Reformats Data into Mainframe Output File Spec
• Transfers Image Data to Backend Imaging System
• System Services
• Overall System Control and Process Flow
• Manages Workflow and Data Structures
• Handles Batch Creation and Processing
• Monitors Local Network Communications

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DPS Architecture
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Forms
State of New Jersey Division of Revenue
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Forms Building Process - NJ1040

• Joint Project between State and Logicon/Northrop
  Grumman
• Three Personal Tax Forms to Process
• NJ1040 Hand Print
• NJ1040 Machine Print
• HR1040 Hand Print (Homestead Rebate Only)
• State Establishes Policy and Form Rules
• Joint Team Designs Forms
• Northrop Grumman Implements Form and System
  Changes
• Post-implementation Changes for Production

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Forms Building Process

• Hand Print NJ1040 Forms
• Two pages/Four form-sides
• Barcodes (2-of-5 Encoding) on each form side
• Multiple Registration Points on each Form-side
• Constrained Boxes
• Number of Fields 101
• Page 1 - 33
• Page 2 - 23
• Page 3 - 19
• Page 4 - 26
• Name and Address Block Processing for both Label
  and Non-label Returns

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Inscript Forms Definition

• Hand Print NJ1040
• 2 Physical Pages - 4 Recognized form-sides
• One FDF/form-side - 101 Total Fields
• Implements 16 Math and 110 Edit Rules
• Registers forms using pre-printed registration
  marks
• Contains ICR and MarkSense fields
• Recognition rate thresholds typically set at 85
• Page End Rule Block enforces cross-field
  validation
• Output file passes through specific Unix
  processes then on to the Verify function

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Forms Building Process

• Machine Print NJ1040 Forms
• Supports 35 Tax Software Versions
• One page/One side
• Large Scan Band Recognition Area
• Barcode on Page 1
• Scan Band Registration Corners
• Number of Fields 101
• Name and Address Block Processing of Machine
  Printed Address Data

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Inscript Forms Definition

• Machine Print NJ1040
• One Physical Single-sided Page - One recognized
  form-side
• One FDF - 101 Fields
• Implements 15 Math and 96 Edit Rules
• Registers form using corner of scan band
• Two-step Processing
• Column-mode
• Field-mode
• Page End Rule Block enforces cross-field
  validation and syntax checking
• Output file passes through specific Unix
  processes then on to the Verify function

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Forms Building Process - WR30

• NJ1040 Success Builds Foundation for New Forms
• DPS Now Processes Wage Reporting Forms (WR30)
• WR30 Dropout Form
• WR30 Plain Paper Spec (PPS)
• Form Processed Quarterly
• 180,000 Employers file each period
• 144,000 single-page forms
• 36,000 multi-page forms result in 130,000 imaged
  pages
• 1.3 million employee records processed/quarter
• Over 32 million fields recognized per year
• States data base used to validate employer and
  employee data each quarter and reduce manual data
  verification

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Forms Building Process

• WR30 Dropout Form
• Variable Number of Pages
• Minimum One page/Two form-sides
• Front-sides Pre-printed
• Add Employees on Back
• Barcodes (2-of-5 Encoding) on each form side
• Multiple Registration Points and Constrained
  Boxes
• Max Fields/page
• Front side 68 and 100
• Back side 28
• Pre-print 99 employees Max

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Forms Building Process

• WR30 Plain Paper Spec (PPS)
• Multiple Tax Software Supplier Versions
• State-specified Printed Page Layout
• Multiple, single-sided Pages
• Maximum 99 employees
• Text-line Registration
• Max Fields/page 108

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Inscript Processing
State of New Jersey Division of Revenue
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Inscript Environment

• Inscript 7.0
• Fourteen (14) Pentium 333 MHz
• 128 MB RAM
• Windows NT Server Platform
• Operates 24 hrs/day

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Inscript Performance Metrics

• NJ1040 Page Processing Rates
• 1997 Rates - Inscript 5
• Hand Print 5-8 sec/page (4 pages)
• Machine Print 14-20 sec/page
• 1998 Rates - Inscript 7
• Hand Print 2-5 sec/page (4 pages)
• Machine Print 5-7 sec/page
• Average Rate Increase Range 120-180

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Inscript Performance Metrics

• NJ1040 Field Recognition Rates
• 1998 Hand PrintAverage 92.8
• Page 1 - 93.7
• Page 2 - 85.3
• Page 3 - 96.5
• Page 4 - 95.1
• 1998 Machine Print
• Page 1 - 98.1

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DPS Results
State of New Jersey Division of Revenue
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1998 Volumes Throughput

• Scanning
• Exceeds 38,000 returns/day
• 10 images/return equates to 400,000 pieces of
  paper and images/day
• Inscript Processing
• 90,000 Pages processed/day
• 26,000 Machine Print
• 64,000 Hand Print
• Verify
• 38,000 returns/day
• 1/2 hour/batch vs. 2 hours/batch in conventional
  data entry

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Projected 1999 Volumes Throughput

• Scanning
• 58,000 returns/day
• Nearly 500,000 images/day
• Inscript Processing
• NJ1040
• 90,000 Form-sides processed/day
• 3.8 M fields/day
• WR30
• 64,000 Form-sides processed/day
• 800,000 fields/day
• Verify
• 58,000 returns/day

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Expanding Technology Base

• Sub-system 1995 1996 1997 1998 1999
• Scanners 3 6 8 8 9
• CPU Modules 1 2 6 6 6
• Inscript Server 6 9 14 14 14
• Verify WS 10 20 33 63 63

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Peak Performance

• Scanning
• 04/30/1998 50,300 page sized documents / 553,300
  pages
• Recognition
• 04/27/1998 5.7 million fields
• Verify
• 04/27/1998 57,546 page sized returns
• Image Committals
• 04/28/1998 895,906 pages
• 633,006 page sized / 262,900 coupon sized

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Next Steps
State of New Jersey Division of Revenue
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Processing Changes

• Implement the 1999 NJ1040 Income Tax Form
• Continue Processing Wage Reporting Form (WR30)
• Integrate Key-From-Image Functions
• Implement Page-size Remittance/Document
  Processing
• Implement Senior Citizens Property Tax Freeze
  Form
• Provide Imaging-based services to other state
  agencies as a result of consolidation efforts

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Upgrade DPS Components

• FormWare software
• Add Formware 2.5 Capabilities
• System Software
• Operating System
• Kodak Capture Subsystem
• Expand System Configuration
• Adjust for increased workload and throughput
• Allow for additional levels of redundancy
• Adjust for added functionality
• Year 2000 compliance (complete 8/1999)