December 1998

Forms Automation Processing Survey

tates Participating in Survey

• Alabama• Arizona• Arkansas• California• Colorado• Connecticut• Florida• Illinois• Iowa

• Kansas• Kentucky• Louisiana• Maine• Maryland• Massachusetts• Minnesota• Missouri• Montana

• New York• North Carolina• Pennsylvania• Utah• Virginia• Washington• West Virginia• Wisconsin• Wyoming

Part One: General

Questions

Types of Tax Forms Processed by States

W ithholding

Sales and Use

Individual Estimated

Individual Income

Corporate Estimated

Corporate Income

CorporateIncome

CorporateEstimated

IndividualIncome

IndividualEstimated

Sales and Use

Withholding

7

9

5

12

10

9

17 States Responding

Automation Equipment Results

0

2

4

6

8

10

12

14

16

Checksposted faster

Betterstatistical

analysis

Highertaxpayer

satisfaction

Accountsposted faster

Greaterefficiency

Fewer hardcopies

archived

Fewer full-time

employees

Reducedcosts

Less dataentry

Lowersystem

suspensionrate

PositiveResultsExperienced

NegativeResultsExperienced

17 States Responding

12

6

0

3 3

1

0

2

4

6

8

10

12

FewerEmployees

MoreEmployees

No Change

FullTime

PartTime

Effect on Number of Employees

14 States Responding

109

Yes :10

No: 9

Taxpayer Education Efforts

NOYES

19 States Responding

Part Two: Software

Developer Approval Process

Number of Approved Software Developers

12

25

98

70

2520 20 22

28

17

35

15

40

160

45

82

5550

10

45

1218

0

20

40

60

80

100

120

140

160

180

AL AZ CA CO CT FL IL IA KS KY LA ME MA MN MO NY NC PA UT VA WA WI

0

5

10

15

20

25

'

' 21 7 16 8 0 5

Written Notice

Telephone FAX/e-mailApplication Required

Approval Fee

Other

Method of Approving Software Developers

24 States Responding

0

2

4

6

8

10

12

14

16

18

6 17 11 3 2 15 6 5 4

Exact Duplicate

Latitude BarcodeAutomated

OutputDropout Ink Scan Line

Same Size Font

Same Style Font

Other

Tax Form Requirements for Reproduction

24 States Responding

21

15

20211920

0

5

10

15

20

25

Corp.Income

Corp.Est.

Ind.Income

Ind. Est. Sales &Use

WH

Tax Forms Permitted to be Reproduced24 States Responding

21

3

Yes: 21

No: 3

Required Approvals For New Editions

No Approval Required

Approval Required

3

10

121 or 23 or 45 or 6

Number of Employees Authorized to Approve Substitute Tax Forms

25 States Responding

1-2

5-6

3-4

0

2

4

6

8

10

12

Listed on WebSite

Logo List No PublicRecognition

Recognition of Approved Software Developers

0

1

2

3

4

5

6

7

8

9

BusinessStaff

IT Staff Contractors Vendors Banks Other

Defining Software Developer Forms

14 States Responding

Statistics on Software Developer Forms Processed

20

3

Yes

No

YES

NO

7

17

2

0

5

10

15

20

Very Satisfied Satisfied Unsatisfied

Satisfaction With Quality of Substitute Tax Forms

Processing Unapproved Forms

Send Back to

Taxpayer:3

Process Manually:

18

Reasons for Unapproved Forms

12

1

20

15

0

5

10

15

20

25

SubmissionWithout

Approval

Failed toSeek

Approval

SmallVendors Not

Approved

DownloadedWeb Form

22 States Responding

Part Three: Equipment and Technology

States Using Barcode or Form ID

0 2 4 6 8 10 12

3 of 9

Form ID

2 of 5

2-D 17 States Responding

2 4 611 11

7

0

5

10

15

TaxpayerInfo.

Page No. Vendor ID Tax Year Form No. Revisionor Ed. No.

3-D

Colum

n 1

Information Contained in Barcodes

13 States Responding

3

17

3

13

4

15

0

2

4

6

8

10

12

14

16

18

Currently Use Plan to Use Researched

Yes

No

Use of 2-D Barcode

41

17

0

2

4

6

8

10

12

14

16

18

Data Capture Imaging Both

Purpose of Forms Automation

22 States Responding

States That Save Paper Tax Forms

0

1

2

3

4

5

6

7

Savedpermanently

1 year orless

2-3 years 4-5 years 6-7 years Not saved

24 States Responding

Types of Technology In Use

24

11

19

1

9

3

0

5

10

15

20

25

30

ElectronicFiling

Fill-InForms

Telefile

Currentlyin Use

Future Use

25 States Responding

Types of Technology Planned

• EDI

• Telefile

• FDI Fax

• W-2 ELF

• Internet Filing

• Barcode for Notices

• CD-ROM File

• IVR

• E-mail Attachments

• PC Filing

• Imaging

• Electronic Liens

Part Four: Printing and Mailing Tax Forms

Printing Facility

1

7

18In-house

External

Both

In-house

26 States Responding

Both

External

Satisfaction with Print Quality

9

15

89

22

0

5

10

15

20

25

In-House External

Very Satisfied

Satisfied

Unsatisfied

Frequency of Address Updates

0

2

4

6

8

10

12

14

Daily SemiMonthly

Monthly QTR Biannual YR AsNeeded

Individuals

Businesses

Forms Mailed with Labels or Envelopes

14

1821

19 19 19

0

5

10

15

20

25

Corp.Inc ome

Corp.Es t.

Ind.Inc ome

Ind. Es t. Sale s &Us e

WH

All States Responding to Survey Send Envelopes or Labels With Some Tax Forms.

Conclusion:

• Shift in Technology to 2-D barcode and Form ID

• Implementation of Automated Processing Results in employee cost savings

• Most states gradually add tax types to automated equipment