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Iowa’s E-File Success StoryPaul E. Benson

Taxpayer Services Manager

MSATA 2006

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Business eFile & Pay Overview

Why did we consider eFile & Pay? Past success with E-Filing of individual

income tax returns Beneficial to taxpayers and department We saw the potential in expanding Wanted voluntary compliance

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Business eFile & Pay Overview

Questions asked included: How to simplify tax filings and collections How to create efficiencies within Revenue How to change the way we transact

business These questions resulted in a 3 year

study which generated even more questions…

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Business eFile & Pay Overview

Questions from the E-Commerce study: How do we market our service? How do we educate our customers? How will we answer their questions? How do we convince them to use eFile & Pay? Will the users, and the department, accept

the change? The decision was made to move forward.

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Business eFile & Pay Overview

eFile & Pay required department changes. Resources were investigated & obtained Shifts in the budget were negotiated Marketing & educational strategies were

developed A new unit was formed & trained All of this occurred while the former filing

process remained in place

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Business eFile & Pay Overview

This overview will describe the strategies that were developed and implemented, including: Creation of the new eFile Service Unit Benefits realized by businesses - and

us Marketing & education initiatives Use of incentives not mandates

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Why Not Mandate? Factors considered:

What would be acceptable to customers? Wanted cooperation, not a mandate

What would policy makers want? No real pressure from legislature

Our success with income tax E-Filing Estimate 67% participation rate this year

Experiences of other states

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Why Not Mandate? Decision was made against mandating

No penalties at this time No returns mailed to permit holders Payment vouchers are mailed Withholding quarterly returns: Web site

only Sales & Use quarterly returns: Web site

only

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Implementation Timeline developed:

Withholding tax in January 2005 Sales & Retailers Use tax in July 2005 Consumers Use tax in October 2005 Withholding VSPs in January 2006 LPG in March 2006 Motor Fuel in July 2006

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eFile Service Unit A new unit was needed.

Decided to place it in Taxpayer Services Education & assistance would be the emphasis Unit could evolve into other areas in the future

Program Manager hired in August 2004 Rest of the unit hired in November 2004 Training occurred until January 2005

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eFile Service Unit Duties of this unit would be:

Answer phone calls Respond to emails Help walk-in customers Help with testing and system

development Input on letters, emails, Web site, etc.

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eFile Service Unit All “new” employees eliminated the risk

of reducing current level of customer service. Originally had 1 manager, 4 full time plus 6

temporary employees. Also added 4 full time backups and 13

emergency backups when needed Wanted adequate phone coverage 1st year

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eFile Service Unit The temporary employees were

originally hired to work the first year while call volume would be high. Two of them worked for 18 months

This would leave a permanent staff capable of handling the level of service needed in the future.

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eFile Service Unit Currently eSU consists of:

1 Program Manager 1 Taxpayer Service Specialist 6 Administrative Assistants 4 emergency backups

We hope to eliminate the backups soon and rely on a permanent staff of 8 or 9.

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Marketing & Education We needed to market & promote.

It would need to be a department wide effort

Who do we target? How do we get the message to them? How do we educate the businesses? What can we do to make this transition

as simple as possible?

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Marketing & Education eFile Governance Team was

formed. The team would oversee the program Consisted of the Director and

managers from most department divisions

Marketing and education plans were developed

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Marketing & Education Mailings:

First attempt to communicate with businesses

Letters sent out 2 months before each tax type went live in eFile & Pay

Withholding letters sent in November 2004 Sales/Use letters sent in May 2005

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Marketing & Education Press Conferences:

Given by the Director of Revenue to alert media the month before each tax went live

TV stations & newspapers picked up the story

Withholding tax in December 2004 Sales/Use tax in June 2005

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Marketing & Education BEN Letters:

Business E-file Number Number used to access eFile & Pay Each business has 1 BEN for all tax types Letter also provided information on accessing

the system, use of the BEN and how to complete their returns electronically

Actual Web site screen shots were included

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Marketing & Education Telephone Scripts:

Developed for businesses that elected to transmit by telephone

Scripts detailed each step of the process Feedback from the scripts has been

positive Provide 18 different phone scripts

8 for withholding tax 10 for sales & use taxes

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Marketing & Education Presentations:

Offered statewide over a two week period Postcards with dates & times mailed to each

withholding agent and sales tax permit holder Done when majority of businesses would be

using the system for the first time 5 Field Taxpayer Service Specialists presented 70 presentations with 4,400 in attendance

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Marketing & Education eLists:

Department has 7 different eLists Use as a communication tool eLists were used 15 times to send out

information regarding eFile & Pay Sent to taxpayers, practitioners &

government entities

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Marketing & Education Reminder Letters:

Mailed to selective businesses Sent as the quarterly due date drew

near Targeted to businesses that had not

yet accessed the eFile & Pay system

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Marketing & Education Web site:

Enhanced to offer as much info as possible Copies of all correspondence (BEN,

reminder) All eFile & Pay presentations (pdf format) PowerPoints showing the screen shots FAQ’s Other miscellaneous items

Pay options, browser info, due dates, holidays…

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Marketing & Education Summary:

70 presentations to 4,400 participants 2 postcard mailings 2 press conferences & articles to the media 15 eLists sent 21 letters generated 12 online PowerPoint presentations Expanded Web site with 30 files of eFile & Pay

info

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Results Methods of using eFile & Pay:

90% of businesses use Web application Remaining 10% use the telephone We anticipate continued Web growth Telephone option will always be

necessary Application down Business PC down Business has no Web access

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Results Electronic Payments:

Over 80% of total money received is sent electronically

Only about 50% of the transactions are electronic

These percents will increase as businesses become more comfortable using the eFile & Pay system

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Results Three major concerns were

answered: Receipts remain steady & timely

Hasn’t been an issue Delinquency rates

They are actually lower Quality of information is consistent

Especially important regarding the local option sales taxes that are reported

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Results Benefits to the department:

Thousands of returns are no longer processed manually

Electronic review replaced manual review

Money is transferred more quickly into the state’s general fund

Record storage is reduced and retrieval is quicker & simpler

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Goal of eFile & Pay70% Participation rate after one

year

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Impact on Business Tax Filings Far better than expected.

Filing for businesses has been simplified

eSU exists to address their questions Volume of E-returns exceeded our

goal

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Impact on Business Tax Filings For the quarter ending 03/31/06:

98% of withholding tax returns filed through eFile & Pay

95% of sales and use tax returns filed through eFile & Pay

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Impact on Withholding Tax Percent of electronic returns by

quarter: March 2005: 87.7% June 2005: 89.6% September 2005: 90.8% December 2005: 97.2% March 2006: 98.3%

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Impact on Sales/Use Tax Percent of electronic returns by

quarter: September 2005: 90.6% December 2005: 92.3% March 2006: 95.3%

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Conclusion We believe education and marketing

helped make eFile & Pay a success. Permanent staff, temporary

employees & department wide backups gave us the customer support we needed. With all available people we could have

up to 41 on the phones

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Phone Statistics Fiscal Year 2006 ACD Phone Call

Volume Total calls: 117,063 Highest volume week: 7,169 (10/24 to

10/28/2005) Highest volume day: 1,737 (10/31/05) Average week: 2,251 Average day: 465

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Phone Statistics Ratio of Transactions to Phone

Calls July 2005 through March 2006

5.4 Quarterly Returns per phone call

9.2 Returns/Payments per phone call

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Phone Calls Received by QuartereFile Service Unit

19,318

22,266

31,62229,900

21,599

33,942

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06

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E-Mail Received by QuartereFile Service Unit

3,064

2,211

4,084

5,326

5,676

3,749

0

1,000

2,000

3,000

4,000

5,000

6,000

Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06

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Conclusion Through the use of technology:

Improved customer service Reduced the taxpayer’s burden Promoted voluntary compliance Created efficiencies within the

department.

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Conclusion Still things to do…

Increase % of electronic payments Businesses eFile return but remit paper

check Need to raise their comfort level

Continue to make enhancements Based on customer feedback Several enhancements made in April 2006

Work on nonfilers Reminder emails & letters after due date

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CONTACT INFORMATION Paul Benson, Taxpayer Services

Manager Desk: 515.281.8966 Fax: 515.242.6487 Email: paul.benson@iowa.gov

Web site: www.state.ia.us/tax