Since 2001, the Virginia Department of Taxation (VATax) has been consistently recognized as an innovator in using technology to improve the efficiency of state tax return processing. In that year, CGI-AMS installed Datacap Taskmaster at the Richmond processing center, replacing a manual data entry system. In doing so, Virginia became one of the first states to implement two dimensional (2-D) barcode capture capabilities to further automate the processing of about 2 million tax returns annually. As a result, VATax won the coveted Federation of Tax Administrators’ 2001 Management and Organizational Initiative Award.
While the use of electronic filing is growing every year, expensive data entry departments in federal, state, and local government are still needed to handle the significant number of paper returns. The use of software to compute tax returns continues to grow, but most software users file returns on paper, suggesting that they are still more comfortable sending a paper return through the mail.
In fact, today, approximately 65% of the paper forms received by Virginia Tax are computer-generated. Even though the information was originated electronically, the taxpayer is still printing and mailing it. This ordinarily requires tax processors to re-key the form, which introduces errors, delays the processing, and consumes data entry time and money.
However, most consumer tax preparation software, such as H&R Block and TurboTax, prints a 2D barcode on the return. This 2D barcode contains detailed information from the completed return. If this barcode is properly scanned and captured by the tax department, significant data entry time and effort is saved.
Unlike the one dimensional barcodes typically used to store SKU information in retail applications, a 2-D barcode stores information along the height as well as the length of the symbol. Since both dimensions contain information, techniques must be used to prevent misreads and produce an acceptable read rate. Misread prevention is relatively easy when used in conjunction with optical character recognition (OCR), which compares the 2D barcode data against the printed information on the return.
By implementing Datacap Taskmaster for the data capture of printed tax returns with OCR, VATax was able to ensure that 2-D barcode capture is accurate and valid. Currently, Taskmaster is being used to automate the capture of about 1.5 individual full-time resident tax returns for Virginia.
The process begins with 5 ImageTrac scanners from Imaging Business Machines Ltd. (IBML), which scan returns, W2 forms, correspondence and envelopes without taping or special preparation. If there is 2-D barcode on the return, the ImageTrac reads and decodes it, then forwards a TIFF image to Datacap Taskmaster.
Taskmaster extracts data off the forms and attachments, using intelligent character recognition (ICR) for handprint and OCR for machine print. If a 2-D barcode is evident, printed data is compared against barcode data. If there is a discrepancy, VATax has configured the system to default to printed data.
Taskmaster employs a number of automated validations to make sure that data is accurate, such as table lookups for zip code and Social Security Numbers, math calculations and cross-field checks to verify that totals are accurately carried over from page to page or correctly entered from an attached schedule. Verified data is routed to the VATax accounting system, and returns are indexed for archival purposes in a FileNet document management system.
Processing productivity has almost doubled with Datacap Taskmaster. When compared to tax returns that are entered manually into the system, such as non-resident returns and prior year filings, manual data entry takes nearly twice as long.