Wisconsin Dept. of Revenue

1. Wisconsin Dept. of Revenue Data Warehouses/Data Mining Janna Baganz Amy Bomkamp August 22, 2006

2. Corporate Data Warehouse Contractor Hired to Build • Project began during 1999 and available July 2000 • STAX available for individuals • Maintenance efforts difficult

3. Corporate Data Warehouse Information Included in Data Warehouse • WI corporate franchise/income tax return information • WI sales/use tax return information • Sales/use tax registration information • Audit history and results

4. Corporate Data Warehouse Successful Projects • State franchise/income taxes are not deductible for WI tax purposes • Addition modification is required to go from federal taxable income to WI taxable income • Addition modification previously computed less than WI net franchise/income tax paid • Corp Office Audit Project • Over $27M of tax assessed

5. Corporate Data Warehouse Successful Projects (continued) • Dept. of Workforce Development (DWD) Project • Corporations filing WI unemployment tax returns with DWD and not filing WI franchise/income tax returns • Over $13M of tax assessed + ongoing compliance

6. Corporate Data Warehouse Successful Projects (continued) • Corporations with more than $1M of gross receipts and little or no use tax reported for specific counties where audits could be assigned • Used for field audit selection for certain district or branch offices • Over $10M of tax assessed SUCCESS SUCCESS SUCCESS SUCCESS SUCCESS

7. Corporate Data Warehouse Successful Projects (continued) • Large corporations located in Minnesota with more than $10M of gross receipts • Need was for audits for our MN office • Large Case Field Audit Project • Further refinement was needed • Almost $8M of tax assessed

8. Corporate Data Warehouse Successful Projects(continued) • Corporations with large gross receipts reporting little or no use tax • Discovery project • Letter sent to taxpayer with worksheet to compute additional use tax due • Over $2M of tax assessed • Didn’t close years for field audit

9. Individual Data Warehouse Build Data Warehouse In-House • Integrated team across IT and Business Units • Business users control what data to load and surface from the data warehouse for reporting • Phased approach to provide value along the way • Keeps technical and business knowledge in-house. • Internal team researched tools and selected lowest cost of ownership with robust ETL and data quality capabilities. Chose SAS platform.

10. Individual Data Warehouse Build Data Warehouse In-House (continued) • Phase 1 - included 3 sources (WI tax returns, IRS individual tax returns, and electronically filed W-2 forms) • Users received five hand-coded reports for audit identification and two look-up reports • Phase 2 – IRS informational returns • Users received end-user query capability and portal access

11. Individual Data Warehouse Build Data Warehouse In-House(continued) • Phase 3 – Dept of Transportation information • Vehicle title, drivers license and registration information • Additional end-user query capability • Phase 4 – Integration of Corporate and Individual Data Warehouses

12. Individual Data Warehouse Iterative Approach

13. Individual Data Warehouse Advantages of the Individual Data Warehouse • Matching individuals and entities allowing reports across data sources • Summarizing various data to the level of tax return information for reporting purposes • Identifies and tracks relationships embedded in existing data • Provides ability to track non-filer activity

14. Individual Data Warehouse Advantages of the Individual Data Warehouse (continued) • Continually modifying based on user input • More useful with each additional data source available • Useful for many bureaus – Audit, Compliance, Research & Policy, etc. • Reports identifying under-reporters

15. Individual Data Warehouse Advantages of the Individual Data Warehouse (continued) • Asset report – all information in one location • Address report • End-user querying ability for audit selection • Write-back capability

16. Data Warehouse Portal

17. Asset Report

18. Asset Report (continued)

19. Asset Report (continued)

20. Asset Report (continued)

21. End-User Query Capability

22. Data Mining • In addition to purchasing the SAS tools, we also purchased a Proof of Concept for data mining • SAS Advanced Analytics Team performed a similar project for the IRS on individuals with gross receipts greater than $250,000 • Submitted data to SAS from WI tax return and federal tax return data on individuals from 2000-2004, as well as historical audit information

23. Data Mining • Information sent to SAS had personal information removed and was assigned a random identifier for matching purposes • We met with them multiple times regarding WI tax specific information • A list of 5,000 taxpayers with various score ranges was provided for testing purposes to help SAS refine the models

24. Data Mining • Fourteen auditors completed testing of initial list on July 31, 2006 • A final audit list will be provided by the end of September 2006, which includes the following two scores for each taxpayer for each year: • Under-reporter score • Monetary indicator score

25. Summary • Corporate tax data warehouse efforts have been successful • Individual tax data warehouse infrastructure is in place and end-users are impressed with query and reporting capabilities • Anticipating positive results from data mining efforts

26. Questions?