Iowa’s E-File Success Story

1. Iowa’s E-File Success Story Paul E. Benson Taxpayer Services Manager MSATA 2006

2. 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

3. 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…

4. 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.

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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.

12. 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

13. 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.

14. 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.

15. 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?

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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…

25. 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

26. 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

27. 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

28. 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

29. 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

30. Goal of eFile & Pay 70% Participation rate after one year

31. 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

32. 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

33. 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%

34. Impact on Sales/Use Tax • Percent of electronic returns by quarter: • September 2005: 90.6% • December 2005: 92.3% • March 2006: 95.3%

35. 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

36. 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

37. 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

40. Conclusion • Through the use of technology: • Improved customer service • Reduced the taxpayer’s burden • Promoted voluntary compliance • Created efficiencies within the department.

41. 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

42. 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