A program to overhaul the way that tax returns are handled in Kentucky is netting big bucks for police and other vital services. But there’s also a reason for the public to like it: Those who have paid more than their fair share are getting their money back faster than ever.
A fair tax collection system is the ideal for every government. For Kentucky, that came with the use of analytics with the help of Council Lead Partner SAS Institute. The result is happier taxpayers while reducing the need to make unpopular budget cuts.
Helping to offset budget gaps
For several years, the state battled increasing budget shortfalls that forced it to lay off police officers, cut resources for updating the sex offender database and other work. The state finally managed to post a budget surplus last year, but that was because the economy grew more than expected.
Even though state tax collectors were already using a fraud prevention system, it felt there was an opportunity to use predictive analytics to do more, both to ease budget pressure when growth slowed down, but also improve service to those taxpayers who are due refunds.
(Almost) instant millions
Kentucky is using the predictive analytics from SAS in addition to its existing system. In just the first few months, the new analytics helped the state stop an additional $1 million in fraud. The state expects that figure to double by the end of the first year.
Predictive analytics works by helping tax examiners focus their efforts on the returns most likely to contain issues. Tax returns are now scored every night. When examiners arrive the next day, their attention is immediately drawn to those with potential issues.
But the state emphasizes that collecting more is only half the equation.
"Our job is not just to collect taxes, but to get taxpayers the money they are owed as quickly as possible," said Mack Gillim, Executive Director of the Office of Processing and Enforcement for the Kentucky Department of Revenue.
The same analytics that draw the examiners’ attention to questionable returns can also help rapidly clear returns where there aren’t any issues. That helps the agency with its goal of sending refund checks to deserving taxpayers within 14 days.