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

2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 1 st year

13. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 30 Goal of eFile & Pay 70% Participation rate after one year

31. 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. 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. 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. 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. 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. 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. 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

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

41. 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. 42 CONTACT INFORMATION Paul Benson, Taxpayer Services Manager Desk: 515.281.8966 Fax: 515.242.6487 Email: paul.benson@iowa.govpaul.benson@iowa.gov Web site: www.state.ia.us/tax