California Puts Tax Data in Auditors' Hands

The California Franchise Tax Board makes a PASS at improving access to tax information resources.

by / December 31, 1997
The sights, cities and tourist attractions in California are world renowned. The "image" of California living lures people and businesses to move there. Despite its problems, California's urban and rural areas, freeways, colleges and lifestyle are envied around the world.

Keeping California attractive to businesses, visitors and residents costs money (well, except for the weather). The California Franchise Tax Board (CFTB) is the state agency responsible for, among other things, collecting that money. It oversees the state's tax code, audits returns and is responsible for tax collection and enforcement. As the state's tax agency, CFTB relies heavily on published reference materials that detail tax policy, tax laws and tax guides to perform its functions. The agency keeps physical libraries with volumes of documents containing research data and tax policy at each of the agency's 17 tax offices; but since these hard copy volumes can not always be carried around in the field, auditors may not have immediate access to the tax information.

Taxing Frustration

"Critical tax research and tax policy information may not be available to the field auditors during business site visits. The auditor must sometimes collect his compliance queries and the tax payers' questions, travel to the office to 'look it up,' and return to complete the audit. This may delay the audit procedure by days and frustrate both the auditor and the taxpayer," claimed Carlos Zamarripa, audit technology project director at the California Franchise Tax Board.

Online Library

CFTB envisioned adding an electronic reference library solution to a new Professional Audit Support System (PASS), which was developed in a partnership with American Management Systems Inc. The library would make the tax research and tax law information files available for immediate access and viewing by field agents as well as in-house personnel. When the new system is fully installed, field users (via their laptops) and office users (via their LANs) would be able to retrieve all associated tax policy data, which is now stored in hard copy form from several electronic sources, including a CD-ROM network server. This would allow hard copy reference library information to be converted to an electronic format and begin the elimination of third-party hard copy subscription services.

This centralized, online document reference library and distribution "call-up" capability required the purchase of additional storage components (e.g., CD-ROMs and associated network software). The PASS partners liked the idea of utilizing a CD tower for this task because installing it would result in an added bonus -- it would provide multiple access capability from desktop PCs and laptops in the field. And so, the search was on for a CD-ROM networking solution that fit CFTB's needs and "meshed" with its current network components.

Towering Solution

CFTB PASS partners evaluated CD-ROM products from a number of well-known vendors. Most fell short in their ability to integrate and run efficiently on a network. However, after talking to Meridian Data, it was learned that Meridian could satisfy CFTB's capacity and network operability requirements. "The Meridian CD-ROM total solution fits our needs and they understand the intended application," stated Zamarripa.

A 60-day pilot program was commissioned (and is now completed) to test PASS with Meridian Data's CD Net software and the CD Tower capability and functionality. Network CD-ROM access to two Meridian Data model 914 towers (each with 14 CD-ROM drives) was implemented in two offices and included sixty initial users. It was extremely successful.

The CD-ROM server solution easily integrated with the new PASS system hardware and software. Any auditor/user with CD-ROM tower access could call up a tax information research file either by document name, subject or date.

The CD Net software package is the key to making it all work, said Zamarripa. "CD Net oversees network CD tower access and storage and makes the CD tower operation transparent to the users. We've been extremely pleased with the initial performance of the CD-ROM CD Net server operating software. There have been no major problems "talking" to the CD-ROM drives. The server software worked well right out of the box."

The PASS pilot test project met or exceeded performance expectations and ease of use. A full scale rollout, with four CD towers (56, 12X drives) for all of CFTB's 650 users in 17 tax districts has been approved. Full implementation of the technology Project For Audit is scheduled to be completed in one year.

Calling all Info

When the CD-ROM reference library network application is fully functional, users will be able to access it from any node on the network and from their portable laptops. Auditors will have the capability to "call up" nearly any provision of tax law or policy, copy some text and paste it into documents they are preparing for audit.

Some of America's biggest businesses, many with operations in several states (and countries), operate in California. Each one has its own complex tax issues to confront as corporate revenues are derived from a variety of sources, which makes the determination of what they should pay in state and local tax extremely complicated. Sometimes vast sums of tax policy information are required to enable the auditors to do their job and collect the proper tax for California.

Throughout the nation, many state tax agencies have been evaluating electronic alternatives to using printed materials, which must be duplicated at each office, are cumbersome to work with, and are difficult to update and maintain. Most who have made the switch from "paper" have opted for outside online subscription services. But this has some inherent disadvantages too. For example, online services are expensive and do not contain all of the resources needed for tax agency research and reference. Many CD-ROM information resources are not available through online services.

"At the California Franchise Tax Board, we want to go one step further. Our vision is to make tax law and policy information accessible to anyone within our organization, at any time, from anywhere. This strategy will improve the quality of the work and service to taxpayers," stated Zamarripa.

Ron Levine is a writer based in Carpinteria, Calif. He specializes in networking, storage devices and emerging technology.

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