The two universal constants of public opinion are that people hate paying taxes and want better public services. The South Carolina Department of Revenue recently developed a Web-based application that promises to increase efficiency and raise new revenues.

The only thing that will exasperate a constituent faster than new taxes is the idea that someone else is getting away without paying his or her share. A recent study of e-government by NIC found that the majority of citizens and businesses support the sharing of information among government agencies to identify incidents of fraud. It is estimated that four percent to six percent of all potential filers fail to file their state income taxes. This translates into millions of dollars of lost revenue to states every year. The identification of these individuals is a key strategic issue for the Department of Revenue. By utilizing Internet technology to capitalize on existing data resources that have been difficult to access and share in the past, a previously untapped source of revenue is being pursued.

Tracking Wages

The Employee Wage Retrieval System is composed of wage data for all individuals employed in South Carolina and their corresponding employer demographic data. Auditors and tax researchers can identify underfilers by comparing earnings information submitted to the agency by employers, such as tax returns and W-2s, with the actual earned wages of an individual. The system provides a link to the accounts of taxpayers registered on the agencys mainframe database that can alert a user to the filing status of an individual. The systems ad hoc query capabilities allow for more focused, faster audit methods to be used in detecting potentially fraudulent employers and employees.

Internet technology is allowing more creative techniques to be used by different types of users on standardized data to identify individuals who previously slipped through the cracks. Ricky Taylor, manager of Office Audit at the Department of Revenue, is quick to point out that the majority of nonfiling incidents are not fraudulent in nature but are a result of poor taxpayer education. For example, an individual employed by a South Carolina business but living in a bordering state may be unaware that he owes income tax to South Carolina. This is an important point in that the goal is not only in acquiring revenue for the present but in promoting voluntary compliance in the future. Accurately and quickly identifying these individuals prevents the citizen from incurring additional penalties and increases total revenue to the state. In accomplishing this, the system will act as a first step in an evolution toward making data more sharable and available across groups and eventually to the general public. In taking this step, the agency moves closer to creating a more robust e-government presence, allowing citizens and businesses to interact with government on an anytime, anywhere basis.

A Changing Environment

Rural is no longer synonymous with isolated. Governments in traditionally agrarian states such as South Carolina are discovering more of their citizens are going online and are demanding government services be provided via the Internet. Over 43 percent of households in South Carolina own a computer and 32 percent of households in the state have Internet access. The number of citizens going online at a national level has been on a steady climb, with rural areas growing at a faster rate. A recent study by NIC found that 65 percent of adults online have executed at least one e-government transaction. It has been projected that by 2002, more than one-third of the population will use the Internet as their primary source for accessing government services.

While citizens interest provides incentive for state governments to move toward Web-based applications, they are not the primary deciding factor. Political mandates act as the main force behind innovation at the state level. These mandates are influenced

Michael S. Parrott  |  Special to Government Technology
Kirk D. Fiedler  |  Special to Government Technology