Crowdsourcing During Tax Season Saves Departments of Revenue Millions

Government agencies are crowdsourcing data entry to help manage the workload during peak tax processing seasons.

by / September 19, 2013

Crowds are smarter than individuals. That’s the thesis of a best-selling book by James Surowiecki called The Wisdom of Crowds, and it’s what organizations everywhere are discovering firsthand as they apply crowdsourcing to different areas of their business. In past articles, Government Technology has showed how trends in crowdsourcing have helped government tackle new problems, increase civic engagement and improve disaster response.

Crowds aren’t just smarter but they can be more efficient, too, saving departments of revenue millions of dollars during peak processing seasons. Don Mackenzie, director of business process crowdsourcing for Waltham, Massachusetts-based Lionbridge Technologies shared how the practice has been saving organizations money for the past 10 years.

During tax season, Mackenzie said, every department of revenue considers the same options – either hire a temporary workforce to handle the huge demand to get out tax returns on time, or radically restructure the organization. Between all the training, extra costs and stress these options  can represent, many have found crowdsourcing to be a better alternative, he said.

Just as cloud computing can be scaled and paid for as needed by the organization, crowdsourcing for data entry works in a similar fashion. “It really gets rid of that bottleneck for peak processing,” he said. “Now they can process much, much quicker. They can get returns out faster. You can use it as much or as little as you need.”

By using a distributed workforce, consisting of people around the country working from home, organizations can farm out their data entry. Although the amount of money saved varies based on the size of the organization, Mackenzie has seen savings from $75,000 to millions. In one Midwestern state that opted not to be identified, the cost of processing forms went from 67 cents per form to 35 cents per form using a document capture platform, Mackenzie said, adding that 5.1 million forms were processed in this manner.

Ensuring data security 

According to Mackenzie, the number one concern organizations have when crowdsourcing this task is security. In addition to encrypting the data and working over an encrypted connection, the data is also scrambled before being encrypted. Furthermore, data is shuffled around and removed from context as an added protection. Social security numbers are cut in half, for example, so a single person never sees an entire social security number or knows which record it goes with. Much like an assembly line in a factory, no one person sees the entire process. And all workers are extensively screened and their locations monitored, Mackenzie added.

“From a technology standpoint, it’s a really stable platform,” he said. “Everything’s built in .NET. There’s nothing about it that’s all that exotic. We use SQL server, so it plays very nice within these environments and it’s really designed to be part of the document capture workflow in a module, not necessarily a standalone product.”

Lionbridge has worked with many departments of revenue around the country, including Pennsylvania's, which uses their crowdsourcing platform to process more than 10 million paper tax returns each year.

Colin Wood former staff writer

Colin wrote for Government Technology from 2010 through most of 2016.

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