The state, like many around it, is moving ahead with an initiative to revamp a 30-year-old legacy system with an off-the-shelf solution. The phased project is set for completion in fall 2021.
The gradual move toward an affordable, modern way for state governments to collect taxes from their residents has seen national traction as agencies transition away from legacy systems and toward off-the-shelf solutions.
New Hampshire recently began reducing its dependency on a 30-year-old COBOL-based tax system built in favor of something that both staff and residents could easily navigate. The first wave incorporated three tax categories including meal and rentals, nursing facility quality assessments, and Medicaid enhancement taxes, representing roughly 9,000 taxpayers in the state. All totaled, the Department of Revenue Administration (DRA) collects more than $2 billion in taxes each year.
DRA Commissioner Lindsey Stepp said her agency will be unplugging older methods — like e-file and telefile — at the end of the year to fully transition first-phase taxpayers to the new online portal Granite Tax Connect (GTC).
The GTC allows taxpayers to file and amend returns, view balances, schedule payments and view electronic versions of mailed correspondence, which is provides users with more information than the methods currently available. Tele-file is restricted to an 800 number, automated prompts and operators, whereas e-filing’s features are limited to the filing and payment of taxes with an option to view previously filed transactions.
A popular vendor in the Northeast is Colorado-based FAST Enterprises and its product GenTax, which is also used by Massachusetts, Connecticut and Vermont.
“We have a nice group here in New England with the states being relatively close together where the commissioners and other staff interact fairly regularly,” Stepp said. “We’ve been able to reach out to neighboring states or New England states to get some feedback or just ask general questions about the system.”
The DRA’s three-phase rollout of GenTax started at the end of October and was the culmination of four years of research, RFP processes and staff training, Stepp said. The seven-year contract with FAST Enterprises costs the state about $29.5 million in total and includes four years of support and maintenance.
James Harrison, a consultant for the vendor, said the cost of the products are dependent on the jurisdiction’s size and complexity of the government’s tax structure.
“We are pretty optimistic that as long as we keep doing a good job there will be lots of work,” Harrison said. “It’s not the case where you’re just going to get a whole bunch of states all of a sudden signing up. The procurement process is generally very slow.”
So far, the solution is being used in 29 states.
Stepp said the company’s track record was a contributing factor in the DRA award decision. Twenty FAST employees relocated to help DRA implement the vendor solution, which has been named Revenue Information Management System (RIMS).
Lisa Crowley, the DRA project director overseeing the RIMS rollout, said she and her team gleaned insights that will prove instrumental in subsequent phases, such as being proactive during the process.
“Myself, coming into this I’ve never directed an IT project in my life,” Crowley said. “It was huge undertaking for me and a huge learning experience. I really felt like in rollout one I managed it in a reactionary way because I felt that I was constantly looking to my FAST counterpart and saying, ‘OK, what’s next? What can I expect?’”
The largest hurdle, she said, was tackling the tax-filing upgrade. Because the department hadn’t seen a project of its magnitude in recent staff memory, it was important for state subject-matter experts to understand taxpayer needs and the capabilities of RIMS before delegating customizations to FAST staff.
Staff received training in the lead-up to launch by duplicating part of their workload in a sandbox environment. Stepp said this allowed them to get comfortable with RIMS and mitigated the risk for error after the FAST product went live.
After the second rollout, which is scheduled for fall 2020, the current system will be shut off. Phase two will include business enterprise tax, business profits tax, communications services tax, and interest and dividends tax, which accounts for roughly 139,000 taxpayers. Miscellaneous filings like tobacco tax, property tax, timber tax, etc. will be incorporated into RIMS in final rollout, adding the remaining 30,000-40,000 taxpayers to the system.
“We were able to get off the ground with a manageable amount of work because at the same time as taxpayers are learning how to utilize this system, we are as well,” Stepp said.
The agency expects taxpayers will continue to use telefile and e-file methods until those options are taken offline and a spike in GTC usage is anticipated in the new year as people start to use the online portal as their primary method for tax payment. Phases two and three will feature a similar two-month adjustment period before filings in each phase move to GTC and RIMS in 2021.
Editor's note: The FAST Enterprises contract amount was adjusted for accuracy.