The Indiana Department of Revenue has begun phasing out its 25-year-old legacy tax system in favor of an integrated software solution. The $77.7 million project is expected to be complete in 2022.
The Indiana Department of Revenue (DOR) today launched the first phase of its four-pronged approach to modernizing the tax filing system to be more user-friendly for businesses, local governments and residents in the state.
Project NextDOR, as the initiative is dubbed, began in September 2018 after FAST Enterprises was awarded an RFP contract to provide its fully integrated software solution, GenTax, to accommodate the roughly 65 different tax types in Indiana.
The $77.7 million deal laid out a four-year implementation of the internal Indiana Tax System (ITS) and the public-facing Indiana Taxpayer Information Management Engine (INTIME). Of that larger pot of money, about $60.2 million has been allocated by the state Legislature for the modernization effort and an approximate $17.5 million is earmarked for 10 years of maintenance.
DOR Commissioner Adam Krupp said the end goal is to shed the department's 25-year-old legacy system to meet the needs of the stakeholders who ultimately use it.
“Some of our fellow agencies in Indiana have online customer portals that folks can use 24/7 from the comfort of their own home and on their own schedule,” Krupp told Government Technology. “We would like to offer the ability to do that, as well. Having a new customer portal with e-services to perform transactions and to interact with the Department of Revenue in an electronic way is coming as part of project NextDOR, and we’re excited about that.”
The first phase encompasses corporate taxes, which includes financial institutions, nonprofits and partnership returns, among others. The three other phases include sales and withholding taxes for local governments, individual taxes, and special taxes such as fireworks, alcohol and fuel. Entities and people will be able to create an INTIME account as each aspect of NextDOR comes online. INTIME will allow for secure electronic communication, tax transcripts, the filing and remittance of sales taxes, automatically generated distribution reports for counties and more. NextDOR rollouts are slated for around Labor Day until 2022.
“It’s the No. 1 priority for the Department of Revenue and it will continue to be the No. 1 priority until we fully implement the system and complete Project NextDOR,” Krupp said. “I would certainly add that it was one of Gov. [Eric] Holcomb’s priorities as soon as he entered office. He has his pillars and priorities of what he is focusing on in his administration [and] the fifth pillar, out of five, is delivering great government service to the taxpayers of Indiana at a great value.”
Indiana will join more than 25 states that have deployed FAST Enterprises’ GenTax product. According to Krupp, DOR staff traveled to South Carolina, Georgia, Wisconsin and Illinois before starting the RFP process for feedback and to distill a set of best practices.
“They have implemented a fully integrated tax system in 26 or so states prior to Indiana,” he said. “Their methodology is proven, tested, it’s reliable and the state of Indiana, here at the department, we did a lot of due diligence in terms of reaching out to other states that have implemented FAST’s system.”
He said FAST Enterprises and his staff recommended the phased model and chose corporate taxes as the initial foray due to the smaller number of taxpayers — 340,000 — in that category compared to individual filings, which stand at around 3.5 million.
Department CIO Kevin Gulley said training approximately 700 personnel on the FAST Enterprises software has been the most significant obstacle to the project.
“I think since our partner has done it so often and so well, there’s a lot of confidence in the implementation itself,” Gulley said. “The challenges are usually around the people, the operational readiness and the training. For a period of time during the four rollouts we’ll have a complex environment up of the legacy environment and the new, transformed environment.”
Training and testing on each new facet of the ITS will begin about four to five months before the release date of each subsequent phase. As the FAST Enterprises solution takes over a functionality of the legacy system, the antiquated program will be partially retired until it is ultimately eliminated in 2022.
The selling point that won over legislators and staff has been the program’s ability to make the department faster and paperless, for the most part, in its communications with taxpayers.
“As we move forward, especially for individuals, individuals file returns that are occasionally missing documentation that supports either the credit or the deduction,” Krupp explained. “Then we send them a letter and say, ‘thanks for filing, however, we need some supporting documentation.’ Then they have to mail that in, and the typical processing plays out, which can lead to errors because it’s a human process. With the INTIME portal, those individuals will be able to scan and transmit that supporting documentation to us through their INTIME account in a secure way.”
How businesses, local governments and residents file taxes won’t change, Krupp said. Submissions from the various electronic tax preparers will be aggregated into ITS and then the INTIME portal will be available for local governments, businesses and residents to interact with the agency.
“We think the ability to send and receive correspondence through INTIME is a game changer for the citizens of Indiana who are used to communicating with the Department of Revenue in a certain way,” Krupp said.