Chapter 1 General Government - The California Performance Review

GG 03The California Performance ReviewConsolidate and UpgradeCashiering for State Taxing AgenciesSummaryMail and cashiering methods used by the Board of Equalization (BOE) and the Franchise TaxBoard (FTB) increase processing costs and delay the deposit of funds, which results in a loss ofinterest revenue to the state. 1 While FTB has substantially improved mail and cashieringmethods over the last several years, the mail and cashiering processes of both agencies shouldbe redesigned to use the more advanced technology such as that already in place at theEmployment Development Department (EDD). Additional savings could be achieved if allmail, cashiering, remittance processing and data capture and image management systems ofthe three tax collection agencies could be consolidated.BackgroundThe state has three major entities that collect taxes. BOE administers the sales and use tax,oversees the administration of property tax and collects excise and special taxes. 2FTB administers California’s Personal Income Tax Law, Bank and Corporation Tax Law andHomeowner and Renter Assistance Law and assists in collection of other departments’delinquent debts. 3 EDD collects employer payroll taxes for the personal income tax,unemployment insurance, disability insurance and the Employment Training Fund. 4 Althoughall three of these agencies perform similar functions, they use different levels of technologyand automation to carry out their tasks, with EDD having the most sophisticated system. 5BOE uses an automated mail processing machine to open and sort most of its mail; however, itstill performs some mail and cashiering activities manually, which causes delays during heavymail periods. Thirty-nine percent of all checks received by BOE are not deposited on the sameday they are received. 6 For every day BOE delays making a deposit, the state losesapproximately $8,220 in interest (based on a 2004 interest rate of 1.474 percent per quarter). 7A June 2001 automation project report shows an annual loss of $114,000 in interest (based on a2001 interest rate of 3.445 percent per quarter). 8EDD completed the implementation of the Tax Engineering and Modernization Project in 2001.It was secured through an alternative procurement contract with Unisys Corporation toprocess its mail and perform cashiering activities. Prior to implementing this project, EDD’stax processing methods were similar to those currently used by EDD and FTB. 9EDD’s new system uses advanced technologies such as high-speed mail opening equipment;document imaging, storage and retrieval; electronic document management; Optical CharacterRecognition; Intelligent Character Recognition; and automated workflow. These technologiesA Government for the People for a Change 17