Wisconsin Dept of Revenue Data Warehouses Data Mining Janna

Wisconsin Dept. of Revenue Data Warehouses/Data Mining Janna Baganz Amy Bomkamp August 22, 2006

Corporate Data Warehouse Contractor Hired to Build • Project began during 1999 and available July 2000 • STAX available for individuals • Maintenance efforts difficult

Corporate Data Warehouse Information Included in Data Warehouse • WI corporate franchise/income tax return information • WI sales/use tax return information • Sales/use tax registration information • Audit history and results

Corporate Data Warehouse Successful Projects State franchise/income taxes are not deductible for WI tax purposes • Addition modification is required to go from federal taxable income to WI taxable income • Addition modification previously computed less than WI net franchise/income tax paid • Corp Office Audit Project • Over $27 M of tax assessed

Corporate Data Warehouse Successful Projects (continued) Dept. of Workforce Development (DWD) Project • Corporations filing WI unemployment tax returns with DWD and not filing WI franchise/income tax returns • Over $13 M of tax assessed + ongoing compliance

Corporate Data Warehouse Successful Projects (continued) Corporations with more than $1 M of gross receipts and little or no use tax reported for specific counties where audits could be assigned • Used for field audit selection for certain district or branch offices • Over $10 M of tax assessed

Corporate Data Warehouse Successful Projects (continued) Large corporations located in Minnesota with more than $10 M of gross receipts • Need was for audits for our MN office • Large Case Field Audit Project • Further refinement was needed • Almost $8 M of tax assessed

Corporate Data Warehouse Successful Projects (continued) Corporations with large gross receipts reporting little or no use tax • Discovery project • Letter sent to taxpayer with worksheet to compute additional use tax due • Over $2 M of tax assessed • Didn’t close years for field audit

Individual Data Warehouse Build Data Warehouse In-House • Integrated team across IT and Business Units • Business users control what data to load and surface from the data warehouse for reporting • Phased approach to provide value along the way • Keeps technical and business knowledge inhouse. • Internal team researched tools and selected lowest cost of ownership with robust ETL and data quality capabilities. Chose SAS platform.

Individual Data Warehouse Build Data Warehouse In-House (continued) • Phase 1 - included 3 sources (WI tax returns, IRS individual tax returns, and electronically filed W-2 forms) ü Users received five hand-coded reports for audit identification and two look-up reports • Phase 2 – IRS informational returns ü Users received end-user query capability and portal access

Individual Data Warehouse Build Data Warehouse In-House (continued) • Phase 3 – Dept of Transportation information üVehicle title, drivers license and registration information üAdditional end-user query capability • Phase 4 – Integration of Corporate and Individual Data Warehouses

Individual Data Warehouse Iterative Approach

Individual Data Warehouse Advantages of the Individual Data Warehouse • Matching individuals and entities allowing reports across data sources • Summarizing various data to the level of tax return information for reporting purposes • Identifies and tracks relationships embedded in existing data • Provides ability to track non-filer activity

Individual Data Warehouse Advantages of the Individual Data Warehouse (continued) • Continually modifying based on user input • More useful with each additional data source available • Useful for many bureaus – Audit, Compliance, Research & Policy, etc. • Reports identifying under-reporters

Individual Data Warehouse Advantages of the Individual Data Warehouse (continued) • Asset report – all information in one location • Address report • End-user querying ability for audit selection • Write-back capability

Data Warehouse Portal

Asset Report

Asset Report (continued)

Asset Report (continued)

Asset Report (continued)

End-User Query Capability

Data Mining • In addition to purchasing the SAS tools, we also purchased a Proof of Concept for data mining • SAS Advanced Analytics Team performed a similar project for the IRS on individuals with gross receipts greater than $250, 000 • Submitted data to SAS from WI tax return and federal tax return data on individuals from 2000 -2004, as well as historical audit information

Data Mining • Information sent to SAS had personal information removed and was assigned a random identifier for matching purposes • We met with them multiple times regarding WI tax specific information • A list of 5, 000 taxpayers with various score ranges was provided for testing purposes to help SAS refine the models

Data Mining • Fourteen auditors completed testing of initial list on July 31, 2006 • A final audit list will be provided by the end of September 2006, which includes the following two scores for each taxpayer for each year: ü Under-reporter score ü Monetary indicator score

Summary • Corporate tax data warehouse efforts have been successful • Individual tax data warehouse infrastructure is in place and endusers are impressed with query and reporting capabilities • Anticipating positive results from data mining efforts

Questions?