“We’re so special that no software fits us.” That and similar comments typify the prejudices of the 1980s, when no one thought it possible for standard software to handle the financial or human resources (HR) processes in public agencies. Times have changed. Today, tax authorities demand the ability to put operative systems into software – for handling corporate income taxes, for example. Standard software can perform the balancing act of mapping the key processes of tax management with a limited budget.
Key Processes of Tax Management
Building upon its vast experience with the private sector, SAP has spent the last few years working intensively on the specific requirements of public agencies and has continued to enhance its portfolio of solutions for tax management. The solution set handles the important key processes of tax management, including registering taxpayers, and submitting and processing tax returns. It also provides revenue accounting functionalities, such as payment processing, receivables collection, case management for tax audits or debt recovery, and comprehensive correspondence options.
The SAP solutions for tax and revenue management build upon existing SAP software that already maps the required processes and can be adapted to meet the needs of tax agencies. For example, SAP Public Sector Collection and Disbursement (SAP PSCD) has proven in other huge accounting environments, such as insurance and utilities. It can also manage open tax receivables, process payments, and support the collection of receivables. Incoming payments are automatically assigned to open tax receivables in the collection and disbursement system of tax agencies.
If the payments cannot be assigned because of erroneous data in bank transfers, user-friendly clarification lists show clerks all the information they need at a glance and help them select follow-up actions. To collect outstanding receivables, the set of solutions sends dunning letters, calculates additional penalties and interest, creates lists for dunning by telephone, and redirects everything to the enforcement department. The business rules framework stores the rules used by the solution. The framework is a flexible, configurable body of rules and regulation, sort of like an electronic version of the tax code.
Thanks to its comprehensive configuration options, the solutions for tax and revenue management offer tax agencies an opportunity to easily review and restructure basic processes. For example, the Swiss city of Biel recently decided to use the improved technology to sell dog licenses over the Internet instead of door to door.
Multifaceted Channels of Tax Levies
The set of solutions for tax and revenue management supports several channels of interaction between taxpayers and tax agencies. It not only maps traditional, paper-based communication and the related administrative processes, but also handles online transactions. For example, taxpayers can use the Web to send tax forms directly to tax agencies, and they can pay taxes online. By creating a special access profile, taxpayers can display open items and the relevant account data from SAP PSCD.
The SAP solutions for tax and revenue management let tax agencies decide whether to implement processes step-by-step or to implement a completely integrated solution that covers everything from registration to collection of a specific type of tax. For example, if an agency decides to implement mySAP Customer Relationship Management (mySAP CRM) with a special configuration for its own tasks, it optimizes contact with taxpayers – with self-service for registration of the owners of a property, contact via a call center, or the submission of a tax return.
The Taxpayer: the Focus of Management
In collaboration with the business rules framework and e-filing, mySAP CRM enables the processing of paper-based tax returns as well as the processing of tax returns entirely over the Internet. E-Filing allows access to tax forms over the web. The taxpayer is able to enter the required data of the tax form online and submit the form to the tax agency. Increasing networking and the pressures of mobility make this option more and more attractive. These kinds of solutions also cut costs and allow agencies to keep pace with changes in tax law because authorized users in tax agencies can modify the business rules framework to meet current conditions. Labor-intensive new programming is unnecessary.
mySAP CRM focuses on a company’s contact with its customers. Similarly, functionalities that mySAP CRM offers for tax and revenue management allow tax agencies to focus on taxpayers. For example, if taxpayers call, the mySAP CRM interaction center offers support. The relevant data is available to clerks at the tax agency at a glance because the interaction center stores a contact history, and clerks can navigate directly to the account and the correspondence. The master data structure allows users to search for data on taxpayers and their multiple accounts without complications. Consolidated and comprehensive data is available at the level of the taxpayer or that of the type of receivable.
Integrated Case Management
In addition to automated processes, the SAP solutions for tax and revenue management offer functions for dealing with exceptions. For example, when taxpayers do not receive a demand notice in time, follow-up action must be initiated. If a taxpayer declares bankruptcy, the tax solutions can administer the resulting files electronically. In the event of an on-site tax audit, there must be a mechanism to transfer the taxpayer’s data into the audit files.
With the seamless integration of case management into the set of solutions for tax management, tax agencies can map these requirements to appropriate case types and tailor their business processes accordingly. Employees are assigned cases that include such attributes as the status or priority of a case. Each case can also be assigned freely definable activities, such as checking the data. Data on the taxpayer from upstream systems or from the tax return is linked to the case. Users can also create notes and correspondence, such as a garnishment letter.
Unlike companies in the private sector, public agencies collect receivables through their own collection departments. The SAP solution for debt recovery management for public agencies is built upon case management and accounts for this situation. The advantage of the integrated structure is the lack of maintenance for costly interfaces or coordination of external procedures. Cashiers work more efficiently because incoming payments are entered only once. All data relevant to collections is available directly to clerks. Time-intensive searching for and through files is no longer necessary. Forms, such as a collection notice, can be printed when needed and integrated into the case. The SAP solution transfers taxpayer data, such as name and address, into predefined correspondence templates for printing.
Opportunities for Tomorrow’s Tax Agencies
In the future, tax agencies will be judged on how they meet their goals of more accurate taxation and compliance with the tax law with limited resources. It’s SAP’s job to support them with standard software. Consider the following example. In the telecommunications sector, customers are divided into risk classes, depending upon their payment history. The priority for collecting receivables and the steps selected to do so are based on this risk classification. Functions in SAP Credit Management can also be transferred to tax agencies. Integrated in the SAP solutions for Tax and Revenue Management, they optimize working procedures and enable taxpayers to be classified by their payment practices or the expected tax amounts, for example.
Companies in the private sector often transform information about their customers into knowledge. For example, a direct-mail campaign is successful only after basic segmentation of customers has occurred. The “customers” of a tax agency can also be segmented. The data from the tax management system can be loaded into SAP Business Information Warehouse (SAP BW), formatted, and analyzed with standard processes of data mining to determine if an audit is worth the effort.
The corresponding applications, such as SAP Credit Management, are already available as standard software. The applications can be made available within the set of solutions for tax and revenue management on SAP NetWeaver, an open integration platform, as a service or they form a component of the architecture itself, as is the case with SAP BW. Tax agencies profit enormously when they take advantage of the full spectrum of functions available in standard solutions.