Mining Data to Increase State Tax Revenues in California

Case Report: Case Study II-4 (Mining Data to Increase State Tax Revenues in California)
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Case Report: Case Study II-4 (Mining Data to Increase State Tax Revenues in California)
1 Introduction
The state legislature of California formulated the Franchise Tax Commissioner in 1929 but was later abolished in 1950 to create the current office of the Franchise Tax Board (Brown et al., 2012). The primary mission of the office is to provide information and services to taxpayers and enabling them to make accurate and timely tax returns. The board has four distinct mandates: enforcement of the tax filling returns, filling the returns, collection of taxes, and auditing of tax returns. The ultimate goal of tax filling is to ensure that taxpayers meet their obligations in filling returns through the use of three systems: filling, accuracy, and payment systems. The filing systems ensure that the taxpayers make filing returns to avoid failures. Accuracy systems facilitate correctness in the filling process. Finally, the payment systems seek to avoid taxpayer underpayments and overpayments.
2 Challenges
Taxes allow the state to execute necessary services to citizens. However, the board faces a serious issue of the tax gap that has seen the increase in the gap between the tax it collects and the uncollected amount. This implies that some taxpayers fail to comply with tax regulations of filling. The approach to address this issue is to identify non-filling and under-reporting. Besides a decline in tax compliance among payers, there is a chronic lack of data mining capacity to manage big data that amount to millions of information pieces from available datasets. There is also a challenge to identify new avenues of untaxed income.
In this case, the board planned to address the multipronged challenges through the application of data mining technologies. With data mining and the latest big data technologies, the company projected to mine and manage up to 400 million income records from taxpayers (Brown et al., 2012). Novel technologies would also see the company increase its data collection, processing, and storage power and significantly reduce the costs incurred in data collection. Another approach would be to improve the ease of software usage through enhancing and making the software user-friendly through graphical user interfaces (GUI). In identifying 100s of thousands of non-compliant taxpayers, the company would up-scale filling compliance. This strategy aimed at an increase in annual revenue collection and a decline in non-compliance actions.
3 Change and change ...