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Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
Tax DSS
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Tax DSS

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DSS for TAX

DSS for TAX

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  • 1. Decision Support System & Data Mining Methodologies
  • 2. Outline <ul><li>Why a Tax Decision Support System (DSS)? </li></ul><ul><li>Tax DSS Architecture </li></ul><ul><li>Tax DSS Methodology </li></ul><ul><li>Tax Decision Support System </li></ul><ul><li>Business Benefits </li></ul><ul><li>Concluding Thoughts </li></ul><ul><li>Q & A Session </li></ul>
  • 3. Evolution 1960 1980 1990 Mainframes Operational Systems Online Analytical Systems
  • 4. Changing business needs ACTION WHY WHAT Prediction Forecast Business Need Complexity
  • 5. <ul><li>Readily access and analyze the tax information </li></ul><ul><li>Effectively and accurately identify the area of non-compliance </li></ul><ul><li>Better understand the taxpayers </li></ul><ul><li>Formulate better legislative policies </li></ul><ul><li>Achieve higher degree of accuracy in revenue forecast </li></ul><ul><li>Optimize the operational cost </li></ul>Challanges before tax administrators
  • 6. by Business Type by Tax Type by Tax Period by Location by its distribution across the various income groups of the taxpayers Typical analysis a Decision Maker may perform <ul><li>Compare the revenue collected and balance due for the past 5 years </li></ul><ul><li>Evaluate the effectiveness of audit programs in identifying non-filers and under reporters </li></ul><ul><li>Trends in the collected and due amounts in the various Payment Plans at various stages and defaulters </li></ul><ul><li>Evaluate the productivity of various departments in handling cases over the years </li></ul><ul><li>Evaluate the effectiveness of external data in identifying non-filers by showing the number of such taxpayers </li></ul>by the payment plan type by the tax period by the income group by the tax type by tax period by location by business type by tax period by location by business type
  • 7. Limitations of Transactional Applications <ul><li>Designed for real-time data entry and editing </li></ul><ul><li>Data maintained is constantly changing </li></ul><ul><li>Limited historical data is available for on-line comparisons </li></ul><ul><li>Running Decision Support queries degrades the performance of the Transactional Application </li></ul><ul><li>Difficulty in making ad-hoc queries </li></ul><ul><li>Complexity in achieving Comparisons, Aggregations, Rankings, Running totals etc. </li></ul>
  • 8. What is a DSS? Decision Support System is a computer based information system designed to facilitate the decision making process of semi structured tasks
  • 9. Tax DSS Architecture <ul><li>“ A Data Warehouse is a </li></ul><ul><ul><li>subject-oriented, </li></ul></ul><ul><ul><li>integrated, </li></ul></ul><ul><ul><li>time variant and </li></ul></ul><ul><ul><li>non-volatile </li></ul></ul><ul><li>collection of data in support of </li></ul><ul><li>management’s decision-making process.” </li></ul>A Data-Mart contains a subset of the data available in an enterprise-wide data warehouse. <ul><li>Data Mining is </li></ul><ul><li>Discovering meaningful new correlations, </li></ul><ul><li>Patterns and trends </li></ul><ul><li>Using </li></ul><ul><li>Pattern recognition technologies, </li></ul><ul><li>Statistical and mathematical techniques </li></ul>On-Line Analytical Processing (OLAP) Is a process to assist decision making by using tools to facilitate the analysis of multi-dimensionally structured business information. Tax Compliance Data Mart Metadata Repository Tax Data Warehouse Data Warehouse Data Extraction, Scrubbing and Transformation OLAP tools EIS Query & Reporting Statistical Analysis Data Mining LAN WAN Internet Meta Cube Internal Data Sources External Data Sources External Sources Indv. / Corp. Tax App. Un-employment Tax App. Withholding Tax App. A/R System State’s Legacy and Transactional application <ul><li>IRS’s different tapes </li></ul><ul><li>IMF </li></ul><ul><li>IRTF </li></ul><ul><li>BMF </li></ul><ul><li>BRTF </li></ul><ul><li>Other State Agency's </li></ul><ul><li>Payroll System </li></ul><ul><li>Transportation System </li></ul><ul><li>General Services </li></ul>East West North 2Q97 1Q97 4Q96 3Q96 2Q96 Income Withholding Insurance Meta Cube <ul><li>Collected Tax Revenue </li></ul><ul><li>North </li></ul><ul><li>Withholding </li></ul><ul><li>1Q97 </li></ul>Source Data Validation Data Scrubbing Data Migration Data Transformation Data Warehouse Title Page AA BB CC AB BA 4 8 12 16 20 X T T X Y Y = Table of Contents 12 3 9 6 Refresh info Time Line of Journey Access Levels Origin of Data Transformation Sequence = T C B A
  • 10. Decision Support Analysis DSS Software Evaluation & Selection Operational Deployment and Support Prototype Development Decision Support Methodology (DSM) Revision & Enhancements Scoping of Prototype Project Evaluation Criteria Detailed Design System Construction Testing Demonstration Evaluation Functional Orientation Operational Training Deployment Maintenance Structured Interviews Decision Analysis Data Analysis Technical Analysis Conceptual DSS Orientation Plans & Prioritization Adaptation
  • 11. <ul><li>Taxpayer Profiling </li></ul><ul><li>Tax Collection </li></ul><ul><li>Fraud Detection & Tax Non-compliance </li></ul><ul><li>Legislative Change Impact </li></ul><ul><li>Revenue Forecasting </li></ul>Tax DSS - Common Subject Areas <ul><li>These Subject Areas can be viewed w.r.t to </li></ul><ul><li>various common perspectives </li></ul><ul><li>Business Type </li></ul><ul><li>Location (States, City) </li></ul><ul><li>Taxpayer (Demographic) </li></ul><ul><li>Tax Type </li></ul><ul><li>Tax Period (Year, Quarter, Months) </li></ul><ul><li>Time (Year, Months, Events, Seasons) </li></ul>
  • 12. Taxpayer Profiling <ul><li>Provides comprehensive taxpayer information </li></ul><ul><li>Identification of potential fraudulent taxpayers </li></ul><ul><li>Compliant taxpayer can be relaxed from cumbersome audit process </li></ul><ul><li>Provide better taxpayer services </li></ul>
  • 13. Tax Collection <ul><li>Analyze the trends in tax revenue for revenue </li></ul><ul><li>enhancement </li></ul><ul><li>Evaluate uncollected tax revenue </li></ul><ul><li>Reallocate resources to value added programs </li></ul><ul><li>Enhance A/R management </li></ul>
  • 14. Fraud Detection & Tax Non-Compliance <ul><li>Maximize the non-compliance discoveries </li></ul><ul><li>Analyze trends and patterns of targeted groups </li></ul><ul><li>of taxpayers </li></ul><ul><li>Rank potential audit suspects by evaluating their revenue potential </li></ul><ul><li>Focus on collection and compliance efforts </li></ul><ul><li>Substantial increase in tax assessments and long </li></ul><ul><li>term reduction in tax gap </li></ul>Cont...
  • 15. <ul><li>Leverage the accuracy, efficiency,and productivity </li></ul><ul><li>of non-compliance programs </li></ul>Fraud Detection & Tax Non-Compliance <ul><li>Provide an alert mechanism to trap non-filers </li></ul><ul><li>before expiry of the statute limit </li></ul>
  • 16. <ul><li>Estimate fiscal and administrative impacts of proposed legislative changes </li></ul><ul><li>Support users in formulating tax policy </li></ul><ul><li>Analyze the revenue effect of proposed and enacted legislative changes </li></ul>Legislative Change Impact Analysis <ul><li>Determine the effects of changes in </li></ul><ul><li>legislation, policies and regulations </li></ul>
  • 17. <ul><li>Ability to formulate reasonable fiscal policies </li></ul><ul><li>Incorporate the historical revenue trends and other governing estimate variables </li></ul><ul><li>Provide the highest degree of accuracy in revenue forecasting </li></ul><ul><li>Use of econometric models to improve the accuracy of forecasts </li></ul>Revenue Forecasting
  • 18. <ul><li>Tangible Benefits </li></ul><ul><li>Improvement in non-compliance will increase tax revenue </li></ul><ul><li>More cost effective decisions are enabled </li></ul><ul><li>Better business intelligence is enabled </li></ul><ul><li>Enhanced taxpayer Services </li></ul>Benefits - ROI <ul><li>Intangible Benefits </li></ul><ul><li>Improved productivity </li></ul><ul><li>Reduced redundant processing and support </li></ul><ul><li>Ability to focus on business processes through complete analysis </li></ul>
  • 19. <ul><li>Tax DSS holds great potential for dramatic business benefits </li></ul><ul><li>Capitalizes on the potential value of the organization’s information </li></ul><ul><li>Provide decision makers access to consistent, reliable and timely data </li></ul><ul><li>Still much more to explore and enhance </li></ul>Concluding Thoughts
  • 20. Large pool of resources Expertise in the Area Superior Solution Tax DSS Methodology Understand DSS Technology Make Things Happen

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