An Update of Florida’s Tax Simplications

By all accounts, Dave Bruns, chief of public information for the Florida Department of Revenue, estimates that Florida’s model tax project, being watched closely by other states seeking to simplify and streamline their tax processes, has been a success. The cost to implement the project was $40 million; however, the investment in the integrated tax system has saved the state $70 million, according to Bruns.

Prior to implementing the new system, Florida’s tax information was kept in 22 different computer systems that were on average between 8 to 12 years old. Bruns notes that if there was a problem that spanned 5 systems, it took the department a while to come to a resolution in every system. But, bringing the information together in one system has made everything much easier. In the next year and a half, Florida will be phasing out the last of its old data systems.

The implementation, however, was not without headaches. It took the department a while to be able to generate bills for telecom providers out of the new system. The department had to create a patch from the old system to the new system to get the bills out, which Bruns notes may have resulted in a few late bills to providers.

And, taxpayers had some questions about their bills, according to Bruns, when the telco providers separated the state and local taxes on the bill. Having to separate these taxes was tough for telcos in Florida, Bruns says, because some customers were taken aback to find out how much they actually pay in local tax. “It was a shock to some consumers,” Bruns says, noting “that was a customer service bump [providers] had to work through.”

And, for the vast majority of local governments, getting the tax information in a usable format was not easy. Some rural counties wanted to keep their records on paper. Bruns says change was not always easy for the various jurisdictions. While most local governments were embracing the new technology, some particularly small areas were a bit challenged. Some of these jurisdictions arranged for cooperative information sharing with other jurisdictions to manage the change.

The State of Florida implemented Group 1 Software’s tax database software to manage its jurisdictional taxes. In the past, it was difficult to scale in the manner that states required, and the transfer of information prohibited fast access to this data. Today, relational databases and the Web make this possible, so that the state can put every address into a database and update it on a regular basis so that Florida can now offer one authoritative database of taxes for each jurisdiction. Today providers can download the information from Florida’s database and match this against their lists.

But some maintain that this causes problems for providers who employ software from other vendors. Having to deal with a number of databases to identify jurisdictions can be problematic for a provider in that downloading new information on a frequent basis can be more time intensive if it is with software that is other than what the provider already employs.

As well, other tax software vendors say they are precluded from using Florida’s database. They can download it and run it against their database to check it, but they cannot download it into theirs.

“As long as the data can be translated, I’m not sure that the software [they use] makes a whole lot of difference,” Bruns contends.

“It’s an issue, but prior to going to the Group 1 implementation, there was just something else that didn’t match anyone,” says AMS’ Senior Principal Robert Balazs.

Despite some of the headaches, the test case had its successes. “I think it’d be fair to say the industry is pleased with how this is playing out,” Bruns says.

According to Bruns, Florida conducted studies to ensure that local jurisdictions would benefit from the streamlined system and found that local governments do now face lower administrative costs.

The state has been able to deploy the system at a much lower cost with a more accurate application of taxes. Bruns says several other states have been talking to Florida to determine whether to take a similar route in their own backyard.