The California Franchise Tax Board (FTB) carried out a significant endeavor for tax modernization. To finance services essential to Californians, FTB works with individual and corporate income taxpayers to ensure that their returns are filed on time, precisely, and in the correct amount. This initiative’s improved identification of dishonest tax preparers was one of its goals, and Aviana was brought in to assist.
The Project:
Analytics was one of the main strategies used in the Enterprise Data to Revenue (EDR) initiative, supported by benefits. Aviana used predictive and outlier-based analytic models to provide solutions to artificial intelligence (AI). The primary functional domains of the EDR organization were supported by more than 50 AI models, including:
- Making an Enforcement Claim Ranking and Scoring
- Risk Management for Debt Collection
- Audit Selection
- Fraud Identification
Aviana offered the whole concept formulation, requirements analysis, detail design, model development, validation, integration and deployment, and post-deployment maintenance lifecycle. The IBM SPSS Modeler and Collaboration and Deployment Services (C&DS) platform, in which Aviana is a renowned specialist, was used for all AI model creation and deployment. The modeling data mart comprised information from the IRS and two other California state agencies and was more significant than two terabytes. Aviana had to implement a release management process, a formal configuration management system for modeling artifacts, and a rigorous methodology to execute models at the enterprise level.
Aviana’s approach of incorporating business stakeholders throughout the model development lifecycle was crucial in managing a project of this magnitude. As a result, a group of “Citizen Data Scientists” were assembled.
We promptly acquired buy-in and sign-off on the models by converting statistical data and model outputs into a format that business stakeholders could easily understand.
Deployment Challenges:
These projects fulfilled demanding deployment specifications. Using an automated interface with FTB’s mainframe computer system, the debt collection models had to score up to 100,000 new cases daily during peak periods. This was achieved via Aviana’s deployment using file- and message-based triggers on the IBM SPSS platform. Due to performance problems, the system has never failed to meet its service-level agreement.
As incoming refund tax returns are processed, real-time scoring was another complex deployment need. This was made possible by the web-service scoring engine used in Aviana’s implementation of the IBM SPSS platform, which was backed by pre-computed historical taxpayer information kept up to date by batch models that ran periodically. Even with up to 30,000 returns processed hourly during the busiest filing season, the system has never failed to meet its service-level agreement owing to performance concerns.
Results:
As of right now, the models in use score:
- Over $3 million in new debts annually (up to $100,000 per day during high season)
- Selecting 17 million or more taxpayers for an audit
- Over 10 million returns annually due to identity theft and refund fraud (up to 30K per hour during peak)
- Millions of delinquent non-filers
- 38K tax preparers for submitting false returns
The FTB established a strict system to monitor the advantages linked to the efforts of several EDR projects. This was required since the suppliers were compensated through those advantages. The following financial gains were attributable to Aviana models as of December 2016:
- Better Audit Selection: $14 million
- $385 million for better filing enforcement
- $136 million in enhanced refund fraud detection
The following AI techniques were used in the development of the analyses and final models from this project: Principal Component Analysis, regression analysis, Logistic Regression, Model Division, Feature Choice, Classification and Regression Trees, Data Mining, Micro and Macro Trending, Learning from Data, Geospatial Modeling, Multivariate Cluster/Outlier Analyses, Principal Section Analysis, Linear Regression, Logistic Regression, and CHAID.
How Can Franchise Tax Payments in California Be Made?
To pay, go to the California Franchise Tax Board payment portal and follow the instructions below.
- Select “business” when choosing between personal and business.
- Next, choose Corporation under entity type. The number on the Articles of Incorporation you obtained from the California Secretary of State is your “Entity ID.” After completing the form, click “Login”.
- Your entity information should appear under Entity ID and Name based on your supplied data. You will enter your name (that of the customer or Heard user) under contact details. Press “continue.”
- Please check the first box on the following screen when your company submits Form 100S for franchise tax.
- Next, choose the method of payment based on what you want to pay for:
- The estimated tax payment is paid every three months. Most likely, you won’t get one until Q3 or Q4.
- Payments for extensions are often issued around March 15. Heard’s Tax Team eFiled your return and informed you that a payment was required with the return; you should choose Original Return Payment. For the amount, please check your final signed return uploaded to Heard.
- Heard usually does not provide calculations for any other payment methods.
- Click “Continue.” After that, a popup window asking for your payment information will appear. Please ensure that the payment covers the entire tax year.
- You will often send in a tax payment from the prior year to pay for the original return plus the extension. (As we are in 2023 right now, you would be sending in a tax payment for 2022. Mark the dates 1/1/2022 through 12/31/2022.)
- Regarding projected tax payments: This is your current year’s tax payment. (As we’re in 2023, your tax payment will cover Jan January 123 to December 2023.)
An example of choosing the initial return payment or an extension may be seen in this screenshot. After selecting “Add an estimated tax payment” and entering the necessary data, click “Continue.” The date entered may be a future date or this one. The data you supplied will appear at the bottom of the payment gateway. Press “continue.”
- After entering your bank details, click “Continue.” To pay this tax, you have to utilize your company bank account. Since it’s regarded as a franchise tax, you can deduct it from your business taxes.
- At the top of the screen, a summary of the data you have submitted will show. To finish the purchase, provide your phone number and email address and tick the Payment Authorization box.