Huffpost Politics
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Governments Benefit From Smarter Tax Collections

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Ever notice those commercials on cable TV that tell you how to avoid paying taxes to the IRS? It makes you wonder how those deadbeats get away with it.

But not for long.

It's not unusual for a U.S. state to have billions of dollars in delinquent taxes. According to the Center for Budget and Policy Priorities, our country's tax shortfall is at a high of $196 billion - a 78 percent increase over 2009.

The U.S. Census Bureau shows that state governments collected $715 billion in taxes in 2009 - down almost 9 percent from 2008.

Lower tax collection means fewer funds for quality education and infrastructure projects to improve water lines, sewer pipes, roadways and rivers. These projects underpin our businesses, industries, communities, cities and economies. They enable where we live, where we work and how we get there.

Without smarter infrastructure, state economies cannot be competitive and the environment faces severe risk, especially since governments are under pressure to boost revenues in order to pay for essential services.

Imagine if governments could collect more just by going after delinquent taxes, while keeping the same tax collections force. They could spend that extra money to provide more and better services for its citizens.

Some states are looking to improve tax code enforcement, identify fraud and speed up the collections processes. However, finding fraudulent claims -- and then actually collecting the money -- has historically been a very expensive proposition for state and local governments.

Today, new and sophisticated technology is helping governments improve tax collections.

A good example is the New York State Department of Taxation and Finance, which collects more than $3 billion in annual tax revenue. Analytics technology developed with IBM is being used to identify questionable refund claims, and has saved the state of New York more than $1 billion over the past six years. Additionally, the state of New York recently added a tax collections optimizer to its innovative collection approach. This new tool is expected to help bring in an additional $100 million over a three-year period.

The system dives into taxpayer data (such as the amount owed, or past payment history) and generates an optimal plan for collecting from the entire population of delinquent taxpayers.

More governments are turning to smart technology to collect tax revenue from major debtors. Improving the tax collection process is not only good for helping governments provide more services with less cost, it also makes paying taxes fairer for everyone.