Can the crowd help state government stop tax fraud?

Can the crowd help state government stop tax fraud?

According to the U.S. Dept. of Treasury, the IRS collects $2.4 trillion dollars each tax year from an estimated 234 million tax returns. If the data submitted on all tax returns and W2s was available in an electronic format, state governments could perform big data analytics to identify and prevent fraud and recover billions of dollars in tax revenue. However, with more than 35 million paper tax returns being filed every year, that is not the case. Historically, capturing and cleansing data from a W2 was cost prohibitive and could only be accomplished with costly manual labor models or by utilizing recognition technology that could only provide a partial data set.

One data services provider has created an offering for both state and federal government designed to help them get a better understanding of what is happening in the tax base. Lionbridge Enterprise Crowdsourcing (ECS) is working with five states on converting paper returns and unstructured data into electronic forms—including all data within tax returns and W2s—and then perform analysis on those 35 million paper tax returns being filed every year.

The offering was first announced at the Crowdopolis event in New York, NY. The ECS service relies on Lionbridge’s existing network of more than 100,000+ “crowd professionals,” which provide data entry and cleaning services. Don Mackenzie, Director, Enterprise Crowdsourcing Division at Lionbridge told CivSource that in addition to this crowd, the company is also creating jobs in the states it brings ECS to by giving the local labor force a first go at becoming a crowd professional.

“The new solution relies on the proven model of distributed workflow that Lionbridge uses with its translation services,” Mackenzie explains. Mackenzie came to Lionbridge through acquisition, his previous company was focused on state and local government data services and is now part of the Lionbridge family. Mackenzie used his understanding of the space to craft ECS features for state and local governments.

Lionbridge ECS manages tax processing programs for several state governments using a qualified crowd of data conversion specialists and a highly secure task management platform. With Lionbridge ECS’ Data Management solutions, state governments can convert paper returns and unstructured data into electronic forms—including all data within tax returns and W2s—allowing them to perform analysis on the 35 million paper tax returns being filed every year. In the past, this data capture and cleansing was cost prohibitive and could only be accomplished with costly manual labor models or by utilizing recognition technology that could only provide a partial data set. Enterprise Crowdsourcing helps agencies close this massive tax gap by capturing structured and unstructured data from returns and W2s which empowers departments to perform analytics that can identify and prevent fraud and result in billions of dollars in tax revenue.

Lionbridge maintains the security of taxpayer information by breaking the form fields into unrelated, non-contextual snippets prior to leaving the protection of client’s facility. Then a team of pre-qualified data conversion specialists capture and confirm the data. Once the data is captured and confirmed, the snippets are then reassembled behind the security of the client’s firewall. Sensitive documents never leave the premises in context, ensuring that the sensitive tax data is fully secure.

“Ultimately, what this does is help states fix the incomplete tax data set. Most states aren’t capturing W2 data. It’s hard to do big data analyitics on the backend when you don’t have the complete picture. Using the crowd, we can get W2’s, individual tax returns, and give states the ability to really make sure that there isn’t under reporting, or other mistakes. States can close the tax gap, without having to invest in a big new system because we work on demand,” Mackenzie says.

So far, the model seems to be working, the company has approximately $150 million in revenue from crowd backed services. With the advent of secure data transfer and capture, state and federal government can get the information to companies like Lionbridge without having to undergo a significant upgrade or change management program.

“The work for crowd professionals is flexible too,” he says. “Everything is done remotely, and we have human project managers along with algorithims which check the output. Government pays by the task, rather than paying for a whole system, which means they don’t have to find an new pay-for, it often comes from existing funds.”

The company also has federals solutions which support other services like invoicing and billing for agencies like the Department of Justice (DoJ). “With our task based model, we can provide support for services even during hiring freezes or budget cuts. In some cases, or model has replaced existing offshore outsourcing contracts because agencies only have to pay for what they need,” says Eric Munz Vice President, General Manager, at Lionbridge.

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