Optimizing Case Management with Predictive Tax Compliance

SPSS Inc.

Optimizing Case Managementwith Predictive Tax Compliance

Benjamin Chard

Senior Solution Engineerbchard@spss.com

Ted London

Executive ConsultantTax and Revenue Managementted.london@cgi.com

Predictive Tax Compliance

SPSS Inc.

Where Does Predictive TaxCompliance Fit

Existing Data Operational Setting

Data Warehouse Solution

•Reporting•Case Mgt

•Return Scoring•Enforcement

•Historical Returns•Current Returns

•Collections•Case Management

DWS – Existing Data Operational Setting

SPSS Inc.

From DWS to Prediction

•Reporting•Case Mgt

•Return Scoring•Enforcement

Historical Returns•Current Returns

•Collections•Case Management

DWS – Existing Data Operational SettingPREDICTION

Examine Data in Entire Dimensionality

Learn Trends Relationships Interactions

Unveil Emerging Shifts in Behavior

FEEDBACK

Build Models

Predictive Modeling Scenarios

Revenue: better return on limited resources Audit Outcome Predict $per audit hour Collections – Treatment Streams, Collection Activities

No-Change: Decrease the number of false-positiveinvestigations Hit Ratio Self Cure

Proactive Approach / Reaction Time Coverage Legislative Concerns Taxpayer Attrition Quicker Enforcement Emerging Trends

SPSS Inc.

We are talking aboutReturn on Information (ROI)

Existing Enterprise Data Sources

DATA MINING &PREDICTIVE ANALYTICS

Data Warehouse Solutions

OPERATIONAL SYSTEMS

Predictive ModelingDashboards

Case Load Distribution

Statistical/TrendAnalysis

Return On Information (ROI)

Predictive ModelResults Case Management

ROIROI

FBKFBK

SPSS Inc.

SPSS: Building Predictive Models

DATA MINING &PREDICTIVE ANALYTICS

Predictive ModelResults

SPSS Inc.

Three classes ofdata miningalgorithms:

Predict who is likelyto exhibit specificbehavior in thefuture.

Associate

“Patterns”

Predict

“Relationships”

Cluster

“Differences”

Mining

Group casesthat exhibitsimilarcharacteristics.

What eventsoccur together?Given a series ofactions; whataction is likely tooccur next?

Predictive Analytics

Concept Extraction

Bag of « Words » extraction

Expressions extraction

Named Entities extraction

Events/SentimentExtraction

Combined with structured data

70’s 80’s 90’s Now

Mr.Smithaka

Ahmed wasseenonthe

cornerof

ChurchEtc.

Mr. Smithwas seen

Mr. Ahmedcorner

Church St.Magnolia Ave.

Nov 13thMr. Smith -> Person

Mr. Ahmed-> Personaka -> Alias

was seen -> locationChurch St. -> Address

Magnolia Ave. -> AddressNov 13th -> Date

Mr. Smith (Person) -> aka (Alias) -> Mr. Ahmed (Person)was seen (location) -> Church and Magnolia (address) ->

November 13 (Date)

Mr. Ahmed in database wanted for questioning

Suspect-> send agent to this

location

“Mr. Smith aka Mr. Ahmed was seen on the corner of Church St. and Magnolia Ave. on Nov 13th”

SPSS Inc.

Predictive Asset Management

In single project there is the potential to createa large number of models and versions ofmodels: different predictions different algorithms different settings different training samples.

X # different data sets

X # different users

X # different locations.

Feedback Collection

FEEDBACK

SPSS Inc.

Predictive Modeling Scenarios by User

Predictive Tax Compliance

Tax Collection•Treatment•Activities

• Audit Selection • Filing Fraud

Non-Filer Discovery•ID Fraud

•Prioritization Models

Register Assess Collect

DATA WAREHOUSE

DATA MINING & PREDICTIVE ANALYTICS TOOLS

Right work to the right resources at the right time

Fraud Detection

SPSS Inc.

Non-Filer/Fraud Discovery Process

Internal Records: Tax Filers External Records:• Registration Databases• Other Agencies• Commercial Databases

HARD MATCHING

SOFT MATCHING PRIORITIZATION

TAXDUE

NO TAXDUE

PredictiveModeling

Audit Selection ProcessLEAD GENERATION

MANDATORYAUDIT PROG.

DATABASEAIDED SELECTION

“BIRD DOGGING”

SPIN-OFFS

LEAD CARDS

AUDITING

WORKLOADASSIGMENT

DISPUTERESOLUTION

$$$ NTC $$$

Tax Assessment Refund

No Tax Change

PredictiveModeling

SPSS Inc.

Tax Collection Process

Non-Filers

Non-Payers

Tax Due Estimation

PrioritizationRisk Assessment

Day 15

Day 30

Day 15

Day 30

Day 60

High Risk Medium Risk Low Risk

Predictive Modeling

Case InformationTaxpayer HistoryTaxpayer Profile

Outcome

Collections - Putting Data Analytics intoOperation

SPSS Inc.

Collections Scenario – Putting Data Analyticsinto Operation

Clementine – Data Mining Workbench

CGI CACS for Government

Predictive ModelResuls Case ManagementFBKFBK

ROIROI

Putting Data Analytics into OperationCGI’s CACS-G Collection Application

SPSS Inc.

Data Mining Workbench

Case Study in Audit Selection

Evaluating Model Performance

SPSS Inc.

Case Study in Audit Selection

Build models to predict different outcomes. Positive Adjustment (Y/N). DPH Return (Group Membership). Actual $$ Adjustment.

Historical Cases selected for model build Cases with Prior audit – prior audit and organizational data. All Cases – organizational data only.

Deployment For each outcome combine predictions for those with and

without previous audit data . For each outcome predict using organizational data only.

Evaluating Predictive Modeling

SPSS Inc.

Optimizing Case Managementwith Predictive Tax ComplianceCome see us in the Exhibit Hall

Benjamin ChardSenior Solution Engineerbchard@spss.com

Lisa BarberAccount Executivelbarber@spss.com

Ted LondonExecutive ConsultantTax and Revenue Managementted.london@cgi.com

SPSS Inc.

ROI – Return on Information

Deploy Scores

Build the model thencreate and save thescores to a data tablewhich Case Managementcan access.

Deploy Model

Build the model and thensave the model andscoring process to filesthat can be executedreal-time.

Optimizing Case Management with Predictive Tax Compliance

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