The tax system in the USA is for all practical purposes an honor
system. Most adult citizens and all business entities are required
by law to file tax returns. However, the truth content and accuracy
of these returns are primarily left to the individuals filing them.
Although revenue departments both at federal and state
levels do audit the returns, the percentage of those audited is
very small. This provides opportunity for tax payers to file returns
with incorrect information and pay less than their fair share of
taxes.
Revenue departments are doing the best they can to identify non-filers
and under-reporters amongst a tremendous number of taxpayers. With
a scarcity of resources available to identify and investigate such
cases, they are falling behind every day. The methods employed for
identification in most situations are either manually oriented or
exhaustive in nature. Thus, without employing more advanced technology,
revenue departments will be always at a disadvantage.
Revenue departments can benefit tremendously by employing an intelligent
computer tool that can automatically identify under-reporters, rank
them according to selected criteria and assign them to experienced
investigators for further action. Such a tool will allow revenue
departments to quickly and efficiently identify under-reporters
from thousands of cases, thereby greatly increasing revenues.
INTELLIGENT CASE IDENTIFICATION & ALLOCATION
Triage for Tax AuditsTM performs as an intelligent case
identification and allocation system. Triage is a hybrid system
combining various artificial intelligence technologies such as,
neural networks, fuzzy logic and expert systems. The two main modules
of Triage are: 1) Case Identifier, and 2) Case Allocator. The Case
Identifier's (CI) function is to identify cases and rank them according
to selected criteria. The Case Allocator's (CA) function is to assign
the ranked cases from the CI to investigators for follow-up.
CASE IDENTIFIER
Figure 1 shows a schematic of the Case Identifier module. The CI
module receives input from three sources: 1) Returns Database, 2)
Case Profiles, and 3) Identifier Intelligence. The returns database
contains all the returns that are to be searched. The case profiles
database stores profiles used to match and identify the returns
that are candidates for further investigation. The Identifier Intelligence
consists of data, instructions, procedures and heuristics, which
will be used by the CI to identify returns matching a specific profile
and rank them according to specific requirements. The final output
from the identifier will be a ranked list of cases that need further
investigation.
CASE ALLOCATOR
The Case Allocator starts where the Case Identifier left off. Input
to the Case Allocator may include the following: 1) The ranked list
of cases identified by the CI, 2) Investigator skill profile, 3)
Investigator work schedule, and 4) Allocation intelligence. For
each case identified by the CI, the Allocator attempts to assign
the case to an investigator by matching the investigator's skill
profile and work schedule. The Allocation Intelligence consisting
of data, instructions, procedures, and heuristics, will be used
by the Allocator in assigning cases to individual investigators.
GENERAL FEATURES
Triage for Tax AuditsTM is a sophisticated system which
implements advanced technologies such as artificial intelligence
and object oriented methodologies. The system uses complex procedures
and methods to store and utilize intelligence in its mission. However,
users of the system should be able to use and maintain the system
with minimal effort. It is also recognized that the system's intelligence
components need to be fine-tuned over time to perfect the process
of identification and allocation.
The system operates in three modes: 1) training mode, 2) operational
mode, and 3) maintenance mode. In training mode, new case profiles
can be developed, trained and stored in a library of profiles. In
operation mode, potential cases for audit are identified and allocated.
In maintenance mode, system's intelligence update and maintenance
tasks are performed.
In all three modes of operation, an easy to use graphical user interface
with context sensitive help is available to the user for performing
various tasks.
BENEFITS
Increased revenues is the primary benefit derived through the use
of the Triage system. This is possible because the system is able
to identify potential audit cases and rank them based on the revenue
each case can generate. Cases with the highest revenue generation
capability may be targeted first for investigation.
Another advantage is the reduction of effort required to identify
potential audit cases. Once the system has been trained to
identify different types of cases in the training mode, the effort
required during operational mode will be minimal. In operational
mode, all that is required from the user is to specify the type
of cases to be identified.
Revenue departments are struggling to increase revenues while facing
cost-cutting measures and heavier case loads. Eventually, it will
become impossible to achieve revenue goals with existing practices.
The cycle may be broken by investing in advanced solutions such
as Triage: allowing revenue departments to use their limited resources
with greater intelligence, efficiency and most importantly, generate
revenue on an entirely new level.
ADDITIONAL
INFORMATION
To initiate a discussion regarding the potential role of
Triage for Tax AuditsTM in your environment, please
extend a call invitation, or send an Email
request.
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Triage for Tax Audits is a trademark of American Heuristics Corporation.
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