This is the second-largest IT-related budget change proposal submitted to the Legislature for the coming fiscal year. The largest was submitted by the Employment Development Department.
The tax board’s BCP, dated Dec. 26, was submitted to the Legislature on Jan. 10, when Gov. Gavin Newsom sent lawmakers his proposed budget for fiscal year 2025-26, which includes a $228.9 billion general fund and $16.9 billion in so-called rainy-day reserves.
The BCP says the augmentation “will allow FTB to continue supporting the optimization of business processes throughout the EDR2 life cycle.”
As Industry Insider — California has reported, the two-phase FTB project dates back to a 2007 analysis that identified some of the business problems associated with collecting state tax, including the challenges associated with the roughly 17 percent of taxpayers who do not file correctly or require remediation.
The first phase, EDR, consisted of application modeling and case management and was completed in 2016. EDR2 “builds on the enterprise data, modeling and case management platform and infrastructure,” the document says.
The BCP offers a stark description of the immediate challenge in the project’s anticipated 30-year process:
“EDR2 is vital to FTB’s operations,” the BCP says. “The technology currently supporting two out of three of FTB’s major legacy systems [Accounts Receivable Collection System (ARCS), Integrated Nonfiler Compliance (INC) and Professional Audit Screening and Support System (PASS)], which annually allow FTB to collect over $4 billion in compliance revenue, are nearing end-of-life and will no longer be supported after Dec. 31, 2025.”
The PASS system was implemented in 1997, the ARCS system was implemented in 1999 and the INC system was implemented in 2001.
EDR2 will include new compliance tools for both taxpayers and the FTB.
The request for proposals for EDR2 was issued in April 2019, a contract award was made in June 2021, and the project began July 1, 2021.
“Since then,” the BCP says, “FTB’s state and vendor staff have been planning, designing and implementing various pieces of the multi-year project. Following the statewide process to support funding for larger projects, an annual budget change proposal is required for new costs related to that year.”
FTB says EDR2’s objectives for the coming fiscal year, which starts July 1, include:
- Using new data analytic tools to support the development of new work including functionality for models, treatment paths and data visualization (reports and dashboards)
- Performing data analysis and cleanup of the INC application data before it’s converted into the EDR2 case management platform
- Analyzing and resolving issues with collection cases that will not convert in an automated fashion
- Enhancing the ability to successfully select best-value cases for compliance efforts and complete quality cases efficiently
- Ensuring that new data fields can be captured from paper returns and other stand-alone tax forms to assist with developing potential modeling strategies and business rules which will result in increased revenue
