Success story
Minnesota Department of Revenue
Industry• Public Sector

Solutions• OpenText™ Captiva™ Capture• OpenText™ Captiva Advanced Recognition

Partner support• Information Capture Solutions

Results
Replaced time-consuming, manual
processes and supported complex
business tax return processing with
automatic classification of morethan 800 document types
Enabled same-day deposits for
majority of checks
Reduced overall time to deposit
checks by at least 40 percent

Minnesota Department of Revenue
streamlines state tax and revenue
operations with OpenText Captiva“We believe we have established a blueprint for electronic
tax return processing that other tax types and agencies canleverage, including revenue agencies in other states.”
Cyndi Rowley

Former Revenue Tax Operations Division Director

Minnesota Department of Revenue streamlines state tax and revenue operations with OpenText Captiva

The Minnesota Department of Revenue manages the state’s revenue
system and administers state tax laws. Revenue manages more than
30 different taxes and collects more than $20.5 billion annually. This
money funds education, local government aid, property tax relief,social service programs, highways, economic development incentives
and grants for businesses, and other state programs and operations.

Challenge

The Minnesota Department of Revenue (Revenue) has been on theforefront of automated document capture for tax return processing
since 2002, when the department began using an earlier version of theCaptiva solution to ingest and process individual (personal) tax returns
and related correspondence.
In 2006, Revenue upgraded to the next generation of the technology with
OpenText partner, Information Capture Solutions (ICS), and provided asolution that includes high-speed scanners and more advanced capture
technology capable of automatically classifying thousands of documents
and extracting tax data. After implementation, Revenue expected thatthe transition to the latest release of Captiva would deliver more systemefficiencies to the state agency.

Inefficient processes for business tax returns

Revenue brought business tax returns into the capture workflow process.
Unlike individual filings, which average seven pages, Minnesota’s businesstax returns can be highly complex—often consisting of more than 100pages and including dozens of forms and schedules.

Since a significant percentage of business tax returns are still filed in paperform, Revenue was spending too much time on manual processes. This
included sifting through the returns to classify documents and ensuring
the proper forms were included. Revenue was also hand-keying datafrom the forms into the department’s tax system, introducing a potential
for error in the process.
ICS and state developers redesigned the business tax forms to systematically read better. This included adding anchors, bullets and other forms ofidentification to help raise the accuracy of classifying the forms. This resulted
in getting more accurate results, and the agency is now processing more
returns than it can open in a day. Any backlogs and bottlenecks related toprocessing the business tax forms were immediately eliminated.

Improving check and voucher processing

Another area for improvement was Revenue’s process for receiving,processing and depositing tax payments, which come into the department
as a separate mailing from the tax returns. The department needed toreplace its legacy remittance system for check processing.
With the previous check processing system, Revenue began by scanningall of the checks and vouchers. Every check and many vouchers weremanually keyed. Once the transaction balanced, the department scanned
each check and voucher again to encode the check. At the end of eachday, Revenue used a courier service to hand-carry the paper checks tothe bank for depositing, which meant the funds were not posted until atleast the next day.

“We easily surpassed thatgoal since we’re virtuallyassured of same-day
deposit for most typesof checks.”
Cyndi Rowley

Former Revenue Tax Operations
Division DirectorMinnesota Department of Revenue streamlines state tax and revenue operations with OpenText Captiva

If there were fewer vouchers to choose from, Revenue felt customers
would find it easier to choose the right voucher. In 2014, Revenue
consolidated its vouchers. Before the consolidation effort, Revenue had
64 vouchers and shortly after, it went down to three. Since implementation,
read rates and automated classification have improved significantly anddeposit time has been reduced by 60 percent. The consolidation effort
also improved Revenue efficiency and accuracy, requiring less work toprogram and maintain.

Solutions

ICS brought the department online with two IBML high-speed,
high-capacity scanners, and migrated all of Revenue’s previous Captiva
processes to OpenText Captiva Capture. To meet Revenue’s requirements for processing all tax returns, including business tax documents
and electronic payments, Revenue extended its Captiva document
capture environment to use the advanced document classification anddata extraction capabilities of OpenText™ Captiva Advanced Recognition.
TMIn order to add business tax returns to the overall Captiva capture
process, ICS defined more than 800 document types via Captiva
Advanced Recognition that identified the various business tax return
documents, as well as required documentation for every type of businesstax scenario. Once the entire return is scanned and intelligently classified,Captiva Advanced Recognition takes over and applies the business rules
to determine whether if the return is complete and acceptable. If the returnis missing certain documents or other information, Captiva Advanced Recognition automatically routes the document set to an appropriate workflow
queue for further processing. This implementation resulted in 90 percent
accuracy in handling all front-end correspondence associated to customer
accounts—a significant improvement.

Comprehensive capture process flow for electroniccheck presentment

ICS integrated a customized Check 21 solution into Captiva thatenabled any bank to accept and honor an electronic image of a checkthat is considered the legal equivalent of the original document. ICS
partnered with Tangent Systems to integrate Tangent’s Deposit21®
solution into Revenue’s Captiva capture solution. As a module within
Captiva, Deposit21 handles the actual check transmission to the bankaccording to Check 21 guidelines.
Captiva classifies each document and sends check images off to theDeposit21 module, where the check amount is captured and validated.
Captiva verifies that the check amount matches the amount due fromthe payment voucher; if different, Captiva automatically routes thereturn to Revenue for further processing. Once Captiva has determined
the payment transaction is balanced, it releases the check to Deposit21
for electronic deposit and automatically determines the optimum
method for transmitting the check to the bank.
Deposit21 formats, encrypts and transmits the electronic deposit files
per each bank’s standards. When each file transmission is completed,the bank sends an acknowledgement file to Deposit21 confirming thatthe bank accepted the deposit credited to Revenue’s account andautomatically creates a short-term archive of all check images tofacilitate any adjustments for bank debits and credits such as NSFs.

Greater efficiencies yield more savings

During peak periods, the department processes and deposits up to
75,000 checks a day—and the system ingests more than 50 million
pages every year. With the electronic check presentment solution,
Revenue has reduced its previous seven-step process to only four

“Revenue was able todeposit 75,700 items ina single day. The past
one-day record using theold system was 48,400.”
Cyndi Rowley

Former Revenue Tax Operations
Division Director

Minnesota Department of Revenue streamlines state tax and revenue operations with OpenText Captiva

steps for ‘clean’ transactions (with no additional processing by agency
staff). Since Deposit21 automates the electronic deposit, checks only
needed to be scanned once. The cost of a courier to hand-carry thepaper checks to the bank has been completely eliminated and deposit
time has been reduced by 40 percent. A new reporting system was put
in place to help provide better reporting metrics. The new reporting
system provides more detailed tracking metrics on any keyed-in items
to the entire processing system.
“We easily surpassed that goal, since we’re virtually assured ofsame-day deposit for most types of checks,” said Rowley, former
division director of Revenue Tax Operations. “Previously, when thechecks were couriered in hard copy form, we had to have them readyto go much earlier in the day in order to ensure timely access to thefunds. It paid off—Revenue was able to deposit 75,700 items in asingle day. The past one-day record using the old system was 48,400.”

The Captiva solution has been truly transformational for Minnesota
Revenue, letting the agency expand its electronic processing ofbusiness and personal tax returns, voucher processing and electronicand check payments.
“We believe we have established a blueprint for electronic tax
return processing that other tax types and agencies can leverage,
including revenue agencies in other states,” said Rowley.

About Information Capture Solutions

Information Capture Solutions (ICS) is a privately-owned Kentucky based
company that specializes in systems development and integration of automated processes for content management. ICS provides total businessprocess solutions, as well as BPO services, for information collection anddata capture, customized to meet each individual client’s needs.
infocapsol.com

About OpenText

OpenText, The Information Company,
enables organizations to gain insight
through market leading information
management solutions, on-premises orin the cloud. For more information aboutOpenText (NASDAQ: OTEX, TSX: OTEX)
visit opentext.com.
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