GenTax® Upgrade to Version 9 Executive Sponsors Demesia Padilla, CPA Cabinet Secretary John Monforte Deputy Cabinet Secretary Greg Saunders Chief Information Officer September 17th, 2014

Background GenTax® – tax system of record for New Mexico Commercial-off-the-shelf (COTS) product provide by Fast Enterprises, LLC First implemented in 2002 for Personal & Corporate Income Tax Currently 30 tax programs are processed in GenTax Manages tax revenue stream fluctuating between $5.5 and $6.5 billion annually

Background Accounting basis for TRD financial revenue processing Manages the revenue stream from taxpayers to beneficiaries Processes all tax returns and payments System for Tax Audit and Compliance initiatives Repository for all historical tax information Used to enforce tax code compliance and combat tax fraud

Key Reasons for Upgrade to v9 Some modules in the current version were obsolete, no longer supported, and were cumbersome to use and maintain; TRD was unable to fulfill critical user requests and implement legislative mandates on a timely basis. Lost revenue opportunities – inability to take advantage of new additional revenues due to lack of implementation of New Refunds module, Taxpayer Offset Program, Discovery product, Business Credit Manager and other modern core revenue generation functionality

Key Reasons for Upgrade to v9 Fraud Prevention – GenTax v6 was unable to identity & prevent millions in fraudulent activity each year Catastrophic failure – if GenTax suffered a catastrophic failure, NM would have been unable to collect and distribute $6 billion in revenues

Scope Upgrade all modules of tax processing system to Version 9 GenTax Implement integrated data warehouse, Discovery Implement a Business Credit Manager module

Benefits from Upgrade Significant annual reduction of fraudulent refunds as a result of upgraded Refunds module and new data exchange functionality: $20,577,764 in additional revenue captured by the Questionable Refunds Unit through increased reduction of fraudulent refunds as of 06/30 2014 due to the upgrade to v9 GenTax and the implementation of GenTax Discovery data warehouse module. Additional new revenues annually resulting from more efficient processing due to an upgraded Taxpayer Offset Program module: $7,051,123 as of 06/30/14 in additional revenue since implementation of new TOP module in 09/2012

Benefits from Upgrade Significant increase in new revenues annually resulting from implementation of GenTax integrated data warehouse (Discovery). This module increases audit, collections, non-filer recoveries, real-time fraud prevention and return validation. $8,179,000 in added collections realized from additional assessments made with the (Discovery) data warehouse product between 11/12/12 and 05/31/14.

Benefits from Upgrade Annual savings in support & maintenance costs by incorporating the current data warehouse functionality into GenTax: $247,000 in annual data warehouse maintenance costs. Considerable annual saving to General Fund will result from the implementation of Business Credit Manager functionality on 06/30/14. This new functionality will help ensure that revenue due to the State is fairly collected and distributed. Greatly reduce the risk of catastrophic failure by upgrading to version 9 of GenTax

Benefits from Upgrade Business Process Improvements Benefits Improved Efficiency Streamlining of business processes for multiple Bureaus such as: the auto assessments of cases, automatic case creation, automatic client/account creation, electronic applications, all of which reduce labor intensive manual tracking and will facilitate realization of revenue. Reducing false positive leads by moving the data warehouse into a single integrated system. Improved collection and levy functions.

Lessons Learned Strong emphasis on implementation of a comprehensive integrated user training plan Different forms of training: videos, handouts, formal classes, computer labs Committed business user divisional resources onsite for the duration of the project Internal PMO and PMO business analyst dedicated to the project Highly effective interaction between the TRD project management staff, vendor staff and IV&V vendor ensured quality of product and on time project delivery Standardization and consistency of GenTax v9 has benefited employees Knowledge and experience is more easily transferred between functional areas

Timeline and PCC Gates Initiation Planning Implementation Closeout 2012 - 2014 Initiation Planning Implementation Closeout 4/18/12 to 5/1/12 5/1/12 to 5/31/12 6/1/12 to 6/30/14 6/30/14

Budget In Laws of 2012, Chapter 19, Section 7, Item 4, TRD received $6,230,000 The total cost of the project was $6,081,072 Project came in under budget by $148,928 Funds were expended by 6/30/14

Summary Return on Investment The original Business Case for the GenTax Upgrade to v9 Project: A ROI of over 3:1 over five years after implementation into Production of GenTax v9 on 06/30/13 As of 06/30/14 the GenTax Upgrade to v9 has generated an additional $36,055,000 in revenue and cost savings to the state at a cost of $7,800,000. This represents a current run rate ROI of over 4.5:1.

Summary The upgrade to GenTax Version 9 resulted in: Increased annual revenue generation Improved Fraud detection and prevention Enhanced processing and tracking of refund requests Business Credit Manager will increase annual savings through the prevention of over distribution from the General Fund Reducing overall system risk over the long term Ensuring continued collection and distribution of $5.5 to $6.5 billion in annual revenues

Questions Thank You!