1 The Paperless Office: Myth or Reality? City of Phoenix Finance Tax Division May 23, 2013

2 The Basis for the Imposition of Municipal Privilege Taxes State law establishes the levy and collection of Privilege (Sales) Tax for the purpose of raising public money, in the amounts determined by the application of rates on gross proceeds or income derived from sale transactions in taxable business activities, per A.R.S. § &

Combined Sales Tax Rate in Phoenix for Retail Activity 6.6 % - Arizona State 0.7 % - Maricopa County 2.0 % - City of Phoenix 9.3% - Total Comb. Rate Taxable businesses file and remit City sales tax by filing tax returns on a monthly, quarterly, or annual basis. 3

4 City of Phoenix Tax Division- Tax Services and Programs n Tax Administration Programs: forum for privilege tax concerns, uniform and fair application of the Tax Code, free sales tax seminars and outreach tax education programs n Privilege (Sales) Tax Licensing Services: office assistance and education to applicants for proper and accurate licensing and registration n Tax Accounting Services: recording, accounting, and processing of filed tax returns, payments, refunds, and adjustments

n Tax Enforcement Services: assistance and education to the business community to ensure privilege tax and regulatory licensing compliance through direct public contact n Tax Audit Program: verification of compliance with Tax Code regulations through the examination of accounting books and records in accordance with Generally Accepted Auditing Procedures and professional audit standards n Tax Collection Services: collections of required payments of privilege tax and license fee liabilities by educating, informing, and assisting taxpayers in delinquent status 5

Primary Legal Documents Collected and Utilized (3) Uniform Application For Transaction Privilege (Sales) Tax License Form 6

Uniform Privilege (Sales) Tax Return Form (duplex) 7

Tax & License Billing Statement 8

City of Phoenix Records Management Program n Administrative Regulation 1.61 outlines the Program. n Departmental Records Retention Schedules are updated by departments through their Records Control Officers. n The City’s Records Control Committee approves the retention schedules which are then submitted, as required by State Statutes, to the Arizona State Library, Archives and Public Records. n The current records retention schedules were approved by the State on December 4,

10 Retention Periods for Primary Legal Documents Collected 1. Uniform Application For Transaction Privilege (Sales) Tax License Form – 6.5 years after expiration of application (imaged record) 2. Uniform Privilege (Sales) Tax Return Form – 7 years after month scanned (imaged record) 3. Tax & License Billing Statement – 7 years after month scanned (imaged record)

11 Operational Document Management Practices with Paper Forms n Prior to March 2009, Tax Division utilized a mainframe DOS-based system (Tax License Registration System or TLRS) n Statistics on form documents collected and processed from taxpayers (individual month): Month-YearApplicationsTax ReturnsStatementsTotal Dec ,373 20,018 66,216 Dec ,513 21,155 67,509 Dec ,106 19,131 66,079

12 n Required 2 employees to receive, balance, and deliver documents for data-entry services n Required 8 ITS department employees to key documents into data-entry software n Required 2 ITS employees to manage the daily data uploading process to system n Required the monthly packaging of all documents in approximately 30 banker boxes for offsite storage n Costs incurred: – ITS data-entry and technical services –data-entry software license and maintenance agreement –moving transportation services –off-site storage and retrieval services –paper, ink, and copier maintenance n Required the handling and use of paper documents for all operational and business needs.

13 Transition from Paper to Imaged Documents n Replacement of the old TLRS system with the new Tax Mantra system, with a data capture and imaging system component (i-Capture/Alchemy) n Review and update of Records Retention schedules for primary legal documents n Approval of a Request for Document Imaging of Public Records When The Source Documents Are Destroyed from Arizona State Library, Archives and Public Records

State Approval Forms: Start of “Paperless” Environment 14

Operational Document Management Practices with Imaged Forms n In March 2009, Tax Division migrated to the client server web-based Tax Mantra system n Subsequent statistics on form documents collected and processed from taxpayers (one month only): 15 Month-YearApplicationsTax ReturnsStatementsTotal Dec ,725 21,854 71,188 Dec ,469 24,709 82,882 Dec ,711 23,519 75,838 Dec-12 (e-Tax)150 4,910 6,827 11,887

16 n Requires 1 employee to receive, and balance documents for scanning and imaging processes n Requires 4 employees to scan, review, and image documents into data capture and imaging system n Requires 1 ITS employees to manage the technical processes of Tax Mantra and i-Capture/Alchemy systems n Costs incurred are for the following: –ITS technical services –Tax Mantra system maintenance agreement –data capture/imaging system software licenses and maintenance agreement –scanning equipment maintenance –dual monitors and licenses n Requires the handling and use of paper documents for various operational and business needs

Paperless Office: Myth or Reality? n Advantages: –quick accessibility to documents and records from user workstations –prompt response to requests for public information –flexibility in providing records in paper or electronic form –increased security controls ( access limited to system users) –savings in labor, moving, storage, retrieval, and destruction costs –savings in paper and ink costs –eliminated need for secure centralized physical location for filed hardcopy records

n Disadvantages: –labor costs to feed documents into scanning equipment and perform data integrity processes –equipment costs for dual monitor at employee workstations –software license costs for dual monitor functionality –increased controls to safeguard the security, storage, and transmission of confidential electronic data and records –existence of a business need for paper documents n Conclusion: –office will never be completely paperless 18