A system update by a major state tax agency, which will ultimately span nearly half a decade when the deployment is complete, is on schedule and using lessons learned to inform its ongoing rollout, an official said recently.

The California Department of Tax and Fee Administration (CDTFA), which manages collection of a variety of taxes including sales and use, vehicle and jet fuel, tobacco and alcohol taxes, deployed the first production release of its new Centralized Revenue Opportunity System (CROS) on May 7, 2018, the initial effort at getting off legacy by migrating to what the department described as a “customer-centered” solution.

CROS features include more online services, better access to customer records, improved process and case management — and establishment of a data warehouse. And significantly, that first release brought onboard the agency’s largest program, sales and use tax, which CROS Project Director Scott Capulong told Techwire accounts for approximately $54 billion of the revenue CDTFA manages every year. That’s more than 84 percent of the $64 billion total annual revenue the agency administers annually.

That first production deployment, Rollout 2, didn’t meet with universal accolades, with some users indicating training and education could have been improved. Capulong said the agency anticipated that new online services would be “a significant change” that could generate calls from taxpayers, so it “proactively prepared” by utilizing representatives from other program areas to assist its own customer support personnel. Subsequently, CDTFA has made good use of lessons learned to test its second production release this winter, ahead of a go-live in mid-August, he said.

“There were definitely areas that had room for improvement after the implementation of sales and use tax in Rollout 2. We listened intently to all input, conducted usability studies and implemented a host of changes that have significantly streamlined the filing process,” Capulong said via email.

These changes included a streamlined decision-making process; a “sandbox testing environment” for staff to practice using the system; and “continuing usability study sessions with taxpayers.” (The first CROS release, Rollout 1, included implementation of infrastructure and data warehouse capabilities, Capulong said.)

Rollout 3, the next milestone in the $281 million project, is part of a continuing process that will stretch into 2020, when the remaining programs will transition to CROS. Spearheaded by vendor FAST Enterprises Inc., which was selected in August 2016 by the State Board of Equalization, with CDTFA staff and subject matter experts from other business areas, it will include Special Tax programs in the following areas:

• Alcoholic beverages

• Jet fuel

• Motor vehicle fuel

• Oil spill prevention fee

• Underground storage tank maintenance fee

• Cigarette and tobacco products tax and licensing

• Diesel fuel

• International fuel tax agreement

• Timber yield

• Use fuel tax

Testing began in January and will continue through its rollout in mid-August, Capulong said. During the January 2019 peak filing period, the agency saw more than 413,000 fourth quarter and yearly sales tax returns filed — the highest number of returns received and the greatest compliance rate achieved during a January peak period in several years.

“The testing is comprehensive and will test complete business process workflows. The testing involves working with business users and having them use the system, provide feedback on their experience, and identify any changes that need to be made,” Capulong said. Rollout 3 is expected to offer several areas of enhancement for users, including:

• Online filing for fee and tax programs that simply didn’t have it before, along with increased account maintenance capabilities, access to real-time account information and the ability to track and obtain CDTFA correspondence.

• A single registration capability for multiple tax and fee programs.

• Automated computations to reduce errors on return filings.

Parallel to testing, the agency will undertake data conversion and outreach, to educate and inform tax and fee payers on the implementation. Some training has already begun and training for staff will start in May. The goal of the third release, Capulong said, is to continue moving off legacy while improving the system’s “intuitiveness” to enhance its customer experience.