Forms Processing Software Speeds Tax Processing

Berkheimer Associates (Berkheimer) is Pennsylvania's largest independent local tax administrator, maintaining offices throughout the state. Over 1,100 municipalities and school districts process their tax records and payments through Berkheimer. Despite a dramatic increase in the number of municipalities it serves, Berkheimer decreased processing time and simultaneously avoided staff increases by implementing Microsystems Technology's (MTi) OCR for Forms ™, a Windows-based forms processing software solution.

In Pennsylvania, municipalities and school districts share in a percentage of individuals' earned income. Berkheimer, as designated administrator for the local earned income tax, processed in excess of 500,000 tax forms last year. Some tax forms are joint returns and most forms contain three to four pages of attachments, such as W2s.

Tax Firm Challenged To Process 15% More Forms
This year, Berkheimer is printing over 1.2 million forms for distribution to taxpayers for 1998, a 15 % increase from the previous year. While the firm still audits tax data throughout much of the year, all tax refunds are issued by July 1, which leaves a short timeframe for its initial data entry phase. This was a tedious process; part-time staff had to open every envelope and sort the forms by municipality. After manual data entry, the firm temporarily filed the forms until retrieved for the required audit, then archived them.

The company's management had recently decided to implement form-managing technology to save valuable storage space. Imaging would also allow the staff to retrieve the forms on-screen, reduce paper handling, filing and retrieval time, as well as lead to an overall decrease in processing time. Robert Fehnel, director of MIS for Berkheimer, was familiar with the capabilities of OCR technology and realized it could be used to provide even greater efficiencies.

Product Selected For Recognition Versatility
After evaluating several competing products, Berkheimer concluded that OCR for Forms would provide the best accuracy. It uses the recognition technologies available for bar codes (BCR), mark sense boxes (optical mark recognition - OMR), hand print (intelligent character recognition - ICR) and machine print (optical character recognition - OCR) data types. The product was also selected because of its ability to take data from paper to ASCII text – quickly and accurately – then effectively move that data into a customer database. Fehnel was also impressed with MTi's local reseller, Document Conversion Associates of Annandale, NJ, who demonstrated the expertise needed to ensure the project's success from start to finish.

After a trial period where Berkheimer proved the system would meet expectations, it moved into full production. Using Bell & Howell scanners, Berkheimer captures the data onto Novell network servers with a Windows client, then stores the images in a Progress database running on a UNIX system. The processed data is then accessed by Berkheimer's tax administration software.

Software Eliminates Need For Additional Manpower
To maximize the scanning accuracy, Berkheimer extracts only select data fields. The software then verifies the taxpayer's math, and compares the numbers against quarterly estimated tax forms and the state's W2 data. In the past year, of all forms scanned, 30% completely balanced and required no manual intervention. The rest of the scanned forms required some manual verification, correction or amendment due to status or address changes. Despite Berkheimer's rapid growth, the labor savings from OCR for Forms has eliminated the need for additional manpower for processing forms. In fact, through OCR for Forms and other efficiencies, the firm finished inputting the data in August last year. This was three months earlier than the previous year, despite the greater workload.

Multiple Phase Approach To Automation
Berkheimer continues to fine-tune its OCR accuracy and data verification through forms modernization. The company plans to expand its use of OCR for Forms to include additional tax forms. During the first year of use, Berkheimer scanned 60% of all forms, the following year, the company was up to 80% and agrees a "phased-in" approach to automation best fits its needs.