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Use revenue analytics to boost voluntary compliance

Discover how microsegmentation enables targeted outreach by agencies to influence the behaviour of non-compliant taxpayers.

Overview

Today’s revenue agencies are harnessing the insight-driven accuracy that revenue analytics provides to understand their customers better. An analysis of audits of small businesses is likely to uncover specific groups claiming unwarranted expense deductions; however, the move from a general approach to reach customers to one that is precisely targeted through revenue analytics means that taxpayer demographics and types of behaviour can be assessed and utilized to improve tax compliance. This shift from reactive to insight-driven activities can increase the probability of compliance.

This Accenture Point of View explores how leading public service agencies are using revenue analytics to move beyond the categorization of business taxpayers into broad classifications, utilizing advanced tools and segmentation processes to dive more deeply into data to identify meaningful microsegments. The cost-per-contact of automated communications is significantly less than for contacts involving personnel, such as in an audit. In fact, communications with well-focused messages are more likely to be understood and followed.

Background

The analysis of small business audits through revenue analytics can uncover particular trends, such as specific groups that are claiming similar deductions. To increase tax compliance, effective communications and precise messaging can be used with these groups to address the observed behaviour, provide instruction for how the behaviour needs to change, and relate the consequences of non-compliance. The variety of targeted communications that can be utilized include email, messages after users log onto online portals, interactive messaging, automated outbound calls, agent telephone calls and paper notices. These forms of communication cost considerably less than an audit and are more likely to be understood and followed by the specific groups identified.

Accenture’s revenue analytics framework hastens the process of identifying microsegments that are at greater risk of non-compliance. Rules and risk patterns which are predetermined in the framework can be adapted for and aligned with data accessible by each revenue agency to create well-targeted communications in an effort to improve the likelihood of changing behaviour.

Analysis

Accenture’s revenue analytics framework works with agencies to improve their results through multiple iterations of revenue analytics calculations, assesses what works and why, and refines the information for use the next time. At a high level, the framework views data by attributes:

  • Taxpayer type

  • Historical behavior

  • Demographics

  • Relationships

  • Compliance tendency

This allows agency leaders the opportunity to review the data and determine subsegments likely to be the best candidates for communication campaigns to improve compliance. This process also helps agencies quantify:

  • The extent of change as a result of a blanket campaign vs. targeted approaches

  • Before and after rates of compliance within each subsegment

  • Compliance within a segment receiving targeted actions vs. a control group

The monitoring and refining of data through revenue analytics can lead to wider implementations and increase the potential of greater returns.

Recommendations

Today, revenue agencies have access to advanced tools and revenue analytics processes which allow them to distinguish specific patterns among like-minded taxpayers, providing insights on ways to boost voluntary compliance in various microsegments. The likelihood of changing behavioural patterns is improved with well-targeted communications, demonstrating a shift in the process of behaviour detection from piecemeal efficiency to mission productivity.

Revenue analytics-driven approaches have many benefits, including increased revenues, reductions in fraudulently claimed refunds and credits, and diminished incidence of taxpayer error. Additionally, agencies can trim and streamline the costs of communicating with large groups of taxpayers through generalized communications and mass mailings. Furthermore, as the public is alerted to the increasing sophistication among agencies propagated by media reports and word of mouth, people will take heed—this heightened perception of a greater likelihood of being caught through the use of revenue analytics is likely to discourage taxpayer carelessness and fraud, and improve voluntary tax compliance.