The Tax Audit and Compliance Solution was developed by IBM’s Center for Business Optimization group, which is part of IBM Global Business Services. The product uses complex data mining and predictive algorithms to match up and compare the tax behavior of similarly banded taxpayers.
The system can be delivered as an on-premise offering installed at the customer site. Or it can be hosted by IBM with its consultants performing analyses on behalf of customers.
IBM says the analysis is a good start for zeroing in on potential tax evaders and fraudulent returns, and is better than the broad audit selection criteria in place today. Around 20% of audits result in no change to the amount of tax due.
According to the IRS, tax agencies lose more than 15% of total revenue to under or fraudulent reporting, or tax evasion – commonly know as the tax gap.
IBM says the Tax Audit and Compliance Solution is currently being used by US state revenue and international government agencies.
IBM Center for Business Optimization is putting its mathematical modeling and analytic prowess to good use in solutions that combat crime and fraud, and to minimize business risk on several fronts, including supply chain, marketing investment and dynamic pricing optimization.
