Chapter 3
Improving Tax Compliance
Chapter 1
Online Tax Collection
Chapter 2
Finding the Right Tax Software
Chapter 3
Improving Tax Compliance
Chapter 4
Increasing Tax Revenue
Chapter 5
Collecting Multiple Tax Types
For any local business, whether they in a large city or a small town, filing taxes can be one of the most challenging and time-consuming interactions they have with their local government on a regular basis. Simultaneously, enhancing tax compliance and collecting sufficient tax revenue is essential for many local governments to help finance public projects and services that benefit their community.
To reconcile these two points, many forward-thinking local governments are choosing to automate their current tax filing and collection systems with the hope of reducing critical obstacles to compliance. This transformation has progressed rapidly over the past decade and was particularly accelerated by the COVID-19 pandemic which led to an increase in digital services and transactions.
This sudden change made the need for governments to digitize their current systems more urgent, but how can it be done in an effective way that benefits the local community while also improving tax compliance? There are a variety of strategies, all of which depend on a fully digitized, streamlined tax filing and collection solution to simplify the tax filing process.
Convenience for the Community
One of the clearest advantages of an online tax solution is the convenience it offers local taxpayers. With an online solution, taxpayers can easily access online tax filing services from anywhere at any time on their computers or smartphones. This level of access greatly reduces the time and effort required to file.
The result is a much more streamlined, painless process for citizens to meet their tax obligations promptly and accurately. The greater the ease of the filing process, the more likely businesses are to comply.
Elimination of Paper Tax Forms
Going paperless benefits both taxpayers and local governments in the latter’s effort to improve tax compliance. Bringing paper tax documents online can expedite the processing of returns, boosting taxpayer confidence in the system.
For local governments, the paperless remittance of online filing systems can save critical space, upgrade security, and reduce paper processing by 95%. It also allows customer service representatives to address errors and resolve issues more quickly, rather than allocating time to the manual input of paper documentation.
Businesses don’t have to repeat information every month, such as their account number, name, and address since it is all saved to their online account record. Often, they only need to enter a couple of fields with information, and the rest will be calculated for them.
Simplification of Processes & Terminology
In a GovOS survey, just under 1 in 4 respondents indicated they knew where to find everything they needed and understood exactly what was required of them to be in compliance with local regulations. Respondents mentioned simplified processes, straightforward verbiage, and helpful information (easy-to-follow online tutorials for example) can provide a significant amount of clarity around compliance.
Local governments can save businesses and themselves significant time and energy by moving instructions online and into the taxpayer’s view, readily available at any time without needing help from the jurisdiction.
Some tax solutions provide popup explanations for each line on a tax form—right inside the form itself—so the user is not obligated to search other pages or resources to understand what’s required, which they often don’t have the time to do.
Timely Updates
Receiving timely, informative status updates on filings and returns also contributes to taxpayers’ faith in the system and, by extension, their compliance with it. Tax software should provide timely notifications to tax filers as well as access to a tax portal where they can file current taxes and look at past filings. Immediate notifications go a long way to provide peace of mind and improve future compliance.
Security & Transparency
When it comes to private financial information, security is essential. Online tax filing and collection platforms can foster trust in the taxation process by being equipped with advanced security measures (encryption, multi-factor authentication, secure payment gateways, etc.) to ensure that personal data remains confidential, minimizing the risk of data breaches or fraudulent activity.
Additionally, online tax filing and collection platforms can improve trust in the taxation process and increase compliance through transparency. By providing a clear view of an individual’s filing history, receipts, and tax liabilities in real-time, governments can cultivate a greater level of trust and accountability between themselves and the community. When things are simple, clear, and accessible, compliance improves.
Comprehensive Support & Real-Time Reports
In the same GovOS survey, respondents mentioned having some kind of interactive online assistance would be of great help to ensure tax compliance. The GovOS tax solution, for instance, includes comprehensive support to both government staff and the taxpayers in the community. It also provides extensive reporting and tracking capabilities that can be accessed in real-time and allows users to view all remittance data as soon as it’s submitted.
The Evidence Is Clear
For businesses, having a fully online filing system with intuitive forms and auto-calculations that lets them submit filings directly to their local government is incredibly beneficial. Governments that implement this kind of system can expect to experience not just improved tax compliance, but increased revenue collection, better reporting capabilities, and significant time savings as well.
By simplifying the paperwork and processes involved in filing taxes for businesses, local governments can encourage greater compliance and help taxpayers focus on helping their own business and local community flourish.