State to bring lawsuit against designer of tax collection system

Wednesday, Feb. 5, 1997 | 11:59 a.m.

The Senate Finance Committee was told that Best Consulting designed the Automated Collection and Enforcement System, or ACES, but it failed to work properly.

"We don't believe we got what we paid for and a lawsuit is necessary," Taxation Director Mike Pitlock said. "We attempted to negotiation with Best, but they came back with a proposal that was not acceptable."

The attorney general's office is reviewing the contract between the department and Best, designers of the mainframe system the state uses to process all sales use and business taxes.

"The purpose of the lawsuit is to recover some of the costs the state incurred developing and operating an inefficient system," Pitlock said.

The failure of ACES coupled with a significant increase in workload resulting from the business tax has resulted in an agency struggling to get its work done.

"Despite our best efforts, without this (budget) request, we will not be able to remain in compliance with the taxpayer bill of rights," Pitlock said. That bill, among things, requires quick service.

Pitlock's department is requesting $500,000 to research and develop a system to replace ACES.

"The current system can't be fixed for a reasonable amount of money and if it is fixed, we don't believe it's a system that can support the increase in workload the department is experiencing," he said. "We need to reshape the process."

The workload has almost tripled in the last four years while the number of employees has not quite doubled, he said. The automated collection system was started in 1991 and implemented by June 1995.

"We have a lot of money invested in a program that was hailed as the savior of the system," Finance Committee Chairman Bill Raggio, R-Reno, said. "I'm not content to sweep $3 million under the rug and chock it up to experience."

Raggio asked state Budget Director Perry Comeaux to explain why the state bought into the system in 1991. Comeaux was the director of the Taxation Department at the time.

"The department was trying to find a way to deal more efficiently with increasing workload," Comeaux said. "The system we ended up buying had already been developed for an entity in California. Reports said it was a functional system, but it didn't turn out that way."

Pitlock said his department administers 19 different taxes and collects $2 billion in taxes each year, handles 100,000 accounts on a quarterly basis and 50,000 accounts on a monthly basis.

"We're behind," he said. "We need to design a solution that will work for a long time."