Tax Jurisdiction Sourcing Data Bases
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1 Tax Jurisdiction Sourcing Data Bases Reducing Cost and Improving Tax Determination via quality data base information Bob Meador Director, GeoTAX Product Management Group 1 Software Agenda Tax issues Tax jurisdiction determination process Basic terminology The ZIP and ZIP+4 solution The street address level solution The data State supplied address lists 1
2 The Tax Jurisdiction Assignment Problem Incorrect assignments which lead to loss of revenue and increased exposure to penalties and class action lawsuits Incorrect distribution of the fair-share of taxes Increased chances of audit risk Reduced customer satisfaction Charge me the correct tax, please! Quote from Retailer Without spatial technology, there is no automated way to confidently assign correct tax jurisdictions Simple vs. Complex The steps involved in determining the correct tax jurisdiction are complex. Do you Standardize and clean your addresses? Use one or more address databases and techniques to determine jurisdiction? Automate the assignment process? Have multiple configurations? Comply with state and federal guidelines? 2
3 Basic Tax Jurisdiction Determination Process Data cleansing/standardization Geocoding Jurisdiction assignment based on address Lat/Long, ZIP+4, or ZIP. State. County, Municipal - FIPS Code Special Purpose Districts Tax Rate Table Integrating Data Quality, Tax, And Geography Data Quality Parse/ Identify Validate/ Standardize Match/ Household Consolidate Batch Clean Data Connect Extract Transform Load / Present Cross Reference Data Integration Address Standardization Address Cleanser Business/Tax Geographics Address-level geocodes (lat/long) Combine various units of geography Keep geographic boundaries up-to-date Allow For Optional CONFIG s (TS 158) X-ref to Tax Tables 3
4 Database Sources A robust tax jurisdiction assignment engine relies on several types of databases USPS Address Database USPS ZIP+4 Centroids Census Road Networks Non-Postal Addresses (911 Addresses) Enhanced Municipality Boundaries Alias Street Listings Street Intersection Database Special Purpose District database State-Supplied Datasets Geocoding is An automated process that assigns a latitude/longitude coordinate to an address. Uses a reference data base to find the closest match Input: 4383 Apple Boulder CO Output: 4383 Apple Ct Boulder CO ,
5 Geocoding Address Interpolation Addresses are geocoded using street network reference databases Files contain street segments which are defined by the street name address ranges on each side of the street boundary nodes (intersections) Geocoding approximates the location of an address based on the length of the segment address range assigned to the segment An address of 49 Main Street is halfway into the address range, so it is located half way along the segment on the odd side Geocoding Levels of Accuracy Example : 1400 W Gateway Cir Fargo, ND digit ZIP Code ZIP+ 4 Address Level 5
6 ZIP is not geography Clearly, ZIP codes have been created by the U.S. Postal Service for their sole benefit for territory management purposes. There are 42,589 ZIP codes in the US and the Postmaster can change them almost at will. ZIP is the acronym for Zone Improvement Plan. ZIP Code identifies a specific geographic delivery area. On July 1, 1963, the U.S. Postal Service implemented the ZIP Code to improve the sorting and delivery of mail and ease the way toward better, faster automated processing of letters and packages. ZIP Code Methodology 6
7 ZIP+4 In 1983, the Postal Service began using an expanded ZIP Code called "ZIP+4." A ZIP+4 Code consists of the original 5-digit ZIP Code plus a 4-digit add-on code. The 4-digit add-on number identifies a geographic segment within the 5-digit delivery area, such as a city block, office building, individual highvolume receiver of mail, or any other unit that would aid efficient mail sorting and delivery. There are on average 600,000 ZIP+4 changes per month, peaking in June of each year with about 1,000,000 changes. In total, about 25% ZIP+4 change every year. ZIP+4 vs. Street Level Methodology ZIP+4 Municipalities Without A ZIP+4: AZ (6.9%) TX (9.2%) KS (10.5%) UT (11%) SD (23%) OK (34%) National (7.3%) 1,432 of 19,486 Note: A ZIP+4 represents the mid-point location for several addresses 7
8 Address Matching - How to Avoid False Positives USPS-only Data 138 Edgemar, EDGEMONT DR DALY CITY, CA Longitude: Latitude: USPS + TIGER Data 138 Edgemar, EDGEMAR ST DALY CITY, CA Longitude: Latitude: These locations are almost 3 miles apart. Address Matching - How to Avoid False Positives 138 Edgemar St & 138 Edgemont Dr 8
9 GDT (TeleAtlas) County Boundary Data County Boundary data is based on the Dynamap/County Boundary data from Geographic Data Technology. It is designed to identify the boundaries of 3219 Counties in the United States and Puerto Rico. Updated annually Map showing GDT County boundaries in Colorado 9
10 GDT ZIP Code Boundary Data ZIP Code Boundary data is based on the Dynamap/5-Digit ZIP Code Boundary data from Geographic Data Technology. It is designed to identify the boundaries of United States Postal Service ZIP Codes. Updated Quarterly Boulder, CO ZIP Codes 10
11 GDT Street Network, Boulder, CO Map of Boulder, CO showing the ZIP+4 Centroids 11
12 ZIP+4 Postal Solution is Incomplete for CO 23 places exist with no 9 digit ZIP Codes 19 incorporated places Aguilar Avon Creede Granada Haswell Kim Kremmling Lake City Minturn Morrison Naturita Nucla Ophir Pritchett Red Cliff Saguache Sawpit Silverton Vilas 4 unincorporated places Carriage Club Eagle-Vail Fort Garland Towaoc Nederland, CO Almost no streets have USPS information Nederland Streets in Red have No USPS Information 12
13 Vail/Avon CO Most of the streets in resort towns have no USPS information Avon Eagle/Vail Edwards Streets in Red have No USPS Information Parker, CO Streets in gated communities generally do not have USPS information Meridian Stonegate Parker Streets in Red have No USPS Information 13
14 Tax Jurisdictions Boundary Data Census Based Geography States/DC Counties Governing Townships (MCDs) Incorporated Municipalities/Cities ( Places ) Non-Census Based (Special) Tax Geography School District E911/Police/Fire/ Public Safety Transit Stadium Convention Center Local Improvement Hospital Public Library Scientific & Cultural Open Space (Recreational) Drainage Challenge of Changing Tax Geography Postal Information: Over 1 million delivery point changes monthly Sparse data collected in rural areas Street Information: New streets, non-postal streets, positional realignment efforts... New Taxing Jurisdictions: Cities, Counties enter/leave tax rolls continuously Increasing use of new special tax districts Shifting Boundaries: Over 3000 city boundary changes annually Over 10 county boundary changes annually 14
15 GDT (TeleAtlas) and NAVTEQ Street Data Data Set is designed for address level geocoding Better than 12 meters for 75% of the population Updated Quarterly/Monthly GDT Statistics Geography is constantly changing Millions of changes each month to core data Over 250 map technicians updating data Source data currency is key to process Over 919,000 miles of new streets added since July 2000 Number of named street addressed segments increased 19% since July 2001 Accuracy of addresses improved by using BFA sources 225% increase over July million miles of accurately positioned streets 15
16 Florida Fire Control Districts Florida Fire Control Districts data is derived from GDT Dynamap/2000 street network data (version 14.0) based on the Fire Control District boundaries specified buy each of 21 FCDs in Florida Fire Control Districts in Florida are special districts that are not bounded specifically by municipalities or counties only Florida Fire Control Districts 16
17 More Detailed FCD Map State Supplied address databases Purpose is to allow a user (a retailer maintaining its own address database) to determine whether an address is within a municipality, county or special district User compares its address data against a state supplied list of sample addresses If user is at least 95% accurate for the population of test addresses, they become certified as in compliance and are held harmless for incorrectly sourced sales and use taxes 17
18 There s a lot going on out there MTSA TS-158 SSTP State Supplied address databases points for discussion ZIP+4 based system may not be adequate as not all incorporated municipalities have Z+4 s Street Level Address based system provides consistent results Certification should be annual to incorporate changes in to the process Data should be updated at least quarterly 18
19 Test Data Points for discussion Consider the following test data categories for the verification process: Boundary/near Edge New Annexations Non USPS False Positive Test Special Tax Districts Preferred postal city not equal to municipality Incorporated municipality with no ZIP + Customizing Address Databases (TS 158) State-supplied address listings (TS 158) contain: Address Elements In Ranges: Low To High FIPS Information: State County Municipality (Place) Special Incorporation Flag Etc 19
20 Customizing Address Databases (TS 158) A consistant format allows for: Commercial use Ease of integration Problem resolution Certified approach Summary Data currency (vintage) How old is it? How is it updated? Data completeness (coverage) Just in metro areas or statewide? Data accuracy (how good is it) What is the source? How is it updated? 20
21 Questions? Bob Meador Group 1 Software Director GeoTAX Product Management 21
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