The Kentucky Department of Revenue is working to improve tobacco excise tax collections by revamping its tobacco tax system. As part of a five year contract, Xerox (NYSE: XRX) will replace the manual, paper-based process with an electronic tax system that will detect potential tax fraud and make it easier to track illegal cigarette smuggling.
The implementation of Xerox's new tax system will include licensing, surety processing, tax stamp ordering, inventory controls, electronic reporting, tax return processing, collection/payments processing, desk and field audits, and the tracking of shipments at the invoice level.
"By streamlining current manual processes, the Kentucky Department of Revenue can eliminate additional operational costs, while working to limit illicit trade," said Rich Bastan, vice president, Americas Commercial & State Government Transportation Sector, Xerox. "State governments lose an estimated $5 billion a year due to cigarette smuggling and we are working closely with Kentucky to increase collections on all cigarette sales taxes due to them."
Kentucky has previously increased its state revenue with Xerox's fuel tax and tracking product and realized the potential to regain revenues from lost tobacco taxes through automated reporting, regulatory compliance, and data analytics.
"DOR is looking for Xerox to bring to KY Tobacco Excise Tax administration and its filer community the same robust efficiencies the company has previously delivered to the Commonwealth and the business community for Motor Fuels Tax administration," said Lori H. Flanery, secretary, Kentucky Finance and Administration Cabinet.