Berkheimer Associates is Pennsylvania’s largest independent local tax administrator, processing tax records and payments for over 1,100 municipalities and school districts throughout the state. Pennsylvania residents pay a percentage of their individual earned income as a tax to municipalities and school districts. Municipalities and school districts, in turn, retain firms like Berkheimer as a designated administrator for the local earned income tax. In this role, Berkheimer receives every annual tax return addressed to its client municipalities or school districts. Berkheimer staff must open every envelope, sort each form by municipality, enter data, process data and funds, issue refund checks, complete data entry for its records, archive records, and make information readily available to its clients.

Despite recent IRS initiatives toward electronic tax filing, the bulk of Pennsylvania residents still file their taxes on paper forms. The paperwork load Berkheimer carries is enormous — and the growth in its business compounded the overload. Last year Berkheimer processed over half a million tax forms — with most forms containing three to four pages of attachments such as W2 forms, and many forms being joint returns filed by couples. This year, Berkheimer is printing over 1.2 million forms for distribution to taxpayers — a 15 percent increase from the previous year. Although tax return audit activity proceeds year-round, all tax refunds in the state must be issued by July 1 — creating a short time-frame between April 15 and July 1 for the initial data entry phase required for processing refunds.

Berkeimer added part-time staff during its peak season to handle the increased processing volume. Staffers would manually re-enter municipal/school district tax information onto Berkheimer’s computer system. After manual data entry, the firm temporarily filed the forms until retrieval if an audit was required, and then archived them. However Berkheimer knew it could decrease processing time and provide greater efficiencies throughout its process — reducing paper handling, filing and retrieval time, and also saving valuable storage space — with a forms imaging system. The firm’s director of information services had some familiarity with OCR for Forms™ from Microsystems Technology, Inc., and chose this product as part of his total imaging solution created by an outside systems integrator.

Berkheimer’s imaging application uses Bell+Howell scanners to capture the data into OCR for Forms on Novell network servers with Windows desktop clients.
The application then stores the images in a Progress database running on a UNIX system. Processed data is then accessed by Berkheimer’s own tax administration software.
To maximize scanning accuracy, Berkheimer extracts only select data fields with OCR for Forms. The software then verifies the taxpayer’s math, and compares the numbers against quarterly estimated tax forms and the state’s W2 data. Out of all forms scanned in the past year, 30 percent completely balanced and required absolutely no manual intervention; the software "did all the work." The rest of the scanned forms required some manual verification, correction, or amendment due to status or address change.

The OCR for Forms application and related efficiency improvements allowed Berkheimer to finish inputting total tax return data needed for its records a full
three months earlier than in the previous year – despite an increased processing workload. The labor savings from OCR for Forms eliminated the need for additional staffing to process forms, despite the firm’s rapid growth. Berkheimer found the OCR for Forms application delivered increased efficiencies across the board that translated into money and time saved, better use of staff talents, and improved customer responsiveness.

Berkheimer plans to expand its use of OCR for Forms to include additional tax forms. The firm increased the percent of forms it scanned into the system from 60 percent in the application’s first year of use to 80 percent in the second year. Berkheimer also is working to modernize its forms as a way to fine-tune optical character reader (OCR) accuracy and data verification

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