State IT chief to lead tax system upgrades

State information technology experts are stepping up their role in the effort to replace an outdated computer system that serves the state Department of Taxation.

After months of complaints from the public and state lawmakers about the new system, Gov. David Ige this week named state Chief Information Officer Todd Nacapuy as “executive sponsor” of the $60 million Tax System Modernization, or TSM, project.

The new computer system generated so many complaints that the Legislature this year stopped the flow of new funding into the project. Lawmakers refused a request from the Ige administration for an additional $18 million to continue the computer changeover.

Lawmakers also transferred a half-dozen of the key tax department staff involved in the project to the Office of Enterprise Technology Services, where they work under Nacapuy.

Unhappy lawmakers also passed House Bill 1414, requiring the state auditor to investigate and report back on the problems with the new tax system, but Ige has signaled he likely will veto that bill.

Ige did not mention any of those developments in his written announcement this week that Nacapuy will now lead all technical aspects of the tax computer system changeover. That shift is designed “to ensure the project successfully implements and fully leverages modern best-practice processes and technology toward stated goals,” Ige said in his written statement.

Nacapuy, who reports directly to the governor, will oversee the work of consultant Fast Enterprises, which is implementing the new system, and has set up similar systems in 21 other states. Nacapuy will also receive what are called “independent verification and validation” reports from another consultant hired to monitor the progress of the tax project, Ige announced.

“We recognize overhauling such a large, complex system affecting virtually every Hawaii taxpayer is not easy, but the benefits are clearly worth the investment and immense effort,” Ige said in his written statement. “We have the right team in place and are positioned to succeed.”

House Finance Committee Chairwoman Sylvia Luke, who has been an outspoken critic of the rollout of the new tax system, said Ige’s announcement “is a step in the right direction.”

She added, “The Department of (Taxation) doesn’t have the right approach and right personnel to address the technical IT issues. It’s not a tax collection issue. It’s an IT issue.”

Many of the complaints from the public focused on the launch last August of the second phase of the computer system, which shifted general excise taxes, hotel room taxes and motor vehicle rental taxes from the old system to the new. Users complained they were unable to register with the new system to pay their taxes, and the call center set up to help the public was overwhelmed.

The tax department has so far spent more than $18.7 million on the project, which Nacapuy said is large, complex and critically important because it involves all state tax collections. His role is to help the tax department address problems that cropped up in the first two phases of the project, he said.

“The biggest focus here is on the constituents,” he said. His department will focus on the technical aspects of the project to improve some of the customer service aspects of the TSM project, he said.

The project schedule calls for individual income taxes to be shifted over to the new system next year, and for the final phase of the project to launch in July 2019.