Tax System Modernization

The North Carolina Department of Revenue (NCDOR) is seeking proposals for a comprehensive Tax System Modernization project through RFP 45-RQ161211, with the primary objective of replacing its legacy Integrated Tax Administration System (ITAS) with a modern Commercial-Off-the-Shelf (COTS) integrated tax system (ITS) and implementation services. The procurement aims to modernize tax administration capabilities across multiple tax types, including individual income, sales and use, corporate, motor carrier, alcohol, tobacco, and severance taxes. The project requires a vendor to provide a robust, secure system that can process over 12.5 million annual tax returns and $44 billion in gross collections, with minimal customization and full compliance with IRS Publication 1075 requirements. The implementation is planned in five phased releases, with each phase focusing on specific tax categories, and will require comprehensive data conversion, system integration, and extensive training for approximately 1,450 NCDOR staff. Vendor responses are due by May 16, 2025, at 3:00 PM EST, with oral presentations scheduled for June 2025, evaluations to be completed by July 2025, and a contract award planned for October 2025.

The RFP does not explicitly outline specific set-aside designations or restrictions for disadvantaged enterprises. The base contract term is up to 6 years, covering implementation and maintenance/support, with three additional 5-year renewal options. The total project cost will be substantial, with the cost proposal form requiring detailed breakdowns across implementation, software, hosting, and production support for a 21-year period. NCDOR will provide the Azure cloud environment for hosting, with costs charged back to the selected vendor, and requires the implementation to integrate with 38 existing interfaces across enterprise, external third-party, federal, and inter-agency systems. The vendor must provide seven full-time equivalent (FTE) staff for Application Support Services and include hourly rate cards for additional services. Payments will be tied to deliverable acceptance and subject to 20% retainage per phase until production implementation. While no incumbent vendor is mentioned, the current system has been operational since 1994 and will require a comprehensive migration strategy to the new integrated tax system.