Sunday, July 15, 2012

Low Contingency Fee, High Success Rate Makes Software Tool Big Hit In Crackdown On Tax-Cheating Property Owners Making Fraudulent Homestead Claims

In Miami, Florida, Government Technology reports:

  • A new software tool is turning up the heat on property tax fraudsters in Southern Florida.

    Called Government Revenue Management (GRM) Insight, the program is helping investigators in Miami-Dade County to mine and analyze national databases to find individuals who may be improperly claiming tax exemptions. Initial efforts have been fruitful, unearthing approximately $5 million in back taxes owed by county residents.

    The violations primarily deal with fraudulent claiming of homestead exemptions, which allow a tax break for individuals who own multiple homes. In Florida, the exemption caps the increase of a property’s assessed value by 3 percent year to year and allows a homeowner to deduct $50,000 from the assessed value of the home for county tax purposes.

    Under Florida law, a person is allowed to claim only one homestead exemption on his or her property taxes. But determining eligibility was difficult. Lazaro Solis, deputy property appraiser for Miami-Dade County, said investigators had limited ability to track property ownership outside of Florida. This blind spot led to a number of illegal homestead claims.

    With 67 counties in Florida, Solis said it was virtually impossible for his team to accumulate and analyze all the needed information. “We would need an army of investigators to go nationwide and pull all the information,” Solis said. “It’d be like a needle in a haystack.”

    The new software is giving investigators a wealth of cross-referenced nationwide data at their fingertips. The simply enter a person’s name and Social Security number. Designed by Manatron Inc., the technology also prioritizes cases by weighting the evidence. The software attempts to weed out false positives that otherwise would be flagged for investigation.

    The software also contains a case management function that essentially handles all the paperwork associated with placing a lien on a homeowner’s property when an illegal exemption is confirmed. Almost every clerical function is performed, except for providing the official signatures required for the documentation.
  • The basic agreement is that Manatron receives 10 percent of the penalties and interest assessed to the back taxes owed by a property owner, but only after the funds are recovered. The only caveat is if the property owner doesn’t pay within 30 months the county is still on the hook for the percentage owed to Manatron.

    For example, if a property owner has back taxes of $10,000 due to an improper exemption claim, Florida law requires the county to impose a flat 50 percent penalty — bringing the total to $15,000 — plus an accrual of 15 percent interest for each year in question.

    In terms of cost to the county, there really is none because the taxes are going 100 percent back to each taxing authority,” Solis said. “So [the money goes] not just to the county, but the school board and cities as well. What the vendor recovers is 10 percent of the penalties and interest only.”
In another story on tax scams using fraudulent homestead exemption claims, see County Uses Fraud Solution to Unearth $1.5 Million:
  • A fraud solution that combines analytics technology and investigative research has helped Delaware County, Ind., uncover $1.5 million in lost property tax revenue.

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