Illegal Tax-Dodging Homestead Exemption Claims Skyrocket; Local Teachers Union Proposes Amnesty Program To Raise Cash, Minimize Membership Layoffs
In Miami, Florida, The Miami Herald reports:
- The teachers union in Miami-Dade County has proposed what could be an innovative way to raise extra money for education: A tax amnesty program that would go after homestead exemption cheats.
- At a news conference Tuesday, the United Teachers of Dade announced plans to push for a pilot program that would encourage residents to come clean that they are illegally claiming homestead exemption - a tax break of up to $50,000 for those whose Florida property is their full-time residence.
- UTD President Karen Aronowitz said the amnesty would be accompanied by an advertising campaign linking tax evasion with the negative effect on school funding, and would be followed up with higher penalties. "Teachers hate cheaters," Aronowitz said. "If people pay their taxes we can pay our teachers."
- Exactly how much a tax amnesty could raise is debatable. Miami-Dade Property Appraiser Pedro Garcia said homestead exemption fraud liens have grown from about $2.7 million in 2007 to $14.5 million so far this year. That is driven by two factors: A poor economy leading more people to cheat and increasing the number of detectives investigating fraud cases.
- But James DiBernardo, a retired major with the Miami-Dade County Police who investigated economic crime, believes those numbers are much higher. Whereas Garcia estimates there are upward of 400 deceased people claiming homestead exemption on the tax rolls, DiBernardo said that number is actually about 12,000. Most of those cases involve relatives of the deceased who now live in the home but have not changed the ownership.(1)
- DiBernardo consulted with three private companies and said each provided similar figures. In all, DiBernardo estimates $280 million is owed in back taxes, 40 percent of which would go toward education. In addition to the 12,000 deceased residents, he believes there are about 20,000 residents who are renting properties but still claiming them as their full-time residence.
- "I'm uncovering a lot more than I ever expected," DiBernardo said of the fraud cases.
(1) My guess is that there is also a 'ton' of recently-foreclosed homes once owned by exemption-claiming homeowners that have now been acquired by banksters who have conveniently failed to file the appropriate change in the properties' homestead status, thereby enabling them to improperly continue pocketing the tax benefit.