‘Billing Integrity” Program Turns up the Heat on Homestead Exemption Fraudsters

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Anyone who works for a government program that can be defrauded knows that agencies must dedicate resources to finding fraud. But here’s the interesting thing? the amount of fraud discovered often pays for the people and technology allocated to find it, and much more. That’s what the City of Baltimore has discovered in today’s fraud from The Baltimore Sun.

The article reports that the mayor wants to ”triple spending” on its ”’billing integrity”’ program to $337,000 to add two new staff members to ”audit all tax credits and investigate the accuracy of property assessments.’? Baltimore’s director of tax and revenue analysis said the budget request ”would more than pay for itself.’? (Yes…they get it!)

The city’s ”’billing integrity’ program launched last spring, has focused on finding homestead property tax credits that go to owners who don’t live in the homes receiving the tax breaks, which violates the rules.’? Maryland’s statewide homestead exemption ”acts as a cap on property taxes, limiting how much of the increased value that primary residences can be taxed on in a single year. In Baltimore, the cap is 4 percent.”

Homestead exemption programs differ among state and local governments. In Baltimore, the city handles billing, but the state determines whether the credit may be revoked. The staff member currently dedicated to finding fraud and errors has been successful? ”so far, the city has requested the state revoke over $1.3 million in homestead credits from 2,157 properties – rentals and vacant homes – and almost $1 million in tax exemptions on properties that the city believes do not actually qualify for the nonprofit break.’? And, they aren’t done yet. The Finance Department soon expects to forward a request for up to $2 million in revocations to the state. (It adds up.How many teachers and police officer salaries could be paid with this new revenue?)

Baltimore realizes that fraud isn’t going to find itself and is making it a priority by putting forth a budget that allows them to hire additional people to audit and investigate the program. Does your state provide a homestead exemption or similar property tax relief program? If so, what steps is your local government taking to uncover fraud?

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Mayor Wants to Expand Property-tax Effort,” written by Jamie Smith Hopkins and published by The Baltimore Sun on March 21, 2012.

The number of city workers charged with rooting out property tax fraud and errors would triple — from one employee to three — under Mayor Stephanie Rawlings-Blake’s budget proposal for next fiscal year.

The “billing integrity” program, launched last spring, has focused on finding homestead property tax credits that go to owners who don’t live in the homes receiving the break, which violates the rules. The Finance Department wants extra staff to audit all tax credits and investigate the accuracy of property assessments.

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