Tightening Exemptions

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Owning a home is a big financial responsibility. On a monthly basis, home owners pay their mortgage and various utility and related bills. Annually, however, the property tax bill comes due. This money is important – it is the source of funding for schools, as well as police and fire departments. Even so, this tax bill can be hefty, and some states have carved out exemptions – often called homestead exemptions – to try to ease the burden on the taxpayer. To qualify for a homestead exemption, the taxpayer must meet the state’s criteria for eligibility, which typically include age or income limits. Also, the home owner usually can only claim a homestead exemption on a primary residence. There are, of course, those who try to cheat the system. Fraudsters like these are the topic of a WLOX13 article, which cites a growing concern about homestead exemption fraud by Mississippi officials, who are working diligently to bring an end to the problem.

In Mississippi, each county is responsible for granting applicant homestead exemptions. Additionally, the applications run through the State Tax Commission in order to determine who is eligible for the assistance by ruling out both county and state tax issues, such as the location your car is tagged in, or if you owe back taxes to the State of Mississippi.

When asked how much money is lost from individuals improperly claiming homestead exemptions in Mississippi, a Madison County Tax Assessor commented? ”I think it’s millions of dollars missing in Mississippi’s county and city and school revenue that comes from homestead fraud.” (That’s a big chunk of change.) Madison County, in particular, has ramped up its efforts to bring the fraud to an end, requesting information, such as utility records. The Madison County tax assessor explained that homestead exemption fraud has ”increased during the recent recession and the housing crisis because a lot of people were not able to sell their house and decided to rent it but they didn’t bother to tell the tax assessor they were renting their property.’? These fraudsters even sign documents stating they are providing truthful and complete information. The tax assessor offered an explanation to the crime? ”Some people think it’s an innocent thing…It’s sometimes treated as passive, as if maybe I’ll get away with it, I’m going to do it.” (It’s a big deal when teachers, police officers and fire fighters lose their jobs because people aren’t paying their fair share of property taxes.)

Madison County’s request for more information about taxpayers via utility records is on target. I’d also suggest this is where public records and data analytics technology is valuable. But, the goal is the same? stop fraud by detecting it up front. Go Madison County!

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Homestead Exemption Fraud a Growing Concern,” written by Courtney Ann Jackson and published by WLOX13 on June 13, 2013.

MADISON COUNTY, MS (Mississippi News Now) –

Homestead exemption can save a homeowner money. But does fraud within the system fly under the radar?

“Homestead is not a right. It’s a privilege,” said Kathy Waterbury from the Mississippi State Tax Commission.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.