September 27, 2009
Investigator takes tax cheaters to task
Retired cop cracks down on homestead exemption fraud
By DEREK CATRON
As angry residents come before elected officials to complain about a tax burden they see as unfair, they might instead look to some of their neighbors.
Don Schubert does.
Schubert is lead investigator at the Volusia County Property Appraiser's Office who checks into allegations of homestead-exemption fraud.
You might call it, "CSI: Property Appraiser."
But while the job might not feature the high drama of a TV crime show, Schubert's small team -- one other investigator and an administrative assistant -- is no penny ante operation. Since 2005, they've returned more than $3.5 million to tax coffers from residents who tried to cheat the system.
"It's not glamorous," said Schubert, a retired police officer, "but at the same time, we believe we're doing a valuable service for the county."
The numbers are on the rise, with Volusia closing about 250 cases a year. Even in a period of declining property values, the worth of the exemption can be a considerable temptation.
Just for living in the house you own, the exemption lops $50,000 off the assessment used to calculate most property taxes (the benefit for school taxes is $25,000). Annual assessment increases are capped at no more than 3 percent by the Save Our Homes amendment, and the benefits are now portable if you sell your house and move to another in Florida.
For some people, especially during the real-estate boom years, those potential savings were too good to pass up.
But the penalties for falsely claiming an exemption can be steep. You could be on the hook for up to 10 years of back taxes plus a 50 percent penalty, plus 15 percent interest. There are no payment plans. To pay it back, you either pay the whole amount, pay off a year at a time -- or don't pay it, and accept the lien on your house (which continues to accumulate the 15 percent interest until you sell the house).
As the exemption benefits grew more significant through the real-estate boom years, officials around the state were compelled to be more vigilant about homestead fraud.
"When someone cheats, we all pay for it," said Flagler County Property Appraiser Jay Gardner, whose office has several people trained to look into potential fraud cases when time allows, helping to save the county a couple of hundred thousand dollars a year.
Despite the potential for savings, it's a sensitive subject for property appraisers, who don't want to appear too gung-ho in pursuing cases against people who are, after all, the citizens they serve.
Volusia County Property Appraiser Morgan Gilreath chose his words carefully in describing the program's goals.
"We're not in the revenue business," he said.
The business is to hold accountable those who would cheat their neighbors. While there's no pleasure in slapping a big tax penalty on a little old lady with a fixed income, everyone who cheats the system only adds to the burden for everyone else.
Schubert's hiring three years ago was an indication of the stepped-up response to the problem of exemption fraud. Schubert has worked for the FBI and retired after 25 years as a police officer in Montgomery County, Md. His new job is a far cry from, say, a narcotics investigation, but the thought processes of building a solid case are not that different.
Cases often begin with an anonymous tip from a neighbor or someone else close to the homeowner, though the investigators also cull through various public records and data services in search of inconsistencies.
Do driver's license, voter registration and utility records match property records? Are there other properties where the owner might claim a tax credit?
When necessary, the investigators go to the house. Sometimes, they knock on the door. Sometimes, they talk with neighbors. Finding tenants living in the house is a good giveaway that the owner doesn't qualify for a homestead exemption.
"We review every case individually," Schubert said. "There are laws and rules we have to go by."
The money that is recovered -- the Volusia office took in nearly $1 million through the first eight months of this year -- is redistributed among the taxing authorities that were cheated in the first place.
The biggest bill Schubert has seen was $250,000, though he called that an extreme case. The bigger cases tend to cost the owner around $40,000 to $50,000.
"The penalties and interest are severe," he said. "It's almost going to double the taxes owed (in most cases)."
It's enough to make Gilreath think the risk isn't worth the reward.
"They're not saving money," he said. "It costs them a lot more when they get caught than they could have saved. And we're getting better every year -- maybe every day -- at finding them out."