Fraud detection technology returns $34 million to Florida counties

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Two counties in Florida have recovered nearly $34 million in unpaid tax revenue over the last decade through data analysis, creating a new revenue model that has helped them fund public services.

The windfalls enjoyed by Brevard County, along the Atlantic coast, and Duval County, which is home to Jacksonville, were made possible with software from the business-research company LexisNexis Risk Solutions and the auditing firm Tax Management Associates. The technology uses data analysis to comb through public records that were previously inaccessible or too large for human investigators to actually verify. In 2018 alone, the two counties uncovered nearly 1,000 fraudulent claims filed just in 2018, resulting in more than $5 million in new revenue.

The fraudulent claims are the result of taxpayers manipulating Florida’s Homestead exception — a tax break for residents who claim a Florida property is where they spend the majority of their time. The exception, which allows taxpayers to deduct the value of their properties by $50,000, is common in places like Florida, where many homeowners often live for only one season, but officials struggle to keep track of people that attempt to use the tax break on multiple residencies.

“Most of our residents are law-abiding citizens who claim only the homestead exemptions they’re entitled to, but there will always be some who try to take more than their fair share,” Jerry Holland, a Duval County property appraiser, said in a press release. 

The tool cross-checks TMA’s proprietary identity data against the state’s public information to find residents that claim exceptions elsewhere or who aren’t eligible in Florida. The data analyzes existing exemption requests for typical fraud indicators, like deceased property owners claiming exemptions and duplicate filings.

When fraud is found, TMA takes a 30 percent cut of the back taxes and penalties. Homeowners are ordered to pay back their unpaid taxes and assessed a 50 percent penalty, plus 15 percent interest on the amount. Officials in both Duval and Brevard counties said they are using the new money to pay for education, utilities and roads.

“They’re all using the solution to effectively save time and resources that would normally be required to track down and verify multiple properties and, in the process, have identified millions of dollars of new-found revenue,”  said Haywood Talcove, the chief executive for government at LexisNexis Risk Solutions.

Other counties in Florida, including Sarasota, Pinellas and Citrus, have used the data analysis tool in in the past to similar success. In 2017, an investigation found $8.3 million in back taxes owed to Sarasota County. Between the six counties using the service, over $140 million has been returned to tax rolls, according to LexisNexis Risk Solutions.

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Big Data, Florida, LexisNexis, tax fraud
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