Illinois’ Cook County is proof that small investments can lead to big payoffs.
Over the past year, the county has collected $5.1 million in revenue from residents who have received erroneous and fraudulent tax exemptions. Another $4.3 million has been billed to taxpayers, who must pay their debt to avoid a lien against their property.
Key to the county’s success in reclaiming those funds was a $1.3 million contract with LexisNexis, which gave Cook County access to the company’s Homestead Exemption Fraud Detection Solution. The solution was implemented in January.
“The revenue which has been collected has far surpassed the initial investment,” says Maura Kownacki, spokeswoman for Cook County Assessor Joseph Berrios.
The LexisNexis solution relies on a powerful supercomputing platform to quickly link pieces of data together and create a complete picture of individuals who claim homestead exemptions in the county, explains Steve Lappenbusch, tax and revenue strategic market planner for the government division at LexisNexis Risk Solutions. “We put together a large database of information about people, [and] it allows us to be the premier [identity] provider.”
The data are aggregated from public records the company buys and collects —including property records, people’s phone numbers and information about vehicles they own — to see if residents are telling the whole truth about themselves, Lappenbusch explains. “The [government’s] system is very much set up to believe people,” but “there are a lot of people who aren’t paying their fair share.”
LexisNexis is able to determine within seconds whether people who have claimed homestead exemptions in Cook County are filing the same claims in other areas. The system flags those who are receiving multiple homestead exemptions and those who are deceased and should no longer receive money.
The county saved more than $6.2 million by removing exemption files of deceased senior citizens from its tax rolls.
“It’s not just about coffers,” Lappenbusch adds. “It’s about everyone paying their fair share.” On average, about 2 percent of the homestead exemption payments LexisNexis reviews for its customers are improper payments.
The assessor’s office plans to review and investigate fraudulent exemption claims in the county’s 38 townships, Kownacki says. Taxpayers can also anonymously report erroneous exemptions.
The Impact of Fraudulent Exemption Legislation
The county’s assessor played a major role in proposing legislation to address the high volume of phone calls from residents reporting other taxpayers who claimed fradulent exemptions. Gov. Pat Quinn signed the legislation in July 2013. It gave taxpayers who received one or two erroneous exemptions a five-month amnesty period to repay the money without facing penalties or interest fees. Kownacki says many taxpayers voluntarily repaid the money to the county during that period.
The county began investigating fraudulent and erroneous exemptions this year and began billing residents in March.
“Prior to this new law, the Assessor’s Office had no real authority to recover money from taxpayers who received erroneous [or] fraudulent exemptions,” she says. “When discovering a fraudulent exemption, our office would remove the property from the exemption rolls and require the taxpayer to provide proof of eligibility in order to receive the exemption in future years.”
Today, per month, the county averages $500,000 in collections and $1 million in bills to residents for taxes it is owed.
Other counties are taking notice of Cook County’s success and have already invested in the LexisNexis solution, including DeKalb County in Georgia and Indiana’s Delaware County.