I-Team Extras: Dangerous Displays
May 18, 2009 11:40 pm US/Eastern
I-Team: Loophole Helps Cash Strapped Avoid Taxes
MIAMI (CBS4 I-TEAM) ―
More than 500 million dollars in taxes don't get paid in time by property owners every year in South Florida but not paying your property taxes in a timely manner is perfectly legal and even encouraged by local tax collectors.
When you look at the home that property records show belongs to businessman John B. Kennelly, it's hard to imagine that he's listed at the top of Broward County's list of delinquent taxpayers in 2007.
It is a house that property records list as just over 6 million dollars in value. In the backyard sits several luxurious yachts. Records show the real estate developer also owns at least seven different properties in Broward County alone.
Florida Department of State Division of Corporation records John B. Kennelly as an agent, manager or officer in 20 different businesses in Broward and Palm Beach Counties. Those records include ones which list Kennelly as a director of the developments Estates of Boynton Waters West Corporation and Enclave at Boynton Waters Corporation in Boynton Beach.
Even with all this financial worth, tax records show John B. Kennelly is more than a year delinquent on $718,447.80 in property taxes on six different pieces of property in Broward County.
But according to state law, he's done nothing wrong by failing to pay his taxes on time and he's not the only one.
So says Broward County's Chief Financial Officer, Michael Geoghegan and Miami-Dade County tax collection manager, Gerardo Gomez.
"We're projecting there's around 300 million dollars in unpaid taxes right now," CFO Geoghegan told the CBS4 I-Team in late April, 2009.
Tax records show 22,302 Broward County taxpayers failed to pay their property taxes on time during the last two years.
As of May 18, 2009, the list includes owners of places like the Hollywood Fashion Mall, Wilshire Marina, and Tropical Paradise Resorts.
According to Broward County tax records the owners of all of these properties were listed as delinquent and Florida law says that's okay.
Broward County's CFO explains it this way.
"The process that's been established in Florida law is that someone will pay those taxes," CFO Michael Geoghegan said. "That property owner will eventually pay those taxes or will have their home sold…to pay the taxes."
In Miami-Dade 32,291 people are delinquent paying a total of $198,817,889.08 in 2008 property taxes.
As of May 18, 2009, the tax collector's list of delinquent payers includes owners of places like Parrot Jungle and Gardens, Inc., now Jungle Island, the Promenade II development at Doral and a Royal Palm 700 Biscayne LLC, owners of a prime location right now serving as an empty parking lot on Biscayne Boulevard in downtown Miami.
All of those properties are listed on tax records as delinquent.
The
CBS4 I-Team has learned that not paying those property taxes has little effect on the day to day workings of most local governments.
"The fiscal impact is not as great as it may seem," Miami-Dade Tax Collector Manger Gerardo Gomez said. "We're able to recoup those funds through the sale of tax certificates."
Every county finance official
CBS4 talked to here in Florida said that not paying your property taxes on time isn't so bad.
CBS4 I-Team investigator Stephen Stock asked, "So you believe that not paying your property taxes is not such a bad thing?"
"It is really not a bad thing," Gerardo "Jerry" Gomez said. "The statutes are written that in such a way that it recognizes that taxpayers can have a tough time. (The law recognizes) that there can be a temporary setback that might impact their (property owners') ability to pay taxes."
How does this happen?
Florida law allows speculators to buy delinquent tax bills much like the stock or bond market.
Those speculators immediately pay the tax bill. Then they have up to two years to collect interest from the property owner who didn't pay his or her bill on time.
"We want taxpayers to know that in these difficult economic times that you have an opportunity to pay a little bit later on down the line without risk of losing their home," Miami-Dade County's Jerry Gomez said.
"I do believe in these tough times if you're going to make a choice and it's between keeping a roof over your head putting food on your table and not paying your taxes know that this is out there absolutely."
Knowing this option exists might help some financially strapped residents keep their homes right now. But remember you will end up having to pay eventually, plus interest.
If a taxpayer doesn't pay the financial speculators within two years he or she could end up losing their home. Those speculators who own your tax bill can ask county officials to auction off your home to make good on the unpaid bill.
"We will eventually get those taxes," Broward County's CFO Michael Geoghegan said. "Once a home is sold we will get the ones that we own so to speak we will get paid that may be one two years down the road but we do get paid."
A little less than $20,000,000 in property taxes actually goes unpaid here in South Florida. It is never recouped by either the local governments or speculators.
Tax collectors say that sum is just a small drop in the bucket considering the $10,000,000,000 worth of property that is taxed every year.
Tax collectors say compared to other states, Florida's system of collecting property taxes adds up to a win-win for everyone, both property owners and the local governments that depend on tax money to exist.
John B. Kennelly did not return several messages
CBS4's I-Team left for comment.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
Dangerous Displays
Click to enlarge
Stumble It!
Reporting
