Is it just a coincidence that the results of last night’s Google® search show up as you check your Facebook® news feed or read an online news article? Nope. It’s “big data,” a term we hear a lot these days. Most of us chalk it up to marketing practices by online retailers, but the possibilities for the use of big data are infinite – and this includes the world of tax assessments.
First, the basics. Big data is defined as “extremely large data sets that may be analyzed computationally to reveal patterns, trends and associations, especially relating to human behavior and interactions.” Clearly, this type of analysis offers a plethora of benefits for businesses and government as they work to gain more insight into individual behavior and broader trends.
When it comes to tax assessment, big data can be gathered from a vast array of resources. Tax authorities can use public records including utility use, driver’s licenses and voter registration information to identify residency and multiple property ownership in an effort to prevent fraudulent or improper tax payments. By combining this data with aerial imagery and geographic information systems, tax authorities can spot irregularities and inconsistencies in property tax filings in a whole new way.
Big data at work
A 2010 analysis of property filings in Athens, Greece, found that just 324 residents claimed swimming pools on their property tax forms. A subsequent review of satellite images turned up a different number: 16,974. Because tax evasion has played such a significant role in Greece’s economic crisis, this example is surely just one of many ways big data is being used for tax assessment in that country.
In the US, big data is at work as well. In Anne Arundel County, Maryland, years of budget pressure coupled with steady development meant tax assessors could assess only a fraction of the properties under their jurisdiction. Enter a pilot program combining aerial imagery and property tax data that enabled Anne Arundel assessors to inspect 10,435 homes, more than double the amount they were able to review over the same time period a year before. Of those, 92 percent were assessed using imagery alone.
Because every pixel in the image was georeferenced, it became actionable, allowing for measurements, data extraction and analysis.
Further, Web-based access and tools made it easy for assessors to view and evaluate the images and information. The properties reviewed represented 17 percent of the total number of parcels, expanding the property tax base in the county by nearly $32 million. The State Department of Assessments & Taxation extrapolated those results to predict that the state’s tax base could grow by $1.4 billion if the same technology was used in every county.
In Ascension Parish, Louisiana, assessor M.J. “Mert” Smiley Jr. convinced the parish’s taxing districts to chip in and pay for aerial mapping technology that produced detailed images of the entire parish. By combining data from the images with property tax records, the assessment team was able to analyze and review property changes on their desktop computers and determine whether a field inspection was necessary. In 2014, the effort paid off by uncovering 6,000 property improvements that were not on the tax rolls, resulting in $18.1 million in new annual tax revenue. Now, the assessor wants to use aerial imagery every three years to keep up with continued growth.
Governments and business are not the only ones who can benefit from big data. Consumers can as well.
Geographic information systems can help individuals ensure their tax assessments are accurate by analyzing property at a granular level, including the risk of earthquake, fire or ﬂooding. Even the likelihood of a sewer backup can be determined. This information is beneficial for individuals not only in terms of property tax assessments, but also in relation to determining accurate insurance policies and making smart real estate investments.
It’s only the beginning
While there is no doubt the use of big data in tax assessment will continue to grow and evolve, the implications will continue to shake out for tax authorities and taxpayers alike. From helping state and local government agencies identify individuals who are underreporting their tax obligations to providing detailed property information to consumers, the use of big data in the world of tax assessments is certainly here to stay.
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