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Tech firms help governments weed out fraudulent claims
Though the scenario doesn't work in all situations, she said many government agencies are open to the idea.
According to Bjorklund, those types of partnerships are more common with state and local governments, because federal laws are more constraining. If the model succeeds in one state, it could expand rapidly, he added.
If "they test a concept say in the state of Kansas ... they're going to go try and sell it to Nebraska," Bjorklund said.
In the case of North Carolina, the state agreed to give IBM 10 percent of the amount it demanded to be repaid in letters sent to violators. The minimum contract value was set at $1.5 million, the maximum at $6 million. The state estimated it will find $54 million to recoup.
Barry said he expects the alternate payment structure to become increasingly popular.
"Not all government leaders have an appetite for that kind of shared risk, but for those that do ... it will be an option they take much more seriously," he said.
LexisNexis, too, is seeking to expand its role in helping the government weed out fraud. Andy Bucholz, director of tax and revenue markets at LexisNexis Advanced Government Solutions, is overseeing the pilot of a homestead exemption fraud detection solution.
The product is meant to help local governments identify individuals who improperly file for a homestead exemption, a tax exemption meant to protect homeowners from rising property taxes or other circumstances that might force them to lose their homes. The exemption is applicable only at a primary residence, and homeowners can't claim the exemption for more than one home.
In Hallandale Beach, Fla., where vacation homes are hardly unusual, LexisNexis turned up more than 600 problematic cases, said Ronald J. Cacciatore of the Broward County Property Appraiser's Office.
"I think we're more susceptible because we're South Florida," he said. "A lot of people own second homes here."
LexisNexis ran the program in Hallandale Beach as a pilot -- meaning it didn't cost Broward County anything. But the company was able to identify that 6.9 percent of the 8,900 homes improperly claimed the exemption.
As a result, the city identified $1.2 million in back taxes and penalties it is owed and put about $39 million worth of assessed value back on its tax rolls, Cacciatore said. That money is particularly needed in Florida, where the real estate market's downturn has been especially evident.
LexisNexis's product, which links public data, news articles and other information sources to determine whether an individual is truly eligible for the credit, is still being piloted in Florida, Georgia, South Carolina and Texas. It typically finds 5 percent fraud, according to the company.
"At this point, [governments have] already turned over the normal rocks to look for cash," Bucholz said. "Now, they're [saying], 'We need to turn over rocks, and we don't have the ability to turn them over and we don't know where they are.' "