The Lake County auditor's office is in the third and final year of separating homeowners with legal tax deductions from the undeserving.
"We have cleaned up 50,000 improper homestead exemptions, and we are going after the lost taxes now," Auditor Peggy Katona said last week.
She said purging tax rolls of ineligible tax breaks relieves legitimate taxpayers. They otherwise are burdened with paying millions of dollars in taxes others have dodged by claiming more than the single homestead deduction allowed on an individual's principal residence.
The process is not without its glitches.
Annamarie Pizer, of Highland, discovered last week her taxes more than doubled this spring because her homestead deduction was removed on the house in which she had been living for two years.
She said she called county government for hours seeking help. But the phones were tied up by a glut of other taxpayers calling about their first tax installments as last Friday night's deadline approached.
She said she finally reached an employee, who said someone had deleted her deduction with the press of a computer button.
"The guy told me I was the 200th person who had that problem," Pizer said.
Katona said Pizer was misinformed. She said members of her staff inevitably make mistakes as they process tens of thousands of homestead applications annually, but she believes the unidentified county employee was exaggerating the problem.
Katona said her staff informed her Social Security and driver's license numbers were missing from Pizer's verification — the pink piece of paper sent to every homeowner in the county since 2010.
Pizer responded, "I can't believe I would leave that off of such an important document. I asked for a copy of it, which cannot be provided because it was (digitally) scanned, and they can't make a copy of the scan."
Porter County Auditor Robert Wichlinski said there are about 9,000 homeowners who have yet to send in their pink forms, but he isn't eager to delete homestead deductions.
"My understanding from the Indiana Department of Local Government Finance is that we can't just take them off," Wichlinski said. "It's not automatic. After we have gone through three years of due diligence, we would still be required to contact those folks one more time and certify to the state we have done that before we can receive permission to take the homestead flag off the (homeowner's) file."
The state Legislature mandated the pink form verification process to create a statewide database that will be used to ensure people aren't avoiding taxes improperly by claiming multiple homestead credits on multiple properties.
Pizer's Lake County homestead deduction has been restored, she said. She is awaiting a $1,000 refund and a new verification form to be filled out, Pizer said.
Katona said, "If we made a mistake, we will correct it immediately, and if they did they can correct it."
She said thousands in Lake County have yet to fill out the pink-colored verification forms that have been sent to homes the last two years. The forms must be completed before Dec. 31 this year, or residents face removal of their homestead deductions, as required by state law.
Katona said, "When these exemptions started, it was entered manually in a book, and we are looking at 30 years of messed-up exemptions. We are working closely with cities and towns who keep us up to date on new rental properties."
Hobart attorney David N. Gilyan, working as a consultant for the Lake County auditor, said he is preparing a list of thousands of property owners whom his staff has identified as homestead deduction violators.
"We will proceed to collect any taxes owing," he said. "Some are outside the law because they are not really aware of it, but whether it was done on purpose or not, they have to comply."
Gilyan said some people may have homestead deductions on rental houses.
"Maybe they didn't know it was on there when they bought it, and they may have thought the auditor was supposed to take it off; well that's what we are calling about," he said.
"We have done the research, and by August most of what we have put together will be in the mail. (Katona) isn't trying to punish anybody. If we are wrong, we ask people to call and explain it."