Homestead Deduction Flap: Couple Fighting To Avoid Back Taxes And Penalties

By Jeff Neumeyer

February 19, 2013 Updated Feb 19, 2013 at 7:14 PM EDT

HUNTINGTON COUNTY, Ind. (www.incnow.tv) --- For a Huntington County couple, paying property taxes right now is a full-blown headache.

They face the prospect of back taxes and penalties because of a dispute over a homestead deduction.

It’s an issue thousands of Hoosiers are dealing with.

Indiana taxpayers have been required to turn in homestead verification forms, proving their primary place of residency, to clamp down on people fraudulently claiming the deduction on more than one property.

Craig Morrison and Karla Moore didn't get their form turned in until late in the process.

They provided drivers license info, voter registration cards, and other documents to prove their residency.

But in late January, the Huntington County auditor sent them a letter saying they were ineligible to claim the deduction, that they owed more than $1,600 in back taxes and penalties, and that she wanted three years worth of federal income tax returns before she would re-consider.

" I don't own another home. I do live in this house, but I can't convince her that I live in this house, even though I can see the courthouse from my window, I can't convince her I live here," Moore said.

" When they bring in their tax return forms and their drivers license, if it proves what their address is, I waive the back billing of the taxes. Ms. Moore has not provided any income tax returns for me to decide that," said Cindy Yeiter, the county auditor.

Yeiter said she got suspicious when at least one of the original drivers licenses turned in was for Arkansas, not Indiana.

Moore says she and Morrison worked in that state temporarily, but that they never changed residency.
The auditor isn't sure she buys it.

Yeiter demanded federal tax returns for the roughly 300 people who were late in submitting their homestead deduction verification forms, but she says she is now requesting state income tax returns instead.

Moore says the IRS told her that the auditor has no authority to demand federal income tax returns.

Moore says she is reluctant to hand over her state income tax returns, because she doesn’t trust the sensitive records will be kept private.

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