Government Tax Collectors Use Google's Street View to Find Signs of Undeclared Wealth

In Lithuania, the Tax Man Cometh Right After the Google Car Passeth

June 1, 2013

The Wall Street Journal - One day last summer, a woman was about to climb into a hammock in the front yard of a suburban house here when a photographer for the Google Inc. (GOOG) Street View service snapped her picture.

The apparently innocuous photograph is now being used as evidence in a tax-evasion case brought by Lithuanian authorities against the undisclosed owners of the home.

Some European countries have been going after Google, complaining that the search giant is invading the privacy of their citizens. But tax inspectors here have turned to the prying eyes of Street View for their own purposes.

After Google's car-borne cameras were driven through the Vilnius area last year, the tax men in this small Baltic nation got busy. They have spent months combing through footage looking for unreported taxable wealth.

"We were very impressed," said Modestas Kaseliauskas, head of the State Tax Authority. "We realized that we could do more with less and in shorter time."

More than 100 people have been identified so far after investigators compared Street View images of about 500 properties with state property registries looking for undeclared construction.

Two recent cases netted $130,000 in taxes and penalties after investigators found houses photographed by Google that weren't on official maps.

From aerial surveillance to dedicated iPhone apps, cash-strapped governments across Europe are employing increasingly unconventional measures against tax cheats to raise revenue. In some countries, authorities have tried to enlist citizens to help keep watch. Customers in Greece, for instance, are insisting on getting receipts for what they buy.

For Lithuania, which only two decades ago began its transition away from communist central planning and remains one of the poorest countries in the European Union, Street View has been a big help. After the global financial crisis struck in 2008, belt tightening cut the tax authority's budget by a third. A quarter of its employees were let go, leaving it with fewer resources just as it was being asked to do more.

"We were pressured to increase tax revenue," said the authority's Mr. Kaseliauskas.

Street View has let Mr. Kaseliauskas's team see things it would have otherwise missed. Its images are better—and cheaper—than aerial photos, which authorities complain often aren't clear enough to be useful.

Sitting in their city office 10 miles away, they were able to detect that, contrary to official records, the house with the hammock existed and that, in one photograph, three cars were parked in the driveway.

An undeclared semidetached house owned by the former board chairman of Bank Snoras, Raimundas Baranauskas, was recently identified using Street View and is estimated by the government to be worth about $260,000. Authorities knew Mr. Baranauskas owned land there, but not buildings. A quick look online led to the discovery of several houses on his land, in a quiet residential street of Vilnius.

Mr. Baranauskas faces extradition from Britain to Lithuania amid an investigation into the collapse of Snoras, which failed in late 2011. Mr. Baranauskas is suspected in Lithuania of property embezzlement, a charge he denies. His extradition case at London's Westminster Magistrates' Court is scheduled to proceed in July.

His properties had been seized, but the house didn't exist on paper. Lithuanian authorities were unable to seize it until the building came up on Street View.

Mr. Baranauskas's lawyer didn't return messages seeking comment.

Most people swept up in the dragnet aren't millionaires. Lithuania is a nation of homeowners, said Giedre Aleknaviciute, analyst at real-estate consultancy Colliers. Authorities say the house with the hammock in suburban Vilnius is worth about $380,000.

Google's Street View service has been highly controversial around the world and many governments in Europe and beyond have tried to restrict the company's operations. In Germany, after legislators considered a law that would curb Street View, the company allowed individuals to request that photos of their property be removed from the service before it was launched. Google didn't respond to requests for comment.

But in Lithuania the government's use of Google Street View has resonated well, and authorities have been aided by the local populace. "We received even more support than we expected," said Mr. Kaseliauskas, the chief tax inspector.

The iPhone used by Mr. Kaseliauskas features an application his office designed to allow citizens to notify the authorities of what they think is tax evasion. About 2,600 people sent information to the government last year using the app, which gave the country of three million people 8.8 million litas, or about $3.3 million, in extra revenue.