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Tax Agents Bombard Appeals Board Hoping to Make a Buck
By Jeff Prang Los Angeles County Assessor
Published July 29, 2021

Jeff Prang (Courtesy Photo)

I’ve been trying to resolve an important issue since I was elected in 2014 that, I submit, is crippling the process by which property owners appeal the assessment on their property. In fact, it has created a huge backlog of more than 40,000 cases still waiting for a hearing, and that could take years to accomplish.

In no small measure, this situation has been caused by a handful of tax agents who file thousands of appeals – this year, 3,600 from one tax agent in a single month – that are without merit, withdrawn at the first sign of legitimate questioning or a no-show at the hearing.

Our tracking reveals that 70% of these frivolous appeals are withdrawn as soon as my appraisers challenge the claim. Moreover, the appeal will come to an unscheduled and screeching halt when the tax agent fails to appear at the hearing, which happens with alarming frequency.

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I have to dedicate more than a dozen of my appraisers to handle these meritless cases who could otherwise be doing our primary work – processing transfers of property and new construction, which contribute to the Assessment Roll, the foundation of the property tax system.  For instance, the appraisers that are assigned to preparing assessment appeals cases for thousands of meritless appeals, could be reassigned to process new construction permits. This year, 40,000 new construction permits will be delayed for processing until 2022. These permits have an estimate value of $4 billion, or $40 million in property tax revenues. These funds will not be available to the County this year for public services such as police, fire, public schools and all kinds of infrastructure maintenance. It’s higher this year because of the COVID pandemic.

Historically, I delay 20,000 new construction permits annually because of this issue, which is $20 million in annual revenue that the County can’t use for public services. That’s a lot of money!

Essentially, these tax agents have monetized the assessment appeals process. They file a high volume of assessment appeals in hope that a smaller percentage will be approved without the necessary scrutiny, which is hard to provide when the system is overloaded by so many cases. I estimate that in hard costs the County loses at least $15 million annually in tax revenue. The lost “opportunity costs” are in the tens of millions.

The tax agents, on the other hand, receive 30-50% of whatever first year tax reduction they get for their client.  It doesn’t cost the tax agents anything to file these thousands of claims that they typically secure through mailing solicitations to unsuspecting homeowners.

These very same homeowners are experiencing a huge boost in their home’s value. Yes, small businesses have struggled, many forced to shutter, but the housing market has been booming. The average single family residence has increased 22% over last year in the average home price, cresting at median of about $817,000.

However, most of the appeals are for residential properties. That’s right, when homes are rising, tax agents say home values are plummeting. It just isn’t the case. Not even close.

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I have a possible solution. Something that many other counties in the state already have: A $46 filing fee, along with a hardship exemption if a homeowner cannot afford the nominal fee.

As an example, the 3,600 claims filed by one agent since July 2 would cost $165,600 in fees. I bet they would think twice about incurring such a cost, if it was required. Now, it costs them nothing to file. Nothing.

By introducing the $46 filing fee, logic dictates tax agents will be much more discriminatory when deciding what legitimate cases to submit. Otherwise, I won’t be able to get my job done, legitimate appeals cases will go unheard, and the assessment appeals process will continue to be overwhelmed.

One last thing, which is very important, I am committed to making sure that property owners are getting fair and timely resolutions to their disputes without rough players consuming my Office’s resources for their own personal gain.

___________________________________________________________________________

Los Angeles County Assessor Jeff Prang has been in office since 2014. Upon taking office, Prang implemented sweeping reforms to ensure that the strictest ethical guidelines rooted in fairness, accuracy and integrity would be adhered to in his office, which is the largest office of its kind in the nation with 1,300 employees and provides the foundation for a property tax system that generates $17 billion annually.

 

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