ORANGE COUNTY IN BANKRUPTCY : Millions in Property Tax Assessment Refunds Delayed : Impact: Thousands of taxpayers who won disputes are being stalled by bankruptcy. Appeals board has huge backlog, with hundreds of cases facing imminent deadlines that mean automatic forfeit.

Orange County’s bankruptcy is delaying millions of dollars in property tax refunds due to thousands of taxpayers who successfully appeal property tax assessments through the Assessment Appeals Board.

The board review process, which settles disputes between taxpayers and the county assessor, has been stalled since the county filed bankruptcy Dec. 6. The board amassed a backlog of more than 62,000 assessment review requests by Feb. 1, including hundreds of reviews that must be started by rapidly approaching deadlines.

The county hasn’t released the dollar value of the 62,000 contested assessments. Assessment figures are important because they help to determine property taxes that the county collects for itself and other local taxing agencies.

U.S. Bankruptcy Court Judge John E. Ryan on Thursday directed the county to resume the assessment review process. But taxpayers who are owed money won’t immediately receive refunds because Ryan granted the county’s motion to retain an automatic stay that has frozen tax refunds during the bankruptcy.

Taxpayers who qualify for property tax refunds because of successful assessment challenges must instead submit claims to bankruptcy court, said Lee Bogdanoff, one of the county’s bankruptcy lawyers.

Attorneys for some taxpayers predicted that refunds will be delayed until after the county crafts a reorganization plan and exits Bankruptcy Court. They also worry that the county might eventually ask Ryan to treat refunds along the lines of the 77-cents-on-the-dollar plan now before investors in the county’s ill-fated bond pool.

Typically, reassessment demands run the gamut from homeowners who are seeking to lower their home’s assessed value by several thousand dollars to large corporate taxpayers who hope to cut assessed values by hundreds of millions of dollars.

The county has been flooded with thousands of reassessment requests in the past few years, as Southern California’s property values have dipped and residents have scrambled to reduce their tax burden.

Ryan’s Thursday ruling “gets the process moving again, which everyone is in favor of,” said Joseph Vinatieri, attorney for several taxpayers, including America West Airlines, which have appeals before the board.

“But it doesn’t answer the question of when you get paid, or, more importantly, will (taxpayers) be getting 100 cents on the dollar,” Vinatieri said. “Clearly, if there were not bankruptcy, this would not be a concern.”

“Once (reassessment) claims get liquidated in an appeals board setting, those become claims against the county and you’ve got the same concerns as other creditors,” said Arlen Woffinden, a Newport Beach-based tax attorney who represents several corporate clients with claims before the board. “The concern is how much you get and when you get it.”

The county “is working on dealing with the issue of refunds and we might have more to say about it within a few weeks,” Bogdanoff said. “The county is committed to doing everything possible to pay creditors off in full, and that includes refund creditors. While we can’t make promises to anyone, we understand their concerns.”

Some tax attorneys maintain that the county asked Ryan for permission to jump-start the review process out of fear that the delay imposed by the county bankruptcy filing would push hundreds of reassessments beyond the two-year limit.

But county officials said Thursday that the review process has been initiated on the most pressing reassessments, including 141 cases that, according to court documents, are inching toward a May 1 deadline.

State law requires the county to begin assessment reviews within two years of a taxpayer challenge. If the two-year deadline passes, the taxpayer’s assessment claim, by law, supersedes the assessor’s figure.

Missed deadlines can be costly. Last year, the county failed to make a timely review of about 200 property assessments where the discrepancy between the assessor’s value and the property owners’ value was about $430 million.