Tidy profit from simple tax request

By Garrett Therolf and David Pierson

March 22, 2008 7 AM PT

Times Staff Writers

It takes only a few minutes for homeowners to request a reduction in their property tax assessment. But that has not stopped some private companies from sending out mass mailers offering to do it for them.

The catch: The companies would keep large percentages of the tax savings homeowners reap with a lower assessment. In one firm’s case, that came to 45%.

With property prices falling, thousands of homeowners are poised to receive tax relief, either through their own requests or as the result of assessors’ already scheduled review of property values. The values of more than 41,000 homes have been reassessed downward in Los Angeles County so far, resulting in an average tax saving of $660. Other counties are working on similar programs.

On Friday, however, officials expressed concern that firms could use the assessment-review process to unfairly -- but legally -- cash in on the real estate bust.

“Using these services” to request a reassessment “would not be a smart thing to do,” said L.A. County Assessor Rick Auerbach. “They can get the same thing for free from us. It takes no special expertise on the homeowner’s part.”

Mike Hannah, a project manager for the Orange County assessor, said the county “has made every effort to make it taxpayer- and homeowner-friendly. It’s not a hard system.”

Counties across the Southland generally ask for a few simple details from people who want officials to take a second look at the value of their homes in order to obtain a tax break. Name. Phone number. Parcel number. The homeowner’s guess of what the value might be for the current appraisal period. Offering the sale prices of comparable homes is often optional.

The firms offering to submit the information see opportunity in the reassessment process.

Michael D. Middleton, president of Protax, said his eight-person office in Poway has sent 100,000 mailers offering to do the work for homeowners in exchange for a 45% cut. He expects 2008 to be one of his best years ever.

Middleton said he targets homeowners whose properties were purchased at the peak of the housing bubble and are valued at more than $1 million. He defended his practices, saying he steps in for people who don’t have the time or the expertise to request lower assessments themselves.

Sometimes, the company will go beyond filing a simple report with the basic details requested by the assessor’s office and take the homeowner’s case through a formal appeals hearing. Middletown said his company uses the hearings “in a very small percentage of cases.”

Still, he said, “this is a really huge job. Assessors will try to say that you don’t need us, but you technically don’t need an attorney to go to court, either. We prepare a professionally done report. It’s not a legal appraisal, but it’s the closest thing to it. “

Middleton said his company has helped its clients obtain property tax reductions exceeding $8 billion in assessed value, saving them more than $80,000,000 in property taxes.

He acknowledged that when some clients realize they could have done the work themselves and balk at paying, his company will sue to win its cut of the savings. “But that doesn’t happen in 90% to 95% of cases,” Middleton said.

In one case, he said, he won a $3-million downward assessment for a commercial property owned by Amir Shokrian of Beverly Hills.

“[Shokrian] said, ‘I’m not going to pay you. I could have done this myself,’ ” said Middleton. “We successfully won that case in court.”

Shokrian said that he felt swindled by Protax.

Said Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Assn.: “They are offering to provide a service that is actually free. What they’re doing is taking advantage of people who aren’t paying attention.”

Vosburgh added, however, that the service may alert some people who do not know they could be eligible for a refund.

In previous years, county assessors have worked to outlaw practices they viewed as predatory. In the 1990s, a large number of companies offered, for a fee, to file a homeowner-exemption claim, which can save consumers $75 a year in property taxes.

The procedure to obtain the exemption is free and simple. In 1997, assessors successfully lobbied the state to cap the firms’ fees at $25, prohibit them from collecting money before filing the exemption form and stop some firms from implying that they were connected to a government agency.

garrett.therolf@latimes.com

david.pierson@latimes.com

(BEGIN TEXT OF INFOBOX)

Here’s what’s needed

The application homeowners must fill out to seek a reduction in their property assessment includes the following questions:

Property address

Property assessor number

Purchase price

Assessed value (from tax bill)

Your opinion of property value

Description of property

At least two examples of comparable home sales in your area to support your claim*.