Scammers' abilities to invent new tricks seem boundless. Recent scams target people desperate for financial aid or relief. These scams succeed because vulnerable people seek an easy way out, or don't have enough information to recognize fraud.

One of the more recent scams concerns property reassessment. California's Attorney General issued a consumer alert about this "tax reassessment" or "tax reduction" scam1 and there's a significant potential for it to spread nationally.

The Property Reassessment Scam: How It Works

In the "property reassessment" or "property tax adjustment" scam, a private company sends an official-looking notice to a homeowner. The company issuing this notice uses words like "tax adjusters," "tax readjustment" or "tax review."

The notice appears to be from a government agency, and may even resemble a property tax bill. It states that the homeowner is paying too much in property taxes, due to declining home values, and shows what the "adjusted" property value should be, which is lower than the current assessed value of the property. The notice then offers to assist the taxpayer with reducing his home's assessed value.

The fee for the reassessment or adjustment can vary, from a "small" flat fee to a percentage of the total projected tax savings. There may be a "late filing" penalty if the form is mailed after a stated date.

Why This is a Scam

Be careful about these mailings. The notices appear to be official - sent by a government agency. They try to trick a homeowner into paying hundreds, or even thousands, of dollars in fees to get his home reassessed.

However, these are really private companies looking to obtain a fee. The companies act as middlemen for the taxpayer by filing for reassessment with the county office where the property is located. Most of the companies will ensure that a homeowner's paperwork is filed properly and that the property is reviewed for assessment. But the vast majority will not refund the fee if reassessment is denied.

These companies conveniently neglect to tell homeowners that they are not a government agency, and that homeowners can file reassessments for themselves; no middlemen are required. Most importantly, homeowners can file the same forms, free of charge.

What to Do If You Receive One of These Notices

There are legitimate private companies that may charge fees to provide assistance with property reassessment. Services can include obtaining comparable sales information, attending assessment appeals hearings and filing the reassessment paperwork. This may be a valuable service for a taxpayer who doesn't want to do this himself.

But consumers should recognize that a government agency would never charge a fee for reassessment. If a consumer receives an official notice, contact the county assessor's office to determine if the notice is real before responding. And if the notice is not real, contact the Office of the Attorney General in your state to report the fake notice. Doing so may save another taxpayer from the same scam.

Sources
1Attorney General of the State of California, "Consumer Alert: Property Tax Reduction Scams," http://ag.ca.gov/consumers/general.php, accessed April 9, 2009.

Tagged as: Consumer Law, Consumer Fraud, property reassessment, consumer fraud lawyer