Can a property tax consultant reduce your tax bill? How do they work? What are their qualifications? The answers might surprise you. The property tax consultant scam is one of the fastest growing sectors of fraudulent activity. Duke University’s Don Wells claims 70% of consultants are charlatans. I suspect that the number is even higher in the property tax consulting business.
Property tax consultants claim to help you lower your property tax bill. Their most commonly used tactic is to help you request a lower valuation of your real property for tax purposes. If your home has a lower tax value, then your bill could shrink. If this sounds appealing, you should also understand the downsides to this approach.
The property tax consultant scam works like this. You pay an upfront fee for representation at your local tax authority. They are supposed to petition for a lower tax valuation on your behalf. The tax rates remain the same, but your overall tax bill drops if they can successfully have a lower tax value assigned.
Some services are performed by paralegals or other entry-level staff at law firms. In other cases, individuals are recruited through work-at-home schemes to become property tax consultants. This recruitment is often through Craigslist and other largely unregulated advertising media. Companies sell a course to anyone who wants to become a consultant, and then that poorly trained person is the one that wants to represent your interests.
There are several reasons why you should avoid hiring a property tax consultant:
- Lowering your property valuation can reduce your future selling price by thousands of dollars. You could inadvertently shoot yourself in the foot when you go to sell the home. The tax valuation is one form of leverage that you have in the price negotiation. The higher the valuation, the better your argument for a higher sales price.
- Most firms or individuals that offer property tax consulting services charge between $1,000 and $2,000. Unless your property is dramatically devalued, it could take you years just to recoup your costs. Furthermore, you have to pay their fees upfront, even though it might take many years to realize the eventual savings.
- Most fees are typically non-refundable. If your property is devalued by as little as $1, they can claim that the desired result was accomplished.
- You can represent yourself with your local tax authority. If you really need help with property taxes, you can gather your own evidence to make your case.
- There are no qualifications to be a consultant. Any individual can claim to be a property tax consultant without any formal training or certification.
- If your consultant fails to show up at your tax protest hearing, you could lose certain rights to protest your home’s valuation in the future.
An investigation by Texas regulators found that one such firm repeatedly failed to show up at scheduled tax hearings on behalf of some clients. Affected clients lost some rights to protest their tax value. Texas Attorney General Greg Abbott entered into a judgment with O’Connor & Associates which set up a $300,000 fund to be used toward restitution to its victims.
Some people qualify for lower property tax rates or other exemptions without having to change their tax valuation. You can get help with property taxes if you are elderly or disabled. There are often tax breaks available to veterans and certain public service workers.
If you do choose to hire a property tax consultant, do your due diligence to avoid being victimized by a scam or an incompetent consultant. Check their references and reputation with the Better Business Bureau. Make sure their formal contract clearly lists any and all fees, as well as their refund policy if expected results are not achieved. Failure to investigate their qualifications could make you the next victim of the property tax consultant scam.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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