BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 992
Assemblymember Lieu
As Amended April 21, 2009
Hearing Date: June 23, 2009
Business and Professions Code
BCP:jd
SUBJECT
Residential Property Taxes
-Assessment Appeal Application Filing Services-
DESCRIPTION
Existing law, relating to property assessment appeal filing
services, restricts the activities of individuals who offer, for
a fee, to apply for a reduction in property tax on behalf of the
owner. This bill would recast those provisions to instead make
them applicable to an assessment reduction filing service and
place additional restrictions on that service. Specifically,
this bill would:
remove an exemption for persons who actively advocate, thus
including those individuals within the definition of an
assessment reduction filing service;
prohibit any statement that a late fee is required if a person
fails to respond to a solicitation by a specified date;
clarify the prohibition on an assessment reduction filing
service charging, demanding, or collecting advance fees, as
specified;
clarify the definition of "assessment reduction filing
service" to include the providing of comparable sales
information in connection with an application or request for
reduction;
make it unlawful to file a request or application for an
assessment reduction without obtaining a written authorization
from the property owner;
require a copy of that authorization to be submitted with any
request or application for reduction in assessment; and
require the offeror to maintain the original written
authorization for a period of three years and require it to be
(more)
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available for inspection and copying, as specified.
BACKGROUND
Proposition 13, enacted by the voters on June 6, 1978,
established the guidelines for determining property taxes. The
annual tax rate is limited to 1 percent of the property's
assessed value, however, the assessed value may only be
increased by a maximum of 2 percent per year. If the property
changes ownership, a low assessed value may be reassessed to
full current market value (but future assessments are restricted
to 2 percent of the annual maximum increase). Proposition 8,
enacted in November of 1978, allows for a temporary reduction in
assessed value when the current market value of a property is
less than the value shown on the property tax bill.
Due to the recent housing and economic downturn, homeowners who
purchased their home at or near the top of the market may have
an assessed value that is higher than the market value. In that
case, the homeowner is entitled to a temporary reduction in
property taxes. In response to a recent wave of property tax
scams, Attorney General Edmund G. Brown issued the following
warning on February 12, 2009:
Companies are sending deceptive mailers to homeowners
offering help in reducing property tax assessments, if the
homeowner pays the company hundreds of dollars in fees. The
companies use official-sounding names such as "Tax
Adjusters," "Tax Readjustment" or "Tax Review" to make
victims believe the company is a government agency.
Property tax reassessment is a free service provided by
county tax assessors. If homeowners believe their property
value has declined and they are paying too much in property
taxes, the local tax assessor will review the property value
for free for a possible downward assessment.
This bill seeks to respond to those scams by revising and
recasting the provisions that govern those assessment services
by strengthening those provisions, and eliminating an exception
that the sponsor contends is being used as a loophole.
CHANGES TO EXISTING LAW
Existing law states that it is unlawful for any person to make
any untrue or misleading statements in any manner in connection
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with the offering or performance of an assessment appeal
application filing service. (Bus. & Prof. Code Sec. 17537.9.)
Existing law defines "assessment appeal application filing
service" as any service performed or to be performed for
compensation in connection with an application for reduction in
assessment of residential property, as specified. Existing law
exempts any service performed by a person who actively
advocates, in person or by written and oral communications, on
the behalf of the person to whom a solicitation is made before
the assessment appeals board or the assessor's office from that
definition. (Bus. & Prof. Code Sec. 17537.9.)
This bill would recast those provisions to instead make them
applicable to an "assessment reduction filing service," which
would be defined as any service performed or offered to be
performed for compensation in connection with an application, or
request of any kind, for reduction in assessment of real
property, as specified, including the provision of comparable
sales information in connection with an application or request
for reduction in assessment of real property.
This bill would remove the above exemption for persons who
actively advocate, thus including those individuals within the
definition of "assessment reduction filing service."
This bill would recast the definition of "untrue or misleading
statement," and include within that definition any statement
that a late fee is required if the person to whom the
solicitation is sent fails to respond to the offeror of the
assessment reduction filing service by a date stated in the
solicitation.
This bill would additionally prohibit an assessment reduction
filing service from charging, demanding, or collecting money in
connection with a request for review, or in connection with an
assessment appeal application until after the request is filed
with the assessor or until after the application is filed with
the clerk of the assessment appeals board, as specified.
This bill would make it unlawful for an offeror of an assessment
reduction filing service to file a request or application of any
kind for reduction in assessment without first obtaining a
written authorization from the property owner.
This bill would require a copy of the authorization to be
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submitted with any request or application for reduction in
assessment, and require the offeror to maintain the original
written authorization for a period of three years and require it
to be available for inspection and copying within 24 hours of a
request without a warrant to law enforcement, the Attorney
General, district attorney, or city attorney.
COMMENT
1. Stated need for the bill
According to the author,
Property values have dropped dramatically since the
staggering increase that occurred during the real estate
boom earlier this decade. Against this backdrop, a blatant
and costly scam has arisen where private companies contact
homeowners and offer to help them lower their property tax
bill. The company offers to file a property tax reduction
request with the assessor's office, in return for an up
front fee of several hundred dollars. In addition to the
fee, there is a penalty charge assessed if payment is not
received by a specific date. The fact is that this same
service is free from the local assessor's office. There is
no need for anyone to pay a fee to facilitate a property tax
reduction. . . . Current law regulates solicitations to
assist homeowners in having their property values
reassessed, including important disclosures to help
homeowners understand that solicitations don't come from
government agencies. However, an exception exists for those
who "actively advocate" on behalf of the property owners.
Solicitors are using this exemption as a loophole to avoid
any disclosures. AB 992 removes the "actively advocate"
exemption, while concurrently banning any advance payment
until after documents are actually filed on behalf of the
homeowner. In addition, AB 992 updates and recasts
provisions of existing law relating to a property assessment
appeal filing service to instead make them applicable to an
assessment reduction filing service, and requires anyone
filing an assessment reduction to first obtain a written
authorization from the property owner.
2. Removal of "actively advocate exemption"
Existing law regulates the activities of "assessment appeal
application filing services," but exempts persons who actively
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advocate on behalf of a property owner to whom a solicitation is
made, as specified. In addition to renaming the service to be
an "assessment reduction filing service," this bill would remove
that exemption, thereby bringing those persons within the
restrictions imposed on assessment services.
The Los Angeles County District Attorney's Office, sponsor,
states that the removal of the exemption is intended to address
a recurring consumer scam in which mail order solicitors offer
to assist homeowners in obtaining re-evaluation of the assessed
values of their properties to help lower property taxes. The
sponsor further states:
These mass mailers - sent by the thousands during times of
lower property values - often mimic government envelopes and
forms, with pseudo-governmental seals and with bogus
organization names confusingly similar to real agencies.
The solicitations require the payment of hundreds of
dollars, and in some cases "late fees" are added if the
owners don't respond promptly.
Many homeowners, and especially seniors, think these
solicitations come from governmental agencies. Most of
these homeowners are lead to believe they need to pay for
this service, when in fact they can request reassessment
easily on their own and at no cost, by filling out simple
forms available online.
Although existing law regulates these solicitations, the sponsor
states that the "current waive of mailers don't conform to the
requirements of section 17537.9, because the solicitors claim
they are covered by a present exception . . . for any person who
'actively advocates' on behalf of the property owners." This
bill would remove that exemption, thus clearly bringing those
solicitors within the scope of the restrictions on these
services. In eliminating that "loophole," the sponsor asserts
that even those who provide active advocacy should follow the
law's requirements on clear disclosure and prohibited practices.
3. Written authorization
This bill would additionally require written authorization from
a property owner before a request or application for reduction
in assessment is filed, and require a copy of the authorization
to be submitted with any request or application for reduction in
assessment. In support of the need for that provision, the
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California Association of Clerks and Election Officials contend
that "[s]ome assessment reduction filing services file
assessment appeal applications or requests for assessor review
without the knowledge and permission of the taxpayer."
This bill would also require the offeror to maintain the
original written authorization for a period of three years and
require the offeror to make it available for inspection and
copying within 24 hours of a request, without a warrant, to law
enforcement, the Attorney General, district attorney, or city
attorney. Considering that a copy of the authorization must be
submitted with any request or application, it is unclear exactly
when law enforcement would need to inspect the original
authorization outside of a criminal investigation. Although it
is also unclear whether assessment reduction filing services
maintain a staffed office 365 days a year that would allow them
to comply with a request within 24 hours, the committee has
received no opposition to this provision from any of these
services.
4. Remaining changes would further address the issue of scams
This bill would also modify the definition of "untrue or
misleading statement" to include any representation that a late
fee is required if the person fails to respond to the offeror of
the assessment reduction filing service by a specified date.
That provision responds to the issue of scammers stating that a
"late fee" will be added if the property owner does not promptly
respond to their solicitation. By including it within the above
definition, that representation would be unlawful.
This bill would additionally: (1) clarify the definition of
"assessment reduction filing service" to include the providing
of comparable sales information in connection with an
application or request for reduction; (2) strengthen the
prohibition on collecting advance fees by specifying that no
advance fee shall be charged, demanded or collected in
connection with a request for review or assessment appeal
application, as specified; and (3) make other technical and
clarifying changes.
5. Technical amendments
The following technical amendment is suggested to clarify the
definition of "assessment reduction filing service."
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Suggested amendments:
1) On page 5, line 12, after "to" insert:
either: (i)
2) On page 5, line 14, strike out "property or" and insert:
property; or (ii)
Support : County of Orange Board of Supervisors; Kern County
Board of Supervisors; Orange County District Attorney;
California Association of Clerks and Election Officials;
Apartment Association, CA Southern Cities; California Assessors'
Association; Los Angles County Board of Realtors; Office of the
Assessor, County of Los Angeles; one individual
Opposition : None Known
HISTORY
Source : Los Angeles County District Attorney's Office
Related Pending Legislation : None Known
Prior Legislation : AB 1178 (Davis, Chapter 249, Statutes of
1997), prohibited certain deceptive advertising practices
related to services which offer to file either a property tax
homeowners' exemption, or a property tax assessment appeal.
Prior Vote :
Assembly Business and Professions Committee (Ayes 9, Noes 0)
Assembly Appropriations Committee (Ayes 16, Noes 0)
Assembly Floor (Ayes 66, Noes 10)
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