Someone who owns land in western Stanislaus County has dodged $2.5 million in property taxes, according to a tipster who wants the county to offer a reward for turning in tax evaders.
Attorney Dennis Beougher of Patterson says his client believes the owners have avoided paying the appropriate taxes for nine years and amassed up to $2.5 million in additional tax liability. Under the state’s Proposition 13, a change of ownership should have triggered a reassessment and higher tax bills, but the ownership change was never filed with the state, the attorney says.
The property, which presumably is inside or near the city of Patterson, has not been identified. Beougher and his client have kept that a secret while talks with city and county officials have taken place.
Tuesday, county supervisors showed no interest when a resolution from the Patterson City Council, recommending a reward program, came before the board. The city recommended the county offer a 5 percent reward on total “escaped assessments, penalties, interest and supplemental taxes” when the resolution was approved Aug. 16.
Sign Up and Save
Get six months of free digital access to The Modesto Bee
Beougher points out that San Francisco adopted an ordinance in 2011 that offers a reward for information on underpayment of property taxes, and he thinks Stanislaus should have a similar law.
“The county is just losing money and the property owner is getting away with it,” Beougher said. He suggested the county can only go after the owners for eight years’ worth of back taxes and penalties because of a statute of limitations.
Beougher, who first approached county officials with a letter last February, says a reward program is similar to a person who gets a cash reward for helping the sheriff apprehend a fugitive. “I believe a citizen should be rewarded for assisting the county’s Assessor in his constitutional duty to tax all property to its full value,” his letter says.
Since the county only gets 12 percent of collected property taxes, its share would be $150,000, plus an annual $30,000, if the owners were forced to pay the proper amount. Those are Beougher’s estimates. Property taxes are divided up by the state, counties, cities, school districts and special districts.
After Tuesday’s Board of Supervisors’ meeting, county Chief Executive Officer Stan Risen and County Counsel John Doering said they foresee a number of problems with a watchdog reward. The county eventually finds out if landowners have avoided paying the proper taxes and uses its authority to seek the assessments and penalties, they said.
Risen also was concerned a reward could create an environment of neighbors snitching on neighbors. He suggested Patterson could carve out a reward for watchdogs from its share of property taxes.
Beougher lamented that Patterson officials were not aware their proposal was put on Tuesday’s agenda and were not there to speak with the board. Patterson’s city manager did not return a call seeking comment Thursday.
In contemplating Patterson’s real estate landscape, a suspect property with that kind of value does not jump out at county staff members who have met with Beougher and Howard Sword, a development consultant.
Beougher would not confirm it is inside the city limits, but it does have an effect on Patterson’s revenue, he said. The attorney disagreed with those who suggest his client is a money grabber and should disclose the information as a good citizen.
He said his unidentified client should be rewarded for risking his or her job. Contrary to one report, Sword is not the client but only used his connections to set up meetings with the county, Beougher said.
County Assessor George Gaekle said his office has pondered where the property is and whether it might be cheating the taxman. Property owners are supposed to report a change in control or ownership within 90 days to the state Board of Equalization, he said.
Some cheaters are caught “when a deed transfer is recorded and the names don’t match what we have in the records,” Gaekle said. The county can fully recover taxes from a legal entity, a corporation or limited partnership, going back 20 years or more, he said, but runs into a four- or eight-year statute of limitations if an individual change in ownership is not recorded.
Beougher said the location of the property will “go to the grave with me” if a reward is not provided for his client. Cities such as Patterson should not be expected to reward whistleblowers because the county is paid for administrative costs of collecting property taxes, he said.
Ken Carlson: 209-578-2321,@KenCarlson16