How to Identify and Avoid Property Tax Scams

Hearing that your home could be taken away from you by the government can make anyone’s heart skip a beat. It’s a frightening idea, and we’re all aware that liens, foreclosures, and repossessions do, in fact, take place in the U.S. 

That’s why a property tax scam has so much potential to cause harm. Criminals who target homeowners use a combination of publicly available personal information, communications that look and sound official, and threats of urgent action to take advantage of honest homeowners. It’s essential to stay vigilant against any real estate scam that could jeopardize your financial security.

Understanding Property Tax Scams

To arm yourself against property tax scams, you need to understand what’s out there and how to respond to it. The first line of defense is information about what may show up in your mailbox, inbox, or on a phone call, along with: 

• What signs you can look for to identify a scam
• Common messages you may see from scammers
• How to confirm whether a threat or offer is authentic

There is a lot of property tax information that’s publicly available and easy to find for anyone with an internet connection. Most counties offer online property tax lookup that allows you to enter a street address and see: 

• Property owner names
• Actual property tax statements, both current and prior years
• Whether there are delinquent taxes due
• Detailed information on the building structure, land plot, assessed value, etc.

That’s more than enough data for criminals to convince homeowners that they represent a government agency or valid debt collector. 

Common Types of Property Tax Scams

First, let’s take a look at what you can expect to see as a property owner. Three categories of common scams include:

Fake Tax Collection Notices

A fake tax collection notice is when a fraudster claims to represent a government agency and tries to get you to pay overdue taxes to them directly. These can come by mail, email, or even phone, and may appear to be from:

• Your county property tax collection agency
• State department of revenue
• The Internal Revenue Service (IRS)
• Another government agency, either real or fictional

A common scare tactic is to claim that the agency will place a lien or levy against your property—or even foreclose on it—due to unpaid property taxes. These unpaid taxes could be at either a county, state, or federal level and might be identified (e.g., federal income taxes) or left vague as simply “unpaid taxes.” 

The homeowner is told that they must respond urgently as this is their last chance to hold onto their property. They are also given instructions on providing payment using credit card or bank account numbers. 

While some may be easy to spot, that’s not always the case. With the technology available today, it’s fairly simple to set up letterhead, notices, and even email addresses that look official. 

Fraudulent Tax Adjustment Offers

In a fraudulent tax adjustment offer, a scammer contacts you with a tax adjustment notice that either requests additional payments or offers to send you a refund. The claim might state that they’re correcting an error such as: 

• Your calculations didn’t add up correctly on the return you submitted
• They added or removed your use of a tax credit, dependent, etc.
• A change in policy adjusted your tax total retroactively

Depending on which direction the false adjustment takes, the scammer will either: 

• Ask for your banking details so a refund can be issued to you
• Direct you to make a credit card, bank transfer, or other payment to them to cover the remaining balance

Phishing Emails and Calls

With phishing scams, criminals are “fishing” for you to provide personal information that allows them access to your money or possessions. Scammers may try: 

• Requesting personal information such as social security numbers
• Asking for bank account or credit card numbers 
• Emailing links or attachments that capture information, install malware, or send you to fake websites

Once they have the requested information or access, phishers either resell the data or use it directly to charge your credit card, drain your bank accounts, or commit further identity theft. 

Warning Signs of a Property Tax Scam

Scammers are always trying new ways to separate you from your money, and some of their efforts are fairly sophisticated. 

In 2020, for example, individuals in L.A. County went door to door claiming to be county workers there to collect property tax while the office was closed to the public due to COVID-19.¹ They went so far as to print a fake individual property tax bill and provide falsified identification at the door. 

However, there are some common warning signs you can watch for. You may be the target of a property tax scam if the “agency” that reaches out:

• Demands payment without the opportunity to appeal or question
• Asks you to use a prepaid debit card or gift card as payment
• Arrives out of the blue with no prior warning or notification
• Demands immediate action, especially while on a phone call
• Contacts you through social media or text

Threats of retaliation are another sign of scams. They might threaten to: 

• Take away your driver’s license or business license
• Send police or other law enforcement to arrest you
• Garnish your paychecks or bank accounts
• Deport you or question your immigration or citizenship status

If you receive a letter or an email, check to see if it contains any of these red flags:

• Misspelled words
• Broken or improper grammar
• Fictional agencies like “Bureau of Tax Enforcement” with no official .gov website²
• A “from” email address that’s gibberish or inconsistent with the agency it claims to represent

How to Protect Yourself from Scams

You can arm yourself against scammers. First, don’t be afraid of seeming rude or mistrustful. Real agency representatives will encourage you to confirm that you’re using official channels and cross-check any claims or demands. 

Verify Communications with Authorities

Before you take any action, verify that you’re receiving authentic communications. Depending on the format, you can: 

• Mail – Contact your county tax collection agency, state department of revenue, or the IRS as instructed on their official websites (with a “.gov” suffix). 

• Emails – Never click a link from an email. Instead, go to the official agency website with a “.gov” suffix and either log in or contact the agency directly. Provide a copy of the email so they can investigate if the information isn’t confirmed as accurate.

• Phone calls – Ask for a case number, the caller’s name, and the main agency phone number, and tell them you’ll call back. See if the number they provide is the same as the one on the official .gov website. If the caller resists these actions, it’s a signal to report the call as a scam. 

If the contacting party claims to represent the IRS, visit the How to know if it’s really the IRS page and follow their directions.³ In general, the IRS will first contact you by mail (not by text or social media or a visit that wasn’t prescheduled with you), will not threaten you with any immediate action, and will always advise you of your rights and options. 

Even if your property tax is paid through escrow by your mortgage lender, share the communication with them as well and ask for confirmation that your property tax payments are in good standing. However, don’t simply leave it in their hands if you’re unsure whether a tax adjustment, lien threat, or other communication is valid or a scam—at the end of the day, you’ll be the one on the hook for any actual unpaid taxes. 

Safeguard Personal Information

Keeping your personal information private and safe is the strongest defense against fraud. Think of yourself as a dragon guarding your treasure, which includes your: 

• Social security number
• Passwords
• Credit card numbers
• PIN numbers
• Bank account details

You can do this by not providing these details:

• Over the phone or by fax unless you have initiated the contact through secure channels
• By unencrypted email
• In response to a link or button sent to you

Instead, go to official websites, apps, and accounts and log in securely.

Keep Your Real Estate Needs in Honest Hands

Criminals are constantly trying new ways to get their mitts on your money. When it comes to your home, check with official sources before taking any action. Another way to keep your property safe from unscrupulous parties is to avoid offers that promise fantastic financial rewards or demand immediate action. 

At Truehold, we’re committed to being fully honest and transparent about our services so you can make the best choices for your goals and family. When you sell your home to us, we offer two standard transactions together in one smooth process: a home sale and a lease. With Truehold's sell and stay transaction, you can stay in the home you love as a renter while freeing up your equity to use as you decide.* 

Give us a call today, and one of our representatives will reach out to review the process and see if Truehold's sell and stay transaction is the right fit for your financial picture and goals.

Disclaimer*: After the home sale, you must comply with the terms of your lease to continue living in the home. This includes making timely payments on your rent for your minimum lease term (which ranges from 6 – 24 months). 

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Sources: 

1. Los Angeles County. COUNTY OFFICIALS WARN AGAINST PROPERTY TAX SCAM. https://ttc.lacounty.gov/wp-content/uploads/2020/10/Tax-Scam-Release-10.22.20_.pdf‍
2. IRS. Taxpayers should beware of property lien scam. https://www.irs.gov/newsroom/taxpayers-should-beware-of-property-lien-scam‍
3. IRS. How to know if it’s really the IRS.https://www.irs.gov/newsroom/how-to-know-if-its-really-the-irs

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