Tax Ferrets, Tax Consultants, Bounty Hunters, and Hired Guns: The Property Tax Netherworld Fueled by Contingency Fees and Champertous Agreements

By: J. Lyn Entrikin

Abstract

Contingency fee agreements between local tax assessors and contract auditors on the one hand, and property owners and private tax consultants on the other, create perverse financial incentives that undermine the integrity of state and local property tax administration. When local governments engage outside auditors to identify undervalued or escaped taxable property, the practice raises serious due process and ethical concerns. As a matter of policy, diverting a share of property tax revenue to private third parties in consideration for outsourced tax assessment services undermines public accountability and reduces net property tax revenue for local government services. And when states allow private tax consultants to use contingency fee agreements to solicit clients seeking to reduce their share of local property taxes, they unwittingly divert substantial tax revenue to private entrepreneurs. The associated private transaction cost of seeking uniformity in local tax assessment unduly burdens the entire property tax system. Because contingency fee agreements with nonattorneys are generally unregulated by state law, honest taxpayers effectively subsidize not only property tax dodgers, but also contract auditors and private tax consultants.

Cite as: J. Lyn Entrikin, Tax Ferrets, Tax Consultants, Bounty Hunters, and Hired Guns: The Property Tax Netherworld Fueled by Contingency Fees and Champertous Agreements, 89 Chi.-Kent L. Rev. 289 (2014).

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>