Tax Money Slipping Through the Cracks

Skip Haynes keeps a watchful eye on his Hollywood Hills neighborhood. It's not crime he's worried about, but over development of the well-to-do neighborhood.

While checking out new building plans, his neighborhood organization made an interesting discovery.

"Right away this shows something wrong," Haynes said. "This should be an empty lot. This shows a house on the lot."

A large, three-story house is listed on the tax rolls as vacant land.

"The assessed land value is $37,432," Haynes points out.

Other homes in this neighborhood assessed at well over a million dollars.

"When we found this out, everybody was kind of outraged because we all pay property taxes," Haynes said.

According to public records, construction started in 2005, meaning the owner should have been taxed on the value of the home as it was being built. Developers we spoke with say the taxes should be at least $10,000 a year, not the current $475.

So who allowed this to happen and why? We asked Los Angeles County Tax Assessor Jeffrey Prang.

"We can't determine why this one slipped through the system," Prang said. "It is a rare error."

We left several messages for the homeowner and have not heard back. Prang says his office will reassess the property value but can only collect taxes for the last four years by law.

Prang says the error occurred when information was transferred from one computer system to another.

"It's an old system that may have just had a momentary glitch," he said.

Prang says there is no way to know how often this type of glitch might happen and it is an example of dealing with outdated technology.

The Assessor's Office is currently in the middle of a much-needed computer upgrade. Prang hopes to have the paper files scanned into a new system in the next couple of years. There are drawers of records still stored on microfiche. There is no way to know how much tax money might be slipping through the cracks.

"We did not catch that until you brought that to our attention," Prang said.

Prang thinks this is an isolated incident and is launching an investigation to look for other cases.

Meanwhile, Haynes wonders how much money the city and county might be missing.

"It's infuriating," Haynes said. "It's absolutely infuriating.