Property taxes are one of the most significant state and local tax burdens on businesses. It is estimated that approximately $300 billion in property taxes are paid annually in the United States and that there are over 75,000 plus taxing jurisdictions that collect this revenue. Real property is taxed in all 50 states, personal property is taxed in 42 states, and 17 states impose a tax on inventory.
Property taxes are one of the largest recurring fixed expenses that businesses face today. In most businesses, the primary task of the property tax function is to ensure that the company is complying with the filing/reporting requirements and the payment of taxes on a timely basis. Very little time or effort is given to property tax planning and tax minimization.
The assessment of real property is based on the value of all the assets at the single location. Tangible personal property should not be included in the real property assessment but often is. This can lead to double taxation when the same assets are reported and taxed on a personal property tax rendition. Another common error is the failure to remove intangible values associated with the real property assessment. Without paying close attention to what is included in a real property assessment, companies may be paying excess taxes.
Personal property tax administration and compliance are difficult. Most state statutes assess the tax on the value of property. However, value is usually determined using tables and multipliers to convert the original cost of assets to the current value. Maintenance of detailed fixed asset schedules is necessary to compile the information necessary for an accurate personal property tax assessment. Errors in the fixed asset schedules can result in overpayment of tax. Many states offer exemptions from personal property taxes for some types of property. Other property may be assessed at a different rate. Failure to claim the authorized exemptions can result in overpayment of tax.
Our Approach To Property Tax Minimization
Our property tax minimization services help companies reduce property tax assessments by identifying, separating, and removing components of the assessable tax base that do not contribute to the market value. Our team of professionals will also monitor conditions, changes in the tax law and business changes as they occur, to help companies position and plan for property tax changes. We will also analyze the current company structure and help the company to alter the structure when property tax savings can be accomplished.
Property (Ad Valorem) Tax Services
Real Property Tax Reviews are designed to identify factors that may result in a reduction of value. Specifically, we analyze whether technological obsolescence, functional obsolescence, or economic obsolescence has caused the property to loose value. The three methods used to value property; the cost approach, the market approach, and the income approach are evaluated to compute the most accurate market value for the property.
Personal Property Tax Reviews focus on a detailed review of the fixed asset schedule. Since the personal property tax returns are most often prepared from these schedules, it is important that these schedules be accurate and reflect only the assets on site within the taxing jurisdiction. The personal property tax review also reviews the asset categories to assure that the assets are placed in the correct multiplier table and that the company takes advantage of all exemptions and credits that may be available.
Property Tax Abatements are available in many states for a variety of companies. Property tax abatements may be granted to specific industries engaged in specific activities. In other jurisdictions, property tax abatement may be offered to a company for locating business property in a specific location. Our property tax professional can assist in locating and identifying property tax abatement opportunities. We will also assist the company in applying for the abatement and securing the tax savings from the appropriate jurisdiction.
Property Tax Appeals are sometimes necessary when the company and the assessor cannot come to an agreement on the taxable value of the real or tangible personal property. Our team of property tax professionals can assist the company by preparing a presentation for the assessor and if necessary, assisting in the filing and execution of a property tax appeal in the appropriate judicial system.