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    10 Essential To-Do’s For Property Tax Compliance

    Posted by Lisa English on Jan 27, 2020 9:37:13 AM

    10 Essential To-Do’s For Property Tax Compliance

    Business personal property tax is no simple matter—certainly not one that can be covered by a single blog post. There’s always more to learn and do in order to improve your compliance processes and make sure you’re paying the right amount. (Check out our blog for a ton of information on those topics.) But at a foundational level, personal property tax compliance hinges on a few important basics. Get these pieces right and you can feel confident you’re fulfilling the requirements correctly.

    10 Essential To-Do’s For Personal Property Tax Compliance

    In the filing returns stage...

    1. Scrub the assets. Ensure that any and all assets no longer present at the site—sold, trashed, transferred, or otherwise disposed of—are removed from the asset listing. Keep track of these assets along with the disposal date and method of disposal for each so a list can be provided to the assessor upon request. And be sure that any non-taxable assets are identified as such. For example, some states don’t tax:
      • Inventory
      • Supplies
      • Certain types of software
      • Vehicles
      • Leasehold improvements, etc.
    2. Compare final numbers to the prior year filing. Once your assets are scrubbed, it’s a good idea to do a quick comparison of what you’re reporting this year to what you reported last year. This should be done at a return level, rather than holistically across all your assets. If you see big differences for any account, do a double check to make sure your information is correct. An assessor may question big changes, so be prepared to explain the discrepancy. Also, make sure you have the key data points for each asset to properly render, including:
      • Asset description
      • Original cost of the asset when new
      • Age of the asset, or date of acquisition
      • Taxable status
    3. Ensure you know the correct depreciation factors to calculate a value for your property. Personal property tax depreciation is not the same as income tax depreciation. Each jurisdiction may have their own depreciation factors for personal property tax. (Tweet this!) Having a good estimate of the value that will be placed on your property helps with accruals and budgeting. It will also help with the reconciliation when you receive your notice of assessed value—you’ll be comparing an accurate expectation against the value the assessor has placed on your property.
    4. Research possible abatements and exemptions that may apply to you. Identifying and requesting exemptions and abatements is well worth the effort—it saves some companies thousands or millions of dollars each year. Become well-versed on the tax exemption policies in your jurisdictions so you can take advantage of them. (Read more about exemptions and abatements here.)
    5. File by the deadline. The main issue with regard to personal property tax compliance is simply meeting deadlines. Each state, and even jurisdictions within the same state, could have different filing deadlines. Use property tax software to manage dates for you, or get a list of all the state filing return deadlines here.

    Find out how technologically advanced property tax software can reduce the time you spend on compliance activities, giving you time back for higher-value tasks.

    In the appeals stage...

    1. File the return on time. In most cases, if you aren’t in compliance with the return, you lose your right to appeal the value.
    2. File the appeal on time. Some states don’t have annual appeal deadlines but require protests to be made [x] number of days after the assessment is sent to the owner (commonly 30 days). And if you do open an appeal, you’ll also need to stay on top of hearing dates.
    3. Provide proper documentation in a timely manner. If you won’t be attending the appeal hearing in person, it may be necessary to send a signed affidavit with the appeal. If you will be attending the hearing, ensure you arrive on time and are prepared to make your argument.

    In the payment stage…

    1. Pay by the deadline. Also, consider available discounts. Some jurisdictions offer discounts for paying early, but you must send the correct amount that corresponds to the payment date.
    2. Communicate to the collector if you’re paying a bill for an assessment that is under appeal. If you’re in the middle of an appeal to lower your assessment, be sure to include a letter, or a memo on the check, alerting the collector. In some cases, you won’t be issued a refund (even if your value is lowered) if you did not communicate this information at the time of payment.

    Most Importantly: Know When To Get Help

    If you need help with your company’s property taxes, you have two options: to hire a property tax compliance service or invest in property tax software. Property tax compliance services will file your returns on time, review your property values, and appeal if necessary; some even pay your bills on your behalf. (The bills come to them, so they handle tracking and making the payments while you fund their account.)

    Property tax software can also help you remain in compliance, and make your team more efficient at the same time.

    MetaTaskerPT and TotalPropertyTax (TPT) were built to help large companies with personal property tax compliance, because it is capable of:

    • Automating data entry from tax documents
    • Quickly calculating the taxability and reportability of assets based on jurisdiction rules
    • Automating the filing process, generating and filing 500 returns in under 15 minutes
    • Tracking deadlines, including filing dates, appeal information, and payment dates
    • Comparing notice values to prior year values
    • Automating bill paying

    If your team is struggling to keep up with personal property tax compliance requirements, get in touch—we’d love to help.

    Download Now: Property Tax Comparison By State

    Topics: Property tax, Property tax compliance