I think it’s safe to say that all property tax teams strive to avoid penalties. But they happen. Teams working for companies with a large number of properties sometimes don’t have enough staff to keep up with deadlines or they have new, untrained staff members. Other times a failure in the process leads to a missed deadline, and extra expenses are incurred. But just because penalties happen doesn’t mean they’re acceptable—or that you should stop searching for ways to avoid them.
In this article we’ll take a look at the various ways penalties are incurred, and how CrowdReason property tax software mitigates your risk in this area.
Property Tax Penalties
No matter what season of the property tax lifecycle you’re currently in, there’s a way to incur a penalty. (Is it any wonder that property tax teams juggling 500+ assessments annually occasionally make a misstep?) Penalties vary by jurisdiction but could, in some cases, amount to 10% or more of the taxes due on the value of your assets and/or possibly losing your right to appeal. Those are big-enough deterrents for any size company.
The preparing and filing season and the tax payment season are both rife with pitfalls that could result in penalties.
Preparing & Filing Returns Season
Getting your business personal property tax returns out the door involves a number of critical steps (which you can read about here) that must be handled in a timely manner, and with great accuracy. Penalties may be incurred by:
- Filing returns incorrectly.
- Filing them late.
- Mailing them to the wrong address.
If you’ve received your assessments and feel that the valuation of your property is too high, you’ll need to appeal the decision. Notifying the assessor that you want to appeal and actually following through on the appeal are up to you—an assessor certainly won’t penalize you for failing to file an appeal!
In this stage, if you miss the opportunity to appeal what you feel is an unfair assessment, you’ve brought a penalty upon yourself: You’re now forced to overpay a tax amount beyond what your property is actually worth. The penalty, then, is equal to the amount you’ll overpay.
There’s only one property tax software that can truly help you avoid penalties—book a free CrowdReason demo to see it in action!
Tax Payment Season
If you’ve made it through the first two tax seasons without a hitch, congratulations. But there’s still the matter of managing your tax bills. Penalties at this stage can be incurred by:
- Mailing payments to the wrong address.
- Missing a payment deadline.
- Paying the wrong amount.
How To Avoid Property Tax Penalties
To manage the influx of information associated with all stages of the property tax cycle, many property tax teams try to utilize tools like spreadsheets, calendars, or project management software (like Excel, Sharepoint, Outlook, etc.). But all these options require manpower—manually gathering information from tax documentation and entering it all into the appropriate tool. But these manual tasks are usually done by highly paid tax professionals, which is a waste of time and resources.
Integrated property tax software can improve your tax process and lower your chances of incurring penalties at every stage.
Most integrated property tax software can do the job at an acceptable level and will definitely be an improvement over manual processes. But if you have a high volume of properties to manage and are looking for a tightly structured tax process that virtually eliminates errors (and therefore penalties), take a look at CrowdReason.
Reduce Property Tax Penalties With CrowdReason Software
MetaTaskerPT is a technologically advanced tax tool that uses a combination of machine learning and crowdsourcing to automate data entry. You simply scan your tax bills, return notices, and other tax documents, and the software will extract all relevant data (addresses, deadlines, amounts due, etc.), locate the related property records, and instantly update them with the newly scanned content. No manual data entry is required. It works to reduce penalties because:
- It performs highly accurate data extraction. To achieve a data accuracy rate of greater than 99 percent, we confirm the extracted information three times during the crowdsourcing process. That means you won’t have to worry about the human errors that inevitably occur during manual data entry, like incorrect addresses, due dates, or bill amounts.
- It cross-checks the extracted data against information from your own past documents and those of other TPT users, giving you additional validation that dates and addresses are correct.
TPT takes the data from MetaTaskerPT (or, when used without MetaTaskerPT, it imports information from whatever data system you’re using) and presents it to you in a way that makes it easy to fulfill your tax obligations correctly. It verifies mailing addresses, key deadlines, and depreciation tables annually and presents upcoming deadlines clearly. It helps reduce penalties because:
- It includes detailed information on more than 20,000 assessing and collecting jurisdictions that is validated annually. So in cases where you didn’t get a bill, for example, and don’t know the payment deadline or address, you can still get a jurisdiction’s contact information within our software and get in touch. And when it comes to filling out tax returns, our one-click form generation feature populates all your asset data on state and local tax forms automatically.
- It ties data to the tax forms it came from. If a jurisdiction claims you didn’t deliver returns or payments on time, you can reference the original documentation you were sent right within our system. If you’ve responded according to the document’s directives, you have a legal right to get that penalty removed (even if the document itself was incorrect).
When it comes to overpaying for taxes in the appeal stage, our software can help with that, too:
- TPT gives you greater visibility over your property’s tax activity. A crucial step in deciding whether or not to protest is to compare your property values against those on prior year assessments, so it’s important to have a simple way to track and see those values. Without easy access to your property value data, you’ll miss valuable opportunities to address what may be unfair property values—and high tax bills.
- Used together or individually, MetaTasker and TPT give you the additional time needed to execute each stage of the property tax cycle carefully, thoroughly, and on schedule. Both of these tools were designed by property tax professionals, so they emphasize time-saving features that enable your team to manage property taxes more effectively. You’ll never again run into “crunch” time that prevents you from evaluating your assessments and responding as needed.