The concepts of an assessment and property tax have proven to be a point of confusion for some business owners—are they one and the same, or two different things? In fact, assessment is an integral function of the tax cycle, but taxation and assessment are two distinct things. The rationale behind the separation: It protects property owners from possible unfair treatment. As a taxpayer, that’s good for you, but there’s more you need to know to ensure you’re being taxed fairly.
This article explains tax assessment vs. property tax in some detail, and briefly touches on how to appeal a property tax assessment if you feel you’ve been assessed unfairly.
Tax Assessment Vs. Property Tax: Definitions
Assessment: A tax assessment is a value attached to your real property and business personal property by the local government, specifically for the purpose of levying and collecting tax money that is used to support your community.
Under this broad definition, there are three types of specific values related to the assessment:
- The appraised value of your property is based on the fair market value, which is the price a willing seller would sell to a willing buyer through an arm’s length transaction (a transaction where both parties have equal bargaining power).
- The assessed value is an adjusted value: Appraised value/market value multiplied by the assessment ratio. (Sometimes exemptions are also then subtracted.) The assessed value does not affect the property’s appraised value or fair market value; it only affects the tax bill.
- The taxable value is the assessed value minus any exemptions. The taxable value is multiplied by the jurisdiction’s tax rates to arrive at the tax liability. That number may then be adjusted further if necessary by applying any exemptions or penalties. Tax rates are not set by assessors, they are set by taxing jurisdictions (a county or a city, for example). Public hearings are often held to discuss proposed tax rates.
Property tax: Property tax is a tax levied by a government on the buildings, land, and certain types of personal property bought or owned within their jurisdictions. Property tax liability is based on the tax assessment.
Should you appeal your property tax assessment?
If you disagree with your property’s assessed value, appealing is an option. (Here’s some guidance on how to know if you should appeal your property tax assessment.) It’s important to note that an appeal isn’t always about value; it may be about some other aspect of the tax, such as a denial of an exemption, a clerical error, a dispute over the taxing jurisdiction, or something else. Also, assessors generally do mass appraisals of buildings in their jurisdiction, so they may not know the specific details regarding your property that could affect its value.
If you do choose to appeal, you may make either an informal or formal appeal.
- An informal appeal may be settled in an informal manner, possibly over the phone with the assessor or by visiting the assessor’s office to discuss it in person. Often, the issue is settled during this informal process.
- If the taxpayer and the assessor are unable to come to a resolution, a formal appeal is usually the next option. (Or, depending on the assessor, informal appeals may not be accepted.) If a formal appeal is necessary, a specific appeal form may be required or a letter of appeal may be accepted. Be sure to check the particular assessor’s requirements.
If you are successfully able to reduce your property’s value, it is the appraised value that is being reduced. As a result, the assessed value is then indirectly reduced because the appraised value is the starting point for assessed value, before any assessment ratios and exemptions are applied.
How To Take Control Of Your Assessments
If you receive a lot of assessments, chances are your team will be overwhelmed and want to simply process them before moving on to the next one. But that means you miss out on opportunities to appeal. Be more proactive with CrowdReason, property tax software that helps you prepare for, track, and stay on top of tax assessments so you can save time and take advantage of appeal opportunities and lower your tax burden.
Efficiently Track Assessments
Every assessment has a deadline for an appeal. Keeping up with a single deadline is manageable, but multiple deadlines can quickly become overwhelming. Our TotalPropertyTax (TPT) solution has a calendar feature that shows all your deadlines—not only for your assessment notices and appeal hearings, but also your return filings and tax bills. In one glance, you can see all your important tax due dates.
You can also take a closer look at assessment notices on the notice summary screen. Here you can see a list of all your assessments and their related data points—notice status, rendered and final values, value comparisons, and more. There are multiple filter and sorting options available so you can view your assessments in a way that suits your current needs.
If you want to dive deeper into an individual notice, simply click on one to bring up its notice detail screen. It shows the original notice, along with any revised notices you received for the same account. Revised notices sometimes stem from an assessor error or incomplete assessment, though they may also be sent out if you called and requested a correction after receiving the initial notice.
You can also access the jurisdiction tax information pop-up to add values and tax rates at the jurisdictional level to assist in validating that the appropriate jurisdictions are included in the assessment.
Reduce The Time You Spend Handling Assessments
Better tracking isn’t the only benefit TPT offers. It also helps you save time. For example, on the notice summary screen, you can use the displayed values and comparisons in conjunction with deadlines to quickly assess whether individual assessments should be accepted or flagged for appeal. It’s a welcome time-saver as your staff members proceed through their workflows, addressing assessments and other elements of the property tax cycle.
This screen also provides easy access to any notice-related documents your team may have connected to a given assessment. Instead of hunting down reference documentation, you can find it attached to the associated assessment.
Another time-saving aspect of TPT is the ability to generate a pre-populated appeal letter. You can send this letter to an assessor to start the appeal process. Some states require special appeal forms in lieu of letters; TPT makes available a few of these state-specific forms, namely for Texas and Oklahoma.
Lastly, TPT can be used in conjunction with its sister product, MetaTaskerPT to save additional time. MetaTaskerPT is data extraction software that automatically scans and extracts key data points from tax documents, eliminating any need for manual data entry. For assessment notices, MetaTaskerPT can extract notice values and appeal deadlines and import them into TPT or your existing tax database. MetaTasker has a 99% accuracy rate (better than a team of people!) and can turn around documents in less than 24 hours.
There’s more to mastering the tax cycle than simply understanding the distinction between a tax assessment vs. property tax—it’s also about handling tax-related activities efficiently and strategically. Using advanced property tax software like TPT and MetaTasker helps you stay on top of property tax bills, appeal more tax assessments, and spend more time on tax strategy, all of which ensure you’re taxed fairly.
To see how CrowdReason’s solutions can help your team conquer the property tax cycle, schedule a demo of our software today.