Tax practice management software is a staple for most accounting and tax firms. But there is no multi-use tax solution on the market that is designed to deal with the particulars of property taxes, as you’ll learn more about below.
Where Property Tax Differs From Income Tax
The property tax cycle differs from that of income taxes in two ways:
- Compliance—Property tax is a local tax of your real property and business personal property where you have to report your property at its location as of the lien date. The tax cycle for property taxes is much longer than with income tax, and includes a significant amount of data gathering and analysis to determine the proper way to file what may be numerous returns.
- Tax authority—Property tax is administered by local government entities, not the federal government. This leads to a slew of unique scenarios because different states and local jurisdictions have their own requirements, tax deadlines, valuation approaches, and so on.
These differences are the reason why, fundamentally, tax practice management software isn’t a good fit for property tax. Specifically, it falls short in three areas: return preparation and filing, fixed asset management, and payments.
3 Areas Where Property Tax Software Outperforms Tax Practice Management Software
1. Return Preparation & Filing
Property tax returns have more components than income taxes, sales and use taxes, or even transaction taxes. These include returns, various jurisdictional requirements, depreciation schedules, appeals, and more.
Then there’s preparation and filing, where you may have to complete hundreds of returns. Tax practice management software doesn’t provide the features necessary to cut any significant amount of time in this part of the tax cycle. CrowdReason not only gives you the tools to efficiently file multiple returns, but helps you document and retain your compliance team’s knowledge for continued success.
2. Fixed Asset Management
You have to track and manage your assets—everything from laptops to heavy machinery and more—across every location, a number that can easily run into the tens of thousands. Keeping up with these assets can be a job in itself without a specialized solution.
Usability is a problem in this area. You can’t easily organize or maintain historic asset data with tax practice management software tailored to track tax basis and elections for income tax. For example, if only a single state allows accelerated depreciation after a certain year, you won’t be able to address this special case and retain the data over time without implementing a manual workaround, which takes extra time and introduces opportunities for error.
Unlike income tax, property tax bills are made up of the value of your assets, the assessment rate, and the tax rates set by individual jurisdictions. Unfortunately, with multiple steps in the process, it’s not uncommon for mistakes to be made by taxing jurisdictions or assessing offices. It’s important that you take the extra step of reconciling your tax bills against the valuation your assessor sent you. If the value isn’t accurate, you’ll need to dispute it and provide relevant evidence—across hundreds to thousands of bills.
It is also important to know what is happening to tax rates, as you have very little insight on or control over what is happening in the jurisdictions where your property is located. For example, your valuation might have decreased but your tax liability increased because of tax rate changes. Having the complete picture of your tax liability allows for better planning and budgeting.
Tax practice management software simply isn’t equipped to handle the complexities of property taxes, nor to keep track of the volume of various tax cycle components like returns and tax bills.
CrowdReason advanced property tax software has helped numerous property tax teams save time, save money, and manage their property taxes more effectively overall.
Ready to learn more about CrowdReason’s property tax solutions? Schedule a demo today.