Common Misperceptions About Appealing Property Tax Assessments

Posted by Anne Sheehan on Aug 2, 2018

During our recent webinar on CFO.com, Paying More than You Should in Commercial Property Taxes? A Guide to Better Risk Management, this question was asked: “What are the most common misperceptions among finance leaders who are not accustomed to appealing property tax assessments?”

Here are the key misperceptions that were discussed:  

  • Property taxes are a fixed cost.
  • It’s not worth a proactive property tax management strategy because it is difficult to figure out the savings potential.
  • The bill went up a few percentage points from last year, so it must be right. 
  • “I know the fair market value of my assets.”
  • Appeals of assessments are always resolved quickly.

 

For more detailed insights, read the complete transcript below or watch the video.

What are the most common misperceptions among finance leaders who are not accustomed to appealing property tax assessments?

 

 

Edited transcript: Webinar presentation and discussion with Anne Sheehan, CEO of Real Property Tax Advisors, Stu Hueber, VP of Tax for Dean Foods, and moderator Joe Fleisher, Editorial Director of CFO.com.

Anne Sheehan, CEO, Real Property Tax Advisors:

First and foremost, the biggest misperception is that property taxes are a fixed cost. As a result, many finance leaders just sign off on it. Clearly after our conversation today, each of us realizes that this is not the case. Property tax is a variable cost. It’s got some “hair” on it, it may not be as cut and dry as you want, but it can be managed. A lot of people will say, “It’s not worth it.” Or, as Stu says, “The assessment or the bill just went up a few percentage points from last year, so it must be okay.” Well, that’s a complete misperception and we’ve proven that over the years.

People don’t really know the fair market value of their assets. As I’ve said, it’s not in your financials; you have to go to outside resources. You have to explore the market. You may have to find the sale of 10 different buildings to find what the average price per sq ft is. Or if you’ve got a specific piece of equipment in one of your factories, you have to figure out if that piece of equipment has been sold on the market--either open or at auction--and what the value was, or what it traded for. So people look at these obstacles and conclude that they can’t figure out their tax savings.. That’s not the case. It may not be easy, but it can be done.

It’s important to remember that taking a pro-active approach to managing your property taxes is not a “side hustle”. It’s an ongoing process that you have to commit to and focus on. Once you do, these misperceptions will dissipate by the wayside and you will start creating year over year value for your company.

Joe Fleisher, Editorial Director of CFO.com:

Thank you Anne. Stu, in your experience, what did you learn or what have you come across in terms of recognizing and overcoming misperceptions about appealing property tax assessments?

Stu Hueber, VP of Tax for Dean Foods:

I’m not sure if I would call it a misperception, but the complexities involved are vast. And when I talk about complexity, I’m referring to a number of variables, such as: 

  • Whether a jurisdiction has a formal process or an informal process.
  • If the law requires a complete appraisal by an MAI or can we present our own data and analysis as evidence.
  • Who makes the argument? Some jurisdictions require outside counsel or expert witnesses in addition to your tax consultant to represent you at the hearing, and finally,
  • The fact that Anne alluded to earlier; with a big county and complex real estate or machinery and equipment, significant taxes are at stake so, this can be a multiyear process that might go on for a very long time.

 

Joe Fleisher, Editorial Director of CFO.com:

That’s a key point that I appreciate you making. One has to be prepared for a variety of different scenarios and be prepared that the process may take a while. But if you do prepare for it, you can increase the likelihood of a better outcome.

 

Watch the Webinar: Pay More than You Should in Commercial Property Taxes? A Guide to Better Risk Management 

Tags: Personal property, business personal property taxes, commercial property tax management

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