During our recent webinar on CFO.com, Paying More than You Should in Commercial Property Taxes – A Guide to Better Risk Management, the question was asked, “What are the first steps a finance leader should take when preparing a property tax management plan?”
Here are the key takeaways:
- Acknowledge that commercial property taxes are not a fixed cost, but a variable cost that you can manage.
- Create a summary of all the commercial buildings and related business personal property (BPP) assets you own or 100% lease.
- Collect property tax bills for the real estate and BPP associated with each building.
- Sort by state and then by taxing jurisdictions. An asset can be taxed by multiple jurisdictions (county, township, and city) and you need to know all of them for an accurate total cost.
- Put all your BPP compliance filing dates and real estate appeal deadlines on a calendar.
- BPP compliance filing dates are usually from January to June.
- Real estate appeal deadlines can occur year-round.
- Decide what internal and external resources you will need to implement your strategy.
For more detailed insights read the complete transcript below or watch the video.
What are the first steps a finance leader should take when preparing a property tax management plan?
Edited transcript: Webinar presentation and discussion with Anne Sheehan, CEO of Real Property Tax Advisors, Stu Hueber, VP of Tax for Dean Foods, and Joe Fleisher, Editorial Director of CFO.com and moderator.
Anne Sheehan, CEO, Real Property Tax Advisors:
The easiest way to start is to collect the property tax bills for your real estate and all the business personal property associated with each building. That can be an arduous process, but it’s necessary to have the information. Remember, the assessors determine value and you have the burden of proof, so you need to know where you own taxable assets.
Next, you have to sort by state and taxing jurisdictions. Be careful – many assets receive tax bills from multiple jurisdictions. If you’re trying to measure your total liability, you need to include every tax bill that you pay from every jurisdiction that is billing you.
After that, you must create a comprehensive calendar for property taxes. This is an incredibly important part of the process as you need to document BPP compliance deadlines, real estate and BPP appeal deadlines, and tax bill due dates.
Lastly, it comes down to data, resources, and what you’ll need to challenge an assessment. We’ve had a large personal property case over the last couple of years. It required months of preparation for the hearing and we engaged several external experts to testify to specific issues regarding fair market value of certain components. This is typical of a complex property tax appeal and requires extensive planning and coordination of assets.
The process can be daunting, but if you follow these steps you will lay the foundation for a strategic, long-term property tax management plan — a key step toward getting control of your property taxes.
Joe Fleisher, Editorial Director, CFO.com, Moderator:
Thank you, Anne. And Stu, in terms of your first steps, what would you want attendees to keep in mind based on your experience?
Stu Hueber, VP of Tax, Dean Foods:
I think Anne said it.
The problem is it’s really difficult. You’re not just talking about 50 states, you’re talking about all the jurisdictions, every place you have inventory or property, plant and equipment. It can be a very big challenge to get all of those bills, to track them, and to understand everything that you’re being taxed on.