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How to Survive Through Property Tax Season… and Still Find Savings

If you’re not doing this, you’re filing your property taxes wrong. 

The essential items to every property tax filer needs to know to be compliant and file timely are: Which jurisdictions to file, Return due dates, Assessment dates, Taxability of tangible personal property, Taxability of inventory, and Availability of freeport storage exemptions.

Reduce Your Inventory Taxes with Freeport Exemptions 

One type of exemption offered by many jurisdictions across the United States is a freeport exemption, which is an exemption or tax break on inventory that only stays within a state or location for a short period of time before being moved out of the state in question. This is a very beneficial exemption for qualifying companies and can draw businesses into counties and cities that offer this incentive. 

The qualification criteria will vary by jurisdiction, however, if your business deals with constant movements of inventory described above, this is a type of exemption worth looking into. Please note, the length of time inventory can be stored will vary by locality. Businesses will need to file an annual application with the county or assessment jurisdiction where they file their personal property tax returns and the information required on this application will be specific to the jurisdiction where the exemption is being claimed. 

Determining Your Taxable Value Base 

Most jurisdictions, upon receipt of business personal property returns, calculate an assessment or taxable value and generate a notice that they mail to the various businesses. This amount is then applied to the authority’s tax rate to give you your tax amount for the year.  

Have a calendar in place, whether on your own or via tax software, that helps you keep track of when you should start receiving assessment notices. The last thing you want is to realize your value is incorrect and have already missed the appeal date.

If it comes down to an appeal, the more information you have to back up your calculation the more likely it is to go in your favor. TIP: Reverse calculate the assessor’s value. The general equation used is:  

Original Cost x Depreciation Factor x Assessment Rate = Taxable Value.   

Check the jurisdiction’s site for the tables and classifications they utilize for depreciating assets. If you are unable to determine why there is a difference on your own, then you will need to contact your tax assessor. 

At this point if you have still not reached a resolution and you are sure that your value is correct, then the appeal process is the next step. 

Review the procedures required of the appeal process especially if you are going in front of a review board. They will treat it just like a court case so having that knowledge will make the process much smoother. Then you will receive the formal decision. 

Top Five Mistakes to Avoid in Property Tax 

Following are five areas where filing mistakes are commonly made: 

  1. Ghost assets - A ghost asset refers to an asset that appears on a company’s asset listing (fixed asset register), but actually isn’t physically present at the location. 
  2. Classification - Asset categories on property tax returns are tied to useful lives and depreciation schedules, all of which are determined by the taxing jurisdiction (county, city, state). 
  3. Non-taxable or exempt - Non-taxable typically implies that the item is statutorily not taxable by nature; whereas exempt indicates that the item is typically taxable by nature but an exemption from the tax exists for certain qualifications. 
  4. Cost basis - First cost, original cost, historical cost, acquired cost, fair market value, book value: these are all examples of the nomenclature seen on property tax returns.
  5. Real or personal - Real property is defined as land, buildings, and improvements to such. Personal property is defined as tangible, generally movable although sometimes affixed to real property. 

Want More of This?  

Allyn's tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state, and local tax compliance and consulting for large US and global corporations. Our website is constantly updated with tax content designed to help your team function smoother. Visit us here.


About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.

 

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