Is your company struggling under the weight of exorbitantly high property tax bills? Either real estate tax, personal property tax, or both? If so, you should know that taxpayers have options for addressing high taxes beyond the knee-jerk reaction of selling their property or moving operations to an area with lower taxes (as if such a panacea exists). Let’s explore a few concepts that may help lower your company’s property taxes. There are others available depending on your particular circumstances.
Review the Assessment
Many governments calculate real estate property taxes based on a property’s appraised fair market value. In Missouri, the measurement date is January 1st of each odd-numbered year. Your first step in addressing high real estate taxes should include a review of your tax assessment records annually to check the accuracy of the assessment. This can be accomplished in many Missouri counties at any time of the year by accessing the County Assessor’s website and searching for your property’s address. Then, seek out the property cards containing assessment data. Sometimes property owners receive a high real estate tax bill because assessors use incorrect information about a property, such as the property’s acreage or the number of square feet in a usage category within a building. Assessors may also mistakenly believe that a property has undergone improvements that increase its value. Property owners can challenge erroneous information contained in an assessment by filing a real estate property tax appeal. With respect to personal property, Assessors request a Personal Property Declaration form each year. In other words the taxable assessment changes each year. Filing this form with appropriate data may lead to reductions in the tax bill. The devil is in the details of the form as against the reality of the personal property owned by businesses. Furthermore, some companies qualify for apportionment of their personal property taxes. This apportionment means that if the personal property is involved in interstate commerce, such as tractor-trailers for example – if the personal property tax declaration is properly filed –tax bills on the interstate related property can be reduced by anywhere from 10% to 90%! This is just one example that shows how personal property tax is not as easy to understand as it first appears. A too often overlooked expense items for companies.
If a real estate or personal property tax assessment just seems too high – retain an expert to help you evaluate whether your sensibilities are correct – and if so – file an appeal. There is much more to property taxes than first meets the eye. An expert will show you how to save money in ways you may not ever have identified on your own.
File an Appeal
Property owners have the right to appeal a property tax assessment. Importantly, owners should familiarize themselves with the deadlines for appealing an assessment. An administrative appeal board or court can dismiss an untimely appeal regardless of its merits. To be safe, in Missouri, first-level appeals should be diligently prepared and filed in June before the July deadline. This means taking action starting in the Spring of each year. Importantly, each opportunity for appeal must be undertaken to have any chance of winning. In legal terms, this is called “Exhausting all administrative remedies.” In Missouri, this translates to, if informal appeals with the Assessor’s Office don’t result in an acceptable result, then file an appeal with the County’s Board of Equalization, and then if no acceptable result is gained, file an appeal with the State Tax Commission. Note: In Missouri, only attorneys can bring a case to the State Tax Commission if a corporate entity or trust owns the property. State Tax Commission appeals are similar to other legal actions, including discovery (interrogatories, depositions request for production of documents), expert witnesses, judicially administered hearings, and so on. Engaging an attorney at the front end generally enhances the chances of prevailing. Some attorneys have a rate program where reductions gained in the early stages of appeals result in lower fees.
During a property tax appeal, an owner can present evidence and expert witness testimony from property appraisers to challenge your property’s assessment. Evidence you might use in an appeal includes recent sales of similar nearby properties and independent appraisals. You may also present photographic evidence or surveys to challenge erroneous information about your property used by the tax assessor. Often, the presentation of postponed maintenance or property damage existing on the assessment date will allow the Assessor to lower an assessment.
Pursue Exemptions or Credits
Many municipalities offer property tax abatements, exemptions, and credits to various groups that can help reduce or eliminate property tax bills. Developers can enter into tax abatement or tax freeze contracts with a municipality. This must be done before beginning construction. Not-for-profit enterprises can apply for tax exemptions at any time. Each County has its own procedures for filing for exemptions or credits.
Negotiate a Payment Plan
If a property has been properly assessed, but the bills become unaffordable, consider negotiating a payment plan with your local tax authority to spread the financial burden over time. Local taxing authorities may look more favorably on a payment plan if you cannot afford your tax bill due to temporary circumstances, such as temporary business closures. A tax attorney can work with tax authorities on your behalf to negotiate a favorable payment plan that spreads out tax payments over time and allows you to keep licenses intact and reduce collection activity.
Contact a State and Local Property Tax Attorney Today
If your property taxes seem unmanageable, a tax attorney can help you explore your tax reduction options. Contact Uthoff, Graeber, Bobinette & Blanke today for a free, initial consultation with the UGBB partner handling this area of law. Specifically, David Adam will discuss how our firm can assist you with your tax-related concerns. A well-reasoned and supportable case is the goal for all involved.
Special Note
Given our decades of practice in various tax arenas, we feel comfortable explaining a particular point of view. The vast majority of assessors (or IRS and State tax agents, as the case may be) are not your enemy. They have a hard job in properly appraising thousands, and sometimes, a County’s staff assesses hundreds of thousands of properties each cycle. Assessors are like you. They have families and are community-minded, local citizens who work to perform their best each day. If properly provided information towards a fairer assessment, when the information falls within the realm of acceptability, the assessors will incorporate the data, leading to a lower tax bill. That said, some assessors lose their recognition that they are public servants. They forget their approach to their duties should be well-informed and non-discriminatory. We have seen where tax officials sometimes improperly refuse to listen to rational information and inappropriately take questioning of an assessment as a personal attack. In those proceedings, navigating a bad situation becomes challenging. Sadly, on one occasion, an assessor’s representative became so unruly and unprofessional that we were forced to assist in removing the person from their position. The other assessor reps were embarrassed and thankful the person was dismissed. In summary, when one engages UGBB to assist with tax matters, appeals will be handled professionally and cooperatively. Only after a respondent abuses our clients or us will “the gloves come off.” We require our clients to behave accordingly and will disengage should circumstances dictate.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute legal advice. Always consult with a qualified attorney regarding your specific situation. Your particular facts and circumstances may alter conclusions derived from information contained in this blog. The author assumes no liability for any errors or omissions in the content and is not responsible for any damages resulting from the use of this information.