Property Tax Appeals / Manufacturers Tax Appeals
Did you open up your property tax bill and just shake your head in disbelief?
Then paid the bill thinking there is nothing you can do about it?
Stop shaking your head and take action!
Consider the following information, and then contact us today for a free consultation to discuss strategies for reducing your company’s tax burden. Join our other corporate clients that have combined to save hundreds of thousands of dollars on their tax bills – savings that accrue year, after year, after year.
Some Basic Background Information
Corporate Property Taxes are assessed in various modes such as Real Estate Tax, Business Personal Property Tax and Manufacturer’s Tax. Unlike virtually every other tax corporations pay, property taxes are based on an Assessor’s “opinion” of fair market value. Compounding the problem, the opinion is often based on mass appraisal, computer modeled assessments. The opportunity, therefore, is in building cases that lower the assessment – and in turn – the tax you pay. Understand, Assessors are not involved in a conspiracy to charge excessive property tax. They are well-intentioned government officials that deserve to be treated with great respect. Even so, sometimes methods used by Assessors to determine fair market value are subject to debate. In a situation where this is true, a case must be made to overcome the presumption of correctness of the Assessor’s value. That’s where UGBB can step in to lend a hand and provide you proper representation. Contact UGBB immediately because the time frame within which to file appeals is short.
IMPORTANT NOTE: In Missouri, a trust, corporation (e.g. entity designated as an LLC, S Corp., Inc., etc.), partnership, estate or other legal entity must be represented by an attorney in order to file a property tax appeal with the State Tax Commission or further along in the judicial appeal sequence. When the stakes are this high, a delay in the process can prove costly. This is why it is so important to hire experienced legal representation early in the process.
Real Estate Tax Assessments
Assessors use one of three methods to determine the fair market value of commercial real property. The information used to make a determination includes data specific to the property and other market indicators such as type and age of construction, sales prices of comparable property, the condition of your property, income generated by your property, and other factors relevant to the property’s value i.e. indicia of value.
- Cost Approach – First, the value of the land is estimated, as if vacant. The Assessor then adds the amount it would take to replace the property’s structure with one of similar utility, including current costs of materials and labor, profit, overhead, permit fees, and the like. If a structure is not new, the Assessor then approximates depreciation from all causes, and subtracts that from the calculation of replacement cost.
- Market Approach – A property is evaluated based on comparable properties that have recently sold, then adjusted for differences, such as improvements, or better location. Where there are frequent sales and similarities in properties, this can be the most reliable approach for residential property, but is oftentimes not as useful for commercial properties.
- Income Approach – This approach generally works well for apartment buildings, shopping centers and office buildings. The Assessor estimates potential gross income from rentals, and then subtracts an amount for vacancies and operating expenses. The amount of net income is converted to a value for the property, using a process called capitalization to establish what a buyer would pay on the market for the property. Properly identifying each of the variables utilized in this approach makes enormous differences in assessments.
In Missouri, the fair market value of property is defined as “True Value in Money.” According to case law, “The true value in money is the price the property would bring after a reasonable exposure to the open market when offered for sale by a person who is willing but not obligated to sell it, and is bought by a person who is willing to purchase it but who is not forced to do so.” The methods identified above are designed to arrive at the true value in money. But even where there is no disagreement with an Assessor as to which method is appropriate – the devil is in the details of how the method is applied – and whether the assessor’s appraisal has resulted in an overstatement of the true value.
Business Personal Property Tax and Manufacturer’s Property Tax Assessments
Assessors use rendition values you supply to determine the fair market value of your business personal property and manufacturing equipment. Businesses submit lists (a rendition) of personal property or equipment with the cost and date of purchase of the items. A standard depreciation factor is applied to the cost based on the life expectancy of the items and purchase date. This process generates an estimated fair market value at the assessment date – an estimated value that oftentimes severely overstates the true market value. In addition, there exist many special categories of personal property that are handled in unique fashions. Certain manufacturing equipment and aircraft are examples.
How Our Firm Can Help
If you feel your company is paying too much in real property, personal property or manufacturer’s tax, contact us regardless of where you are in the tax cycle. Call us whether you just received your assessment and want to file an appeal, or received a bill that seems too high even after the assessment appeal cycle has passed, or during review of the tax budget and wish to consider how taxes can be reduced. Also – if your business is considering buying a company which transaction includes real property or equipment, you should include property tax inquiries as a part of your due diligence review. For instance, a purchaser may face liability for the tax owed by the seller if not identified before the acquisition – or on the positive side – a purchaser or seller can develop strategic advantages for tax savings and improved purchase terms.
A comprehensive review will provide a thorough evaluation of all issues impacting a client’s property valuation. This review not only considers fair market value, but also classification and special purpose assets, i.e. those with special tax advantages. Our review will position us to approach the Assessor at the proper time with probative information. Know that Assessors have greater flexibility to reduce values and assessments on a pre-notice basis than they do on an appeal basis. Assessors are also more likely to make a favorable change under appeal than when approached for a refund of tax at a date subsequent to the appeal deadline. Sometimes erroneous billings take place and can be corrected outside of the appeal cycle. A proactive approach to property taxes is the best way to reduce your property tax liability.
A Favored Choice of Out-of-State Clients
Notably, as a highly respected law firm, UGBB represents many businesses situated outside of Missouri. UGBB has engendered the trust of in-house and corporate legal counsel which has led to referrals and representations. Of course clients also benefit from the attorney/client privilege in a UGBB representation…a feature that eases concerns for companies dealing in highly competitive industries.
Bases for Appeals
Generally, grounds for appeal fall into the following categories:
- Misgraded agricultural land
- Discrimination and Exemption
Therefore, our firm’s comprehensive review includes:
- Review of real estate/real property assessments; determine if market indicators dictate a property tax appeal.
- Review of personal property or business equipment return/declarations for compliance and over-reporting.
- Review of each item of reported property to determine fair market value, correct classification and special treatment.
After review, one or more of the following steps may be required:
- Further investigation of the case and/or preparation of a certified appraisal.
- Presentation of the case to the Assessor’s office for informal review.
- Representation at the local Board of Equalization – and to higher tax appeal venues such as the State Tax Commission or even the Supreme Court if necessary. Note, in Missouri, cases presented in the latter venues pertaining to property owned by companies, requires representation by a lawyer. UGBB clients enjoy an advantage because we can handle cases from beginning to end unlike tax consulting enterprises which operate without attorneys on staff.
Much of the value we bring to the table comes from building your appeal case simultaneously with our review. In addition to considering applicable law, the specific facts and circumstances related to your property such as age, use, economic conditions, neighboring properties, and various industry factors are a few that are accumulated and considered. Then the approach used by the Assessor is deliberated. Oftentimes the Assessor is brought into the matter early to save time and cost. It may be that a different approach is more appropriate than that utilized by the Assessor, or perhaps the method used by the Assessor is appropriate, but the data used needs to be corrected. Under our approach, the cost-benefit analysis of an appeal is better deliberated – and sooner than later – before appeal deadlines pass.
Why Choose Our Firm? A Team Approach – Maximizing the Power of PartnershipsTM
UGBB does not compete with your accountants and staff or even your present legal counsel – we compliment their work. The education and experience of these professionals oftentimes did not focus on Property Taxes. The reality is that this area of taxation is not part of the skill set for most staff, CPAs and attorneys. However, we know these people bring other talents to the table. In fact this understanding is why we are able to “compliment” your own experts and engender a team approach to solving matters. That’s how we “Maximize the Power of PartnershipsTM.” Our group includes lawyers with tax and accounting knowledge along with hands-on business experience. Our professionals have extensive experience working with both large and mid-size public and private companies in the property tax discipline. Add the accompanying advantage of Attorney/Client Confidentiality Privilege to these attributes to ease concerns over safe-guarding corporate secrets – and a successful formula to solve your property tax issues is compounded.
Now that you have identified the solution – call UGBB and take the first step to reduce your company’s tax burden.
Our lead tax practice attorney, David K. Adam, has an accounting background to supplement his law license, and served as a CFO, business developer and tax consultant for over twenty-five years. He works with companies ranging in size from small firms to multi-nationals. Historical client matters have resulted in millions of dollars in assessment reductions, and hundreds of thousands of dollars in tax savings. He cooperates with the UGBB team to provide services ranging from investigations, to interpretation of tax codes, to aggressive advocacy and representation at hearings and trials. UGBB can be retained on an hourly or contingency basis. Contact David K. Adam to schedule a no cost consultation.
Representing All Industries
While each industry is unique, with proper experience, one can utilize common features and theories to achieve success for each category of business to generate tax savings. With UGBB you can count on experience and resourcefulness to present the best possible case.
A Non-Exhaustive List of Industries UGBB has Assisted
- Agricultural Services & Products
- Aircraft & Aircraft Repairs
- Auto Dealers
- Commercial Banks, Credit Unions, Savings & Loans
- Distributing & Warehousing
- Finance & Insurance
- Medical Supplies & Health Products
- Miscellaneous Services
- Nursing Homes & Hospitals
- Physicians & Other Health Professionals
- Printing & Publishing
- Religious Organizations
- Food Stores
- Funeral Services
- General Contractors
- Hospitals & Nursing Homes
- Hotels, Motels & Tourism
- Leasing & Rental
- Residential Construction
- Commercial Real Estate Developers and Investors
- Recreation – Public Golf & Country Clubs
- Restaurants – National, International and Local chains
- Retail Sales, Strip Centers
Representative Cases at Various Magnitudes:
Tax Savings: $172,481 – Year 1
Assessment Was: $2,344,950
Assessment After Appeal: $6,050
Tax Savings: $37,995 Per Year
Appraisal Was: $2,736,500
Appraisal After Appeal: $1,840,000
Tax Savings: $16,065 Per Year
Appraisal Was: $1,634,800
Appraisal After Appeal: $1,150,000