In 1696 England brought a new property tax onto the scene.  After the hearth property tax, well they thought they’d give it another try.  Instead of taxing homes based on the number hearths (like they had tried earlier), this new methodology was directed at windows.

Property taxes started with a base fee for each building or home and then an additional amount was added based on the number of windows in the building.  The concept was that windows represented wealth and therefore those with more windows should pay more taxes.

Some of the taxpayers attempted to block up windows or camouflage them so that they would not be counted on assessment day.  Like many previous attempts at property taxation, the public did not take to the window tax.  Eventually the tax was modified to take into account more than just windows and in 1784 it became the Assessed Tax, which is a predecessor to the system of property tax that we have come to love today…

In 326 B.C. Alexander III of Mecedon or Alexander the Great was ruler of the known world at only thirty years old.  You can imagine the military genius it took to accomplish such a feat, but have you ever thought of Alexander the Great as an excellent tax administrator?

The ancient world of Alexander the Great was burdened with heavy taxes from their governing bodies.  Alexander was able to quell the frustrations of the people he conquered by lowering their property taxes and investing half of what he collected back into public improvements.  Most of the people who fell under his rule paid fewer taxes than before and enjoyed more government financed improvements.

His genius property tax policy prevented many rebellions and contributed to Alexander’s ability to rule those he conquered with relative peace.  Who would have thought that good tax reform could be just as effective as a big sword?  Well maybe not just as effective....

As you can imagine, property tax assessors and collectors have not always had the best track record when it comes to love from the public.  To the Jewish people in biblical times, tax collectors were especially hated.  They were seen as traitors to their own people because they chose to serve the Roman Empire.  Furthermore, they often collected far more than was due from the people.

A famous story in the Bible describes one of these property tax collectors, Zacchias.  Because he was especially short, not to mention hated, he decided to climb a tree to see Jesus as he came through town.  Much to his surprise, he was called out by Jesus and told to come down from the tree (the Sunday school songs are coming back to me).  Much to the frustration of the religious leaders, Jesus spent the rest of the day with Zacchias.  What was even more unbelievable to them was when Jesus said, “The tax assessors and prostitutes are entering the kingdom of God ahead of you.”  How is that for a new perspective?

The professions that people most commonly celebrate are teachers, nurses, artists and…the tax assessors?  Maybe I’m mistaken.  Perhaps it’s simply a matter of being born in the wrong century to fully appreciate and love the tax assessor.  Let’s step back, way back.    

In ancient Athens the city treasurer had many duties, including assessing and collecting property taxes.   Around 530 B.C. a man named Aristides stepped onto the scene as city treasurer.  His ability to judge fairly and impartially shone through his reforms and he became well loved in the city.  He gained the nickname “The Just” and that came from the people he taxed.  A monument was dedicated to him in the city and he has often been looked to as a pillar of what tax officials should be.  Perhaps this might give the taxman hope and the taxed a slightly different perspective.

Is outsourcing property taxes the best way to go?  While the predictable answer from a consultant might be “absolutely”.  I am going with “it depends”.  The real question is not “should we outsource?” but rather “what is the most effective way to manage property tax compliance and pursue savings opportunities?”  When considering whether to outsource or manage property taxes internally consider the following factors:

·        Complexity – There are an estimated 12,000 taxing jurisdictions.  Is your corporate tax department equipped to manage the numerous tax laws and rulings, renditions, factor tables, exemptions, abatements, tax bills, deadlines and valuation methodologies?  Are the outsource providers you might be considering equipped to do the same?

·        Staffing – Most property tax returns are due between January and May.  Are you appropriately staffed to accomplish the filings?  Can your tax department staff be more effectively deployed to strategic, value-adding initiatives?

·        Expertise – Does significant property tax knowledge reside within your tax department?  Do you want to build property tax knowledge into it?

·        Costs – Have you considered all of the costs to manage the property tax function internally?  How about all of the costs to outsource?

Considering these factors within the context of the goals/focus of your company (and your tax department) will help you determine if outsourcing is right for you.  And here’s another thought… Outsourcing doesn’t have to be an all or nothing decision.  You might just find a partial outsource to be the right decision.