M. Night Shyamalan wowed us with his breakthrough film, "The Sixth Sense". This may be the only time one of his films has wowed us but I’ll leave that topic for another day. "Sense" rejuvenated the suspense thriller without the gore and violence that is typically used in such flicks. In this intense story, Dr. Malcom Crowe (played by Bruce Willis) is a child psychologist whose new patient, Cole Sear (played by Haley Joel Osment) sees dead people and is constantly terrified by what he sees. The whole movie plays off the reality of Malcolm trying to help Cole with his perception of having these sightings. Reality is flipped upside down in the surprise ending where Malcolm realizes that his "reality" was just a perception - Malcolm is actually dead (sorry if I ruined the ending for you). It was Cole who helped him get to this realization – as he says in the movie, "Dead people only see what they want to see".

I remember watching this film on an airplane. Never in my 20+ years of travel have I encountered so much conversation around an airplane movie than for "The Sixth Sense". Everyone was talking to their neighbors and in the lines for the bathroom. This concept of only seeing what we want to see and letting our perceptions overshadow reality resonates with us. It resonates in the property tax industry as well. In the PropTax™ Assessment results we found property tax managers (with 11+ years experience on average) felt very positive about the following statement, "Our tax team regularly evaluates and uses all applicable depreciation tables, seeking to accelerate depreciation wherever possible". Participants in the PropTax Assessment who labeled themselves as "Individual Contributors" (with 0-2 years experience) felt the opposite, that this was rarely done. This made for an interesting and lively discussion at breakout sessions during the most recent IPT Annual Conference, especially since we agreed that the individual contributors were actually filing most of the returns.

While updating the West Virginia Commercial Business Property Return for PTR by Advantax, one of our technology experts brought to my attention that there is a “Number of Sheep and Goats of Breeding Age” section on the return.  Logically it’s placed between “Vehicles” and “Incomplete Construction”.  The instructions ask the preparer to fill in the number of each and then remit $1 for each head with the completed form.  This got me thinking…..  How many sheep and goats live in West Virginia?  How do you know when sheep and goats are of breeding age?   Who audits that kind of thing?

According to a 2001 study, the breeding ewe and lamb population in WV was about 28,000.  Now since a lamb is a newborn we have to assume that it is not “of breeding age”.  Actually, I’m not really sure when the lamb becomes a breeding ewe – and I’m not one to pass judgment on the sheep anyway.  Suffice to say, if all the sheep in the study were, let’s say “active”, the maximum collectable property tax would be $28,000 (at $1 per).   That hardly pays for an auditor to drive around the state to visit all the sheep farmers.

In researching this further, it appears that tax on sheep is not a new thing.  In 1549, England imposed a tax on sheep with different rates for different breeds.  It was the shortest-lived tax in English history (apparently even more unpopular than the Hearth Tax).  This makes me wonder why in 2010 West Virginia is still hanging on.  Are they not familiar with the 1549 failed tax?

Perhaps they should take the more aggressive approach like New Zealand tried in 2003 when the government proposed a tax on the flatulence emitted by sheep, cattle and deer.  They determined that half of the greenhouse gas emissions in their country were the result of livestock flatulence.  If West Virginia could get $1 for every time those 28,000 sheep passed wind, you might be talking real money.

Have you ever had the opportunity to view the Grand Canyon from an airplane on a clear day?  At 277 miles long and up to 18 miles wide, it is a site to see!  The North Rim is generally accessible from Las Vegas and the South Rim from Phoenix or Flagstaff.  Attempting to hike from one rim to the other is discouraged by park officials because of the distance, steepness, rocky trails, elevation changes, and potential heat exhaustion.  Even though rescues are often required for unsuccessful rim-to-rim travelers, hundreds of physically fit hikers complete the trip every year.  For those who are in exceptional shape, there is even a 78 mile ultra-marathon through the canyon.

We, in the property tax industry, have our own Grand Canyon.  It plays out like this…..  Property tax departments are on the South Rim of the canyon, having driven up from Phoenix, while executives of their organizations are on the North Rim, having driven over from Vegas.  For years property tax representatives have complained that upper management doesn’t understand property taxes and has made few attempts to hike to the South Rim.  In fact, evidence shows that most executives have a very limited knowledge of property taxes.  An often quoted CFO magazine article states that property tax is the “least understood tax” by CFOs.

But what is happening on the South Rim?  How many attempts have been made to cross over to the North Rim?  In a recent assessment we conducted, the PropTax Assessment, we found that only 50% of property tax departments were providing upper management with ”easy to understand, insightful property tax reports” on a regular basis.  Only 50%!  Property tax departments often complain of lacking resources to adequately do the job they have been charged with doing.  Those with the capabilities of authorizing resources are on the North Rim.  If they aren’t learning about the impact that your department is providing to the organization from you, they probably aren’t learning about it.

Perhaps it’s time to get in shape and hike to the North Rim.  If you have already taken that hike a few times, you might consider taking it up a notch and signing up for the ultra-marathon.

Remember the legendary Roman Empire?  That’s the one whose mythical foundation started with abandoned twins, nursed by a wolf and raised by a shepherd.  It was in Rome that the world first witnessed a republic established on principles of self government.  The city thrived on its’ republic ideals and expanded into an empire to become the undisputed ruler of Italy, and ultimately the world.

The creation of a sophisticated and ground breaking property tax system was one of the milestones of the Roman Empire.  Property taxes were paid based on land value, livestock, structures, even plants and trees and all other personal property.  The United States has taken some cues from this legendary government, well, minus the wolf-nursed abandoned twins.  Many of the property tax policies in Rome have found their way into our current property tax systems.

Performing a fixed asset inventory can be about as exciting as a root canal.  But like any good root canal, a proper inventory can alleviate a great deal of pain - in this case, the pain of a surprise tax bite when an audit reveals that your property tax and fixed asset accounting departments disagree on the cost of your fixed assets.

By developing a strategy that addresses the distinct goals of both your property tax and fixed asset accounting departments, you can not only avoid the pain, but even experience some outstanding benefits, including:

• Meaningful fixed asset inventories
• Detailed support information for tax or internal accounting audits
• Reduced duplication of efforts