Topic: A Tax to Grind, Property Tax Appeals
Thursday, 28 May 2009 by David H. LeVan
The third-party auditor stated that the taxable property value was too low. It appeared that the 30 minute “site inspection” of the balance sheet showed plenty of costs that the auditor could add back into the assessment without even asking any questions. How can this be? According to one third-party auditor, “It is standard procedure for all taxpayers.” Wow, and I thought it was all about fair market value.
If you are not reading this from your prison cell, you probably understand that the cost on a company’s books is not the last stop on the road map to taxable value. So why not ask if the equipment is still at a location? Why not look to see what a “flancofurnistop” actually does?
When discussing the value added by the third party auditor we received this response, “I would guess that you have roughly three million dollars worth of piping on the roof.” What does guessing have to do with anything? All questions of value may as well be solved by means of belly-bumping contests. It would be just as accurate but much more interesting.
And what about taxpayer rights? Apparently, in this situation the taxpayer didn’t have as many rights as one would expect in a country as great as America. The taxpayer had to disprove the third-party auditor’s outlandish claims. I scratched my head in disbelief, and asked if there might be a better way to perform an audit.
The enthusiastic response: “We have looked into it—really. However, our current audit procedure generated the highest possible taxable value for the least amount of effort or documentation. And that is just dandy for everyone.” …Except the taxpayer.
Thursday, 21 May 2009 by David H. LeVan
If property taxes motivate people to do anything it tends to be to take a trip to the local assessor’s office. The Roman Empire found a way to create a more positive response to property taxes. Augustus Caesar accomplished this through flat-rate land property taxes. This meant that property taxes were assessed not on what a property did produce but on what it could produce. If two properties were deemed to have the same production possibility they both paid the same amount of property taxes, even though one might actually produce more. This incentive motivated farmers to get the maximum amount of production out of the land in their care, which in turn increased the wealth of the Empire. How’s that for smart taxes?
Thursday, 14 May 2009 by David H. LeVan
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