Topic: A Tax to Grind, Property Tax Appeals
Thursday, 27 August 2009 by David H. LeVan
When it’s time to measure depreciation for ad valorem tax purposes, obsolescence is typically nowhere to be found. Understandably, obsolescence is much more difficult to measure than physical depreciation, but that doesn’t mean it shouldn’t be accounted for. More often than not, functional and external obsolescence are not listed on a property record card. What’s wrong with this picture?
Typically, assessor’s market value is based on the cost approach and doesn’t include obsolescence. In many instances, however, we find the assessor’s market value to be greater than the potential sale price of a property. If only physical depreciation is accounted for, then the difference may be attributable to obsolescence.
To determine obsolescence, you can look for a superadequacy or a design deficiency and the cost to fix it. Or you can identify external forces, such as government restrictions, that may negatively affect your property. The best way to get started is to ask the following question: If you were to build your facility new today, what changes would you make?
Thursday, 20 August 2009 by David H. LeVan
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.
Thursday, 13 August 2009 by David H. LeVan
Are you still paying for deceased assets? As you file your personal property tax return this year, try to recall the last time you took an inventory of your assets. It may have been so long that there are dozens of assets—maybe even hundreds—that are nothing more than GHOSTS!
How many GHOSTS are you still paying tax on? Our experience has shown that GHOST assets come in all shapes and sizes, even in relatively new facilities. Prime candidates are smaller items, such as forklift batteries or computer equipment. Whenever there is constant turnover, retirements can be overlooked and the cumulative effect can add up to sizeable dollar amounts.
If there is a turnover in personnel, asset retirements can slip through the cracks. In one instance a whole processing line had been disposed 7 years prior but not removed from the books. While some of the assets had been removed, many items were left on the asset register. In part, this occurred because the classification description made it difficult to identify individual assets as part of the disposed process. Another recurring cause of GHOSTS is when a group of assets is transferred from one location to another. In these cases, we often find a significant cumulative dollar amount in assets left unwittingly on the books.
To be a GHOST BUSTER, one should first perform an on-site inspection of the facility is economically feasible. You’re a step ahead of the program if you are familiar with the layout and processes. Discussions with local personnel are a key ingredient in identifying disposed items. The day you sit down with on-site personnel to review the asset listing item by item, is the day you become a GHOST BUSTER!