Advantax identifies non-taxable assets and quantifies economic obsolescence issues for a chemical manufacturer, saving the company over $1.5 million.
THE CHALLENGE
The taxpayer operates one of the largest chemical production complexes in the United States. The company wanted to ensure that property tax liabilities were reasonable and accurate, but did not have the internal resources to do so.
THE SOLUTION
Advantax, along with the company’s tax professionals, began by reviewing the jurisdiction’s real and personal property assessment methodology in conjunction with the assets at the facility. During the review process, Advantax identified numerous assets included in the personal property assessment, but were not physically located at the facility. They also identified assets that were pollution control devices or permanently idle that should have been valued at a lower rate according to state guidelines. Advantax also identified a missed exemption for inventory and documented the correct adjustment based on a letter ruling from the department of taxation. Advantax also identified several structures at the complex that had been demolished, but were never accounted for by the assessor in the real property assessment. In previous tax years, Advantax was also able to document and quantify significant economic obsolescence at the facility based on a history of low utilization resulting from less than expected product demand.
THE RESULTS
Advantax assisted the taxpayer and legal counsel in presenting these issues to the local board on two different occasions. Advantax also helped negotiate a settlement with the state appraisers responsible for valuing the facility for property tax purposes. Based on the initial review, the taxpayer received more than $1 million in real and personal property tax savings, with an additional $500,000 in savings related to the valuation adjustment for obsolescence.
