Property Tax Relief Planning During Times of COVID
May 20, 2021 | Josh Malancuk, CPA, CMI and Karen Koch, CPA, MT
As we mark the one-year anniversary of the COVID-19 pandemic, the economic fallout has been far and wide. But only now have business owners come to grips with the impact that the COVID-induced recession will have on their property taxes. When the new property tax rates and assessments start arriving in the mail, jaws will be dropping in many parts of the country--especially among business owners. But instead of getting angry, taking the right approach to a solution can substantially improve your company’s ability to negotiate and reduce its tax hit for years to come. Don’t rush into this decision, and it’s not an area where you want to be a do-it-yourselfer.
Some sectors of the economy—specifically manufacturing--have been hit harder than others during the pandemic, due to declining revenue, lower utilization reduced occupancy and generally higher costs of doing business. Many state and local governments maxed out their emergency services and aid programs in 2020. As operating costs rose dramatically during the pandemic, those costs will likely be passed on to their business property taxpayers in the form of tax levy increases through rising tax rates. These tax torpedoes will hit capital-dependent businesses especially hard during the next year or two.
How business property owners can defend themselves
We recommend reviewing business property tax assessments each and every year. It’s amazing how often we find errors, miscalculations or outdated information when reviewing our clients’ assessments. Correcting these errors and arguing a case the right way can provide substantial, long-lasting savings.
COVID property tax assessment review plan
During recessions, tax assessors tend not to account (immediately) for significant property declines that have occurred in their areas. That’s why it’s important to have an experienced navigator on your company’s side who understands all facets of property taxation, including valuation, property accounting, and local protest procedural rules.
The key to appealing successfully is starting the review process well before your annual deadline for property tax return amendment and real property tax protest (i.e., Iowa appeals were due April 30).
A suggested company review process: key steps
- Assess initial real and personal property tax opportunities.
- Compare assessment with market data analysis.
- Identify and calendar statutory deadlines.
- Implement findings through appeals or amendments.
- Validate secured savings through property tax statement review.
Typically, the analysis is prepared in conjunction with appeal protest periods and may include procurement of a third-party appraisal. Meeting these protest and exchange deadlines are essential for securing relief. It will likely be well worth your while to enlist an experienced team to advocate for your company and improve your chances of a successful property tax appeal.
Why not reduce one of your biggest annual expenses so you can retain more money for running and growing your business?
Start early, work the plan, and bring in the experience! Your company’s bank account will thank you mightily in the end!