Tax Savings on Business Property Taxes – Should You Appeal?

June 25, 2020

In today’s business environment, everyone realizes cash is a critical component to future stability and success. One way to save cash it to reduce expenses, including taxes. As tax advisors, we are always looking for ways to save our client’s tax dollars. An often-overlooked savings opportunity for business owners is in the area of property taxes. These taxes come in the form of both personal property taxes on machinery and equipment and real estate taxes on land and buildings. For companies with large facilities or vast amounts of capital assets, these taxes can be a significant expense.

Assessment notices have started to come out for 2020 taxes. Each company should review the amounts in these notices to ensure the assessed value is representative of the fair market value of their equipment and real estate. If the value is overstated, the company can appeal. However, be cognizant of the date by which appeals need to be filed. In Georgia, appeals must be made to the respective county within 45 days of the assessment notice being issued. For locations outside of Georgia, these dates will vary, but they typically follow a similar process. If no appeal is made, the values are locked in and taxes will be due later in the year based on the assessed value.

In the wake of the pandemic over the last few months, many businesses have seen their operations completely change. While unfortunate, this may provide an opportunity to lower the company’s property taxes. Consider the following questions:

  • What has COVID-19 done to the value of your business and its underlying assets?
  • Has COVID-19 rendered any of your equipment obsolete?
  • Have changes in the external market rendered some of your equipment economically obsolete?
  • Is any of your equipment sitting idle or being underutilized?

If you answered yes to any of the above, there may be a basis to appeal.

The personal property tax return determines value using a standard state depreciation table. Property taxes are required to be assessed at market value. These standard tables do not always equate to fair value, and they never take into consideration any type of physical, functional, or economic obsolescence. Even if a lower value was not requested on the originally filed property tax return, there is still an opportunity to appeal the value.

Another consideration is ensuring any exemptions have been properly applied. For manufacturers and wholesalers, the most applicable of these is the Freeport exemption. With a Freeport exemption in place, certain inventory is not taxed, but companies must apply for it each year. It’s critical to make sure this is captured on the assessment notice.

Aprio has property tax specialists standing by who can assist with these matters and ensure you save money on your property taxes. Prepare for what’s next and reach out today.

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About the Author

Mitchell Kopelman

Mitchell is the partner-in-charge of Aprio’s Tax practice as well as the Technology & Biosciences group. He has been a partner since 1990 with Aprio, which is the largest Georgia-based tax, accounting and consulting firm. Mitchell works with companies in the software, gaming, clean tech, financial technology (FinTech), health care IT, processing, biosciences (biotech and medical device) and manufacturing industries. Whether a company is pre-revenue, starting up, growing or preparing for a liquidity event, Mitchell works with them to maximize their potential at each stage. He is known for promoting research, innovation and entrepreneurship by enabling companies to be successful, regardless of where they are in their business lifecycle.

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