Property Tax Compliance: Retail Locations Our client had 90 branch locations and was unhappy with their provider. They didn’t believe the current firm was doing any analysis of the fixed assets and was reporting assets that were not taxable or no longer there. The company had gone through a series of major renovations to all their locations and spent almost $40,000,000 revitalizing the branches. Upon closer examination of the property tax filings we discovered that the preparer was reporting all the old torn out improvements as well as the new remodeling. We went through the assets and prior returns and prepared the current year properly. We used that filing as a model to show the assessor that there were clerical mistakes on prior returns and that we would be asking for corrections. We have achieved refunds going back 4 years on approximately 45 of the properties.
Real Estate Reductions: Bad Information We were asked to take over the appeals from another consultant that had not achieved meaningful results. We analyzed the properties and asked the client about the information requests or discussions they had with the previous consultant. They said that the prior consultant had not asked any questions about the property. They simply wanted the P&L and rent roll. After we analyzed the financial information we sat down with the client to get a better understanding of the properties they manage. By first visiting the properties and then asking questions we uncovered several obsolescence factors that would affect the assessed value. The information gathering process is critical to determining the proper comps to use in valuation.
Machine Shop: Double Assessment Client moved into a new building and spent $2.5 million on leasehold improvements which they recorded on the fixed asset listing. The real estate assessor picked up the $2.5 Mil value from the building permit and added that amount to the real estate assessment. The company prepared the annual personal property filing based on the fixed asset listing and reported the leasehold improvement. The personal property section, not looking to see if the $2.5 mil had already been taxed as real estate, taxed the improvements on the personal property bill. ITG consultants showed the assessor the double taxation and removed the value from the real estate roll thus achieving an annual savings of over $25,000
Manufacturer: Ghost Assets A food products manufacturer had external tanks that housed many of the ingredients used in the products. When the company moved they did not take the tanks with them. At the new location they installed new tanks and recorded them on the fixed asset listing. However they failed to remove the abandoned assets from the records. For several years they had been reporting both the new tanks they put in place and the old tanks they had abandoned during the move. By thoroughly analyzing the fixed asset listing we were able to determine what they actually had at the facility and which assets should be deleted from the system. We removed $1.9 mil of tanks resulting in tax savings of over $30,000 annually for a $32 million company.