In a recent post, I shared some suggestions from Jeff Moore, director of complex property tax with Thomson Reuters Tax and Accounting, about the steps tax directors should be taking right now to influence their organization’s property tax liability. Moore very kindly followed up with these additional action steps, which read almost like a Top 10 best practices list for effective corporate property tax management:

1. Educate your corporate and facility personnel on how they can help you influence the amount of property tax they pay. Involve all the stakeholders, including finance; planning; asset accounting; plant manager and controller; and facilities, maintenance, and environmental engineers. Show them examples of the tax impact of successfully translating their ideas into opportunities.

2. Understand your company accounting and capitalization policy, especially as it relates to costs such as equipment rebuilds, overhauls, modifications, and upgrades. Develop consistent rules for property tax reporting of these unique costs. How much taxable value do these expenditures really add?

3. Speak with personnel each year prior to filing to discuss the prior-year capital additions. Asset descriptions are not always what they seem. Make sure you understand each capitalized asset. Ask questions until you get to the right answer. Clearly document your decisions for taxability, classification, depreciable life, and any unique circumstances impacting valuation. You’ll be glad you did when your company gets audited.

4. Evaluate the details in your CWIP [construction work in progress] holding account. Identify any costs that are not directly associated with tangible assets on site on the assessment date. Look for circumstances such as progress payments, feasibility and engineering studies, equipment purchased but not received, and capital projects that were canceled or deferred. Report only what is taxable.

5. Understand how your inventory book values are determined. Confirm whether these values are consistent with the state’s definition of market value. Ensure that all inventory booked to a location is actually there, and that you identify and report any off-site inventory that is subject to tax.

6. Review your real property assessments annually to keep tuned to market changes. In today’s manufacturing environment and unsettled real estate markets, things can change quickly. Look at comparable sales and assessments to identify inequities. Make sure your comps are truly comparable or are appropriately adjusted. You may need to look beyond the local market for large and special-purpose properties.

7. Identify, measure, and document all forms of functional and external obsolescence. Obsolescence is more common than you may think, but it does take time, savvy technical skills, creativity, and persuasion to maximize this benefit year in and year out. This is not a one-time exercise; it’s an ongoing process. And it’s the most fun part of your job!

8. Work your network. Talk with colleagues in other companies, as well as consultants, attorneys, appraisers, brokers. Stay current on industry issues and trends. Subscribe to industry publications and email newsletters. Search for answers. Challenge yourself to find the missing pieces of your puzzle.

9. Don’t hesitate to discuss, negotiate, and appeal your assessed values if you have solid evidence and a compelling case. It’s your right, it’s your company’s money, and you know more about your property values than any government entity.

10. Managing property assessments, especially on major properties, is a year-round process. Find reasons to periodically meet with, email, or call your assessor. Keep him or her apprised of changes and issues as they evolve, and well in advance of when you need to address them. Communication is key. ###