There are four steps you can take to save money and improve your overall commercial property tax management.
By Anne Joyner Sheehan
Let’s face it. Taxes are never a convenient issue for business owners, no matter if the tax levied occurs at the federal, state or local level.
The common denominator for businesses is one that most Americans ask themselves during the tax season when trying to finish the process: What’s the bill?
What you might not realize is there is a good chance you are paying more than your fair share of commercial property taxes. Many convenience store owners receive a property assessment and take it at face value, which can be costly—most commercial property portfolios are overtaxed by about 30%.
To avoid overpaying, it’s critical to reexamine how you’re managing your commercial property taxes. In my business, I often recommend four steps you can take to save money and improve your overall commercial property tax management.
DEVELOP A STRATEGY
Convenience store owners are often reactive when it comes to property taxes. Think about your own approach. When you receive a property tax assessment, how is it handled? Do you have a designated protocol for handling assessments? Most businesses don’t. They receive an assessment and pay their taxes—no questions asked.
To effectively manage these taxes, however, you need a strategy in place before your assessment even arrives. Don’t wait until the last minute. You need to determine who will handle an assessment and take responsibility for spearheading an appeal effort, if one is needed.
UNDERSTAND YOUR JURISDICTIONS
Each jurisdiction has its own system for assessing properties and processing appeals, including the deadline for filing appeals. To build an effective, proactive strategy—including appeal preparation—you must first understand how your jurisdiction functions.
For convenience store owners with multiple stores in various jurisdictions, this is particularly important. Every state mandates how properties should be assessed, but it’s up to individual jurisdictions to implement those mandates.
Another key aspect of each jurisdiction’s property tax process is the deadline for appeal. When you miss an appeal deadline, there’s no second chance. Deadlines are sometimes as short as 15 days, so be prepared when an assessment arrives.
PREPARE FOR AN APPEAL
Because these deadlines are so short, it’s best to have a proactive appeal strategy in place before you ever need it. First, determine what information you need to know before filing an appeal, including what data to gather and what paperwork to complete. To file an appeal that’s ultimately successful, you have to understand what the jurisdiction’s requirements are and follow them to the letter.
Often, detailed presentations are prepared by both sides of an appeal. Preemptively prepare a presentation, so you’ll be ready to defend your appeal when the time comes.
Appeal with caution, however. When you appeal, you run the risk of your property assessment actually increasing. The jurisdiction could decide, after taking a closer look at your property, that your property was under assessed.
So, before you appeal, you should be positive your assessment is too high. Many companies make this determination by conducting their own annual property assessments to gauge each property’s value.
Also, keep in mind that regardless of whether you decide to appeal or not, you must still pay the property taxes based on your assessment. If your appeal is successful, you’ll receive a refund for the excess funds.
OUTSOURCING YOUR TAXES
Managing your own commercial property taxes is time-consuming and tedious, which is why so many companies’ strategies fall short. For convenience store owners, outsourcing your commercial property tax management is a smart and convenient alternative to handling it yourself.
Professional property tax advisors have the experience and industry knowledge to conduct successful appeals. They know how to accurately assess your property, and defend that assessment so you only pay your fair share.
Lastly, partnering with property tax advisors takes the burden off you so you’re able to focus on your business.
Anne Joyner Sheehan is the CEO of Real Property Tax Advisors, a national firm that assists businesses in managing the risk of their property taxes for their real estate assets. Sheehan has over three decades of experience in the commercial real estate industry as a business property tax consultant, real estate appraiser, review appraiser and commercial real estate broker.