States and counties have long made it a habit to use commercial property taxes as a honey hole to shore up their finances. They argue that everyone needs to pay their fair share, and the share is more significant for larger pieces of property. In reality, however, these assessments can mean the opposite – an unfair burden upon businesses.
The good news is that there is a process for appealing the tax assessment. The process is not straightforward, but proper planning can lead to success and a lower bill. These five tips may need to be modified to fit the business:
- Learn how to do it: The federal government, states and municipalities publish information on the appeal process. Deadlines will vary (The deadline to appeal with the Minnesota Tax Court is 60 days after the assessment is sent out.), so it is wise for the owner to determine how much time to file an appeal after receiving the assessment. Keep in mind that the owner must pay the assessed amount and then file an appeal for property valuation reduction. If they win the appeal, they will then get some money back. Failure to pay forfeits the owner’s right to appeal.
- Know the value criteria: The options are a) income based on profit estimates, b) cost of the same or similar property, including all forms of depreciation and land value, and c) sales comparison based on the sale of similar properties in the market. There has been much debate of late over the value of commercial property, with owners successfully arguing for the value based on the value of an empty space rather than one filled with product.
- Plan ahead: It is essential to be as prepared as humanly possible. Those appealing bear the burden of proving they paid too much, so collecting all necessary evidence and information is essential. The owner or their representative then presents it to the tax appeal board.
- Be patient: There are substantial backlogs, so the appeals process can take up to a year or more.
- Ask for help: Those wishing to increase their odds of success often find it helpful to turn to attorneys specializing in filing appeals and representing clients in hearings.