SPECIAL-USE AND HEAVY MANUFACTURING
Industrial, Utility, and other Custom-Projects
Special-Use Property is property designed for a specific business/industry purpose and cannot be used for other business/industry purposes. Special-use real estate usually only serves the purpose of protecting the machinery and inventory involved in the process of the business and is usually laid out accordingly. Many manufacturing facilities are considered special-use. This reality has a significant impact on their market value, as the value of both the real and personal property assets of the facility are frequently influenced by, if not derived entirely from, the economic condition of the industry using the facility, the technology of the facility, and the marketability of the product being produced. Owner-operators of special-use facilities are well served by enlisting a competent Property Tax Consultant.
CONCERNS FOR SPECIAL-USE PROPERTY
Property Tax Services, Done Right, Go Far Beyond Return Filing
Property taxes divert valuable staff away from more important projects and regular finance operations during the busiest accounting months of the year, January through April. The diversion of staff, not to mention the costs of missed opportunities, are too expensive not to call in a quality consultant.
ASSET REVIEW
Many companies operate their fixed asset lists and record keeping around two functions - resource allocation and income tax depreciation. Neither of these focuses align with the interests of property tax assessments. Testudo reviews your assets in the manner that matters to assessors. Our method includes verifying the physical presence of assets, determining their functionality, identifying their use in the process, isolating bottlenecks, reviewing the technology, componentizing costs, and numerous other considerations. The goal is to identify exposures and opportunities.
EXEMPTIONS
Numerous jurisdictions offer, sometimes locally and other times statewide, partial or complete exemptions for certain assets, businesses, geographic areas, or uses. Examples relevant to special-use properties frequently include pollution control exemptions, freeport exemptions, intangible exemptions, agricultural valuations, development zone incentives, and industry specific exemptions. Such exemptions may be stated in the state constitution or be buried in local code. Many require extensive documentation and an application process to one or many governing authorities for a single exemption.
COMPLIANCE
Most states require the filing of annual returns and records to be used by assessing authorities, be they local or state officials, to determine the value of your property for property tax purposes. Businesses may also be required to file their financial statements, previously obtained exemption certificates, fixed asset lists, and other documents. Such returns must be timely filed or penalties and the revocation of rights, such as the right to appeal the resultant value, will be enforced against the tax payer. A 10% tax penalty is common for late returns. Another great effect of a professionally produced return is that the taxpayer is much better able to predict the value and tax many months in advance of their issuance. Improperly completed returns, in addition to penalties, do not allow business owners to accurately predict what their tax bill will be that year.
ASSET CLASSIFICATION
Testudo will review the current and best alternative classification of every asset for your property. Rather than just assuming the perfection of the tables provided by the local assessing authority, the accuracy of the description of the fixed asset listing, or ignoring the prospect of a costly audit, Testudo reviews the actual assets in place, their actual economic life, and their real use. With this information, Testudo can classify assets in a defensible and reasonable way, to result in the least amount of taxes possible, without the need for appeal.
INDUSTRY REVIEW
Testudo reviews the market for the client's products, the source of raw material, feedstock prices, competition, technology, customer base, export position, and the numerous other facets that are relevant to determining a just taxable value and identifying potential exemptions from taxation. It can make a huge difference whether your products are made to order, if the product is purchased by the military, if your clients are moving overseas, if your competitors are closing their doors, or if you are operating a utility business. These considerations, for illustrative purposes, can make huge differences in the value and taxability of your property.
AUDIT DEFENSE
Some jurisdictions regularly audit taxpayers above a certain payment threshold. Practically all have the power to audit businesses returns, sometimes going back five or more years. These audits can be time consuming, nerve racking, and costly, if not properly managed. Testudo assists businesses by acting as recipient of the auditors inquiries, providing answers, and minimizing the impact to operations of the business. Additionally, Testudo will work to keep the resulting audit just and not unreasonable in its findings. If an audit is forthcoming, enrolling the services of a tax consultant as early as possible in the process will serve the tax payer more than the audit's conclusion.
VALUE ANALYSIS
Ad Valorem Taxes are taxes "to the value" of the subject property. Whether real estate or personal property, that value is subjectively derived (if it is to in any way reflect market value). Consequently, it is in the interest of the owner to know if the value derived by the assessor's calculations are just and reasonable. Even a return, accurately provided to the assessor, may result in a grossly incorrect value. The assessor may not know if a machine is broken, if a building is vacant, if the technology is obsolete, if there are excessive labor costs in that area, or any number of other influences on the value of your property. The assessor cannot be expected to know all these influences either. It is up to the consultant, and expert witnesses (when necessary), to research, identify, and weigh these influences, to scrutinize the justness of the assessor's findings.
REAL ESTATE
Often ignored in special-use property reviews, real estate values deserve serious examination each assessment cycle. The review should include, but not be limited to, identifying functional inadequacies and super-adequacies, curtailment on property rights, fact verification, analysis of sales, presence of contamination, access to market, building layout, age of structures, and much else.