Real Estate

Selected for a Business Personal Property Tax Audit – Now What?

The real estate implosion has been devastating for local government budgets. Property taxes, once the most stable source of local government revenue, are trending downward as property values ​​decline. As a result, more personal property audits are being conducted to generate much-needed revenue.

If your business has been selected for a commercial personal property audit in Georgia, here are some general guidelines for navigating the mud:

Relax. Relate. Release. Take the time to read and understand the details of the audit letter. Resist the temptation to be overwhelmed by the scope and severity of the audit, and instead focus on delivering on deliverables.

Contact the Assessor’s Office immediately. This tax issue will not go away if it is ignored. Try to speak briefly with the appraiser or auditor who will be handling your case. Let the auditor know that you have received the letter and try to comply with their requests in a timely manner. Explain any business status, ownership, or location changes at this time.

Talk to your accountant. By submitting an affidavit or power of attorney from a third party to the Office of the Assessor, your accountant or CPA may act on your behalf in this specific tax matter. If your accountant is not well versed in business personal property tax law, you may want to consider a tax advisor who specializes in this area. A qualified personal property tax consultant can mitigate or reduce the total amount of back taxes, interest and penalties owed.

Submit all required documentation promptly and in an orderly manner. If an auditor has to choose between going through a shoebox full of handwritten receipts and notes, or receiving a well-organized set of financial statements, fixed asset listings, and inventory reports, which do you think the auditor would prefer? Facilitate the auditor’s work by delivering the required information in a timely manner. Provide all required documentation; but, only provide optional information at his own discretion. Federal and state tax returns are generally considered optional information for a personal property audit. Many audits have been expanded based on optional documentation submitted by an unsuspecting taxpayer.

Accept or appeal. The auditor is required to justify all audit findings. It is prudent for the auditor to explain the results of the audit so that the financial implications are understood. Most counties/localities give the taxpayer the ability to agree or disagree with the results of the audit. Be prepared to provide documentation to support why you disagree with the audit results. The Office of the Tax Assessor will mail an assessment change notice if the audit produced a positive or negative change in assessed value. This notice explains your right to appeal the new assessed value in writing within a specified time period. If the appeal deadline is missed, you lose the right to appeal the value.

Business personal property tax audits are on the rise. Protect your business and your bottom line by filing the required annual tax return. With strategic tax planning and compliance, you can minimize the risk of your business being selected for an audit.

Leave a Reply

Your email address will not be published. Required fields are marked *