Turner Business Appraisers, Inc

Taxpayer utilization rates of electronic filing systems (e-file)

In this article the author discusses the utilization rates of business personal property online filing systems (e-file). The purpose of this study was to shed light on the percentage of business taxpayers who actually utilize online listing systems. And to identify trends with respect to which taxpayers are likely to file online. The research consisted of telephone interviews with Assessment Officers across the Country. Each of the Officials interviewed work for jurisdictions that have maintained an online listing system for at least 3 years. The surprising results will be revealed and will be discussed.

To see what inspired the topic of this blog, watch a brief interview with Jim Turner, CPA and President of Turner Business Appraisers, Inc., here: www.youtube.com/watch

Currently, there are a lot of ideas being exchanged across North Carolina with regard to automating the business personal property listing function. One only has to consider the list of potential benefits to quickly become intrigued with the prospects of an online listing system (i,e., e-file). Obviously in today’s economic climate, the potential cost savings alone is enough to make online listing attractive. In addition to the cost savings, consider a few of the other potential benefits--like freeing up your staff to perform more meaningful work, the potential reduction in the amount of foot traffic in your office, and perhaps more importantly, making the listing process easier to understand and more convenient for your taxpayers.

In a nutshell, taxpayers could potentially replace the County’s need for data entry and they (taxpayers) would enjoy the convenience of an online listing system. Theoretically, they could start their online listing on a cold January morning while enjoying a cup of four-bucks coffee, then come back to it in May, finish their online listing, press the send button and receive an official confirmation within seconds. All of this from the privacy and convenience of their own office!
 

So why don’t more jurisdictions have an online listing system? I was part of the team that designed an online listing in 2006, and at that time, only one other North Carolina County had an online listing system. To answer this question, I recently embarked on a journey to scour the landscape, by interviewing several jurisdictions across the Country who currently host an online listing system. I asked them pertinent questions regarding the following:

1. Utilization rates-how many businesses file online.
2. Identification of those taxpayers who are likely to use an online system.
3. What have been some of the successes and opportunities with respect to online filings.
 

A review of the utilization rate table depicts that I received responses from 4 jurisdictions. Rates of utilization ranged from 18% to 24% of the total business personal property tax accounts. The businesses that were most likely to utilize the online system were, surprisingly, small Mom-n-Pop establishments. Meanwhile, taxpayers whose tax listings are more complicated, (leasing Companies, CPA’s and other professional tax representatives) were less likely to utilize the online listing systems. Based upon this information, what conclusions might a jurisdiction draw that is pondering whether or not it would be cost effective to implement an online listing system?

Well, the data seems to clearly support the premise that while an online listing system will reduce the amount of work hours necessary for County staff to devote to data entry it probably will not make a material impact anytime soon. With that said, over the next decade as more generation X & Y folks enter the work-force, perhaps many of them will embrace an online listing system since they have grown up in the technology era and they are accustomed to performing numerous tasks online (e.g., online banking, bill pay, shopping, etc.)

For the time being, jurisdictions should expect to continue manually keying the most difficult taxpayers (e.g., Pitney Bowes, G.E. Leasing, CIT Leasing, etc.). These folks already have their own in-house automated property tax filing systems that they utilize in multiple jurisdictions across the Country. Convincing them to abandon a tried and true system that they are familiar with for an online system might prove to be difficult. A few jurisdictions I spoke with have a special listing system for these types of accounts but these systems are separate from the online filing system.
 

Despite the obstacles we face in convincing taxpayers and their representatives to migrate over to an online listing system, I am optimistic that more Counties will begin utilizing an online listing system within the next five years. Perhaps the North Carolina General Assembly will promulgate legislation to encourage businesses to file online. Currently, the best promotional tools are mailings and other forms of positive advertising, encouraging taxpayers to file online. And, you might consider adding options for filing extensions, appeals, and other pertinent requests online. Just getting a taxpayer to visit the site might compel them to file online--especially if the site is user friendly and convenient.

The evidence thus far, regarding an automated listing function, leads me to this observation: In order to automate a substantial (50%) portion of the business personal property listing function, it is going to take multiple modes of data capture. While this article does not lend itself to a full discussion about these alternatives, please contact me at your convenience if you are interested in learning more—I think you will find the solutions quite interesting.
 

Jim Turner, Jr., CPA, CVA

The heart of the discerning acquires knowledge; the ears of the wise seek it out.
-King Solomon in the Proverbs
 

Pender County, NC wins at NC Supreme Court on amusement company audit appeal

NC Supreme Court says Pender County can tax the assets of NC State Fair midway operator working out of Burgaw, NC

Posted September 22, 2010

On August 26, 2010, the North Carolina Supreme Court formally declined to hear Amusements of Rochester, Inc’s (ARI) appeal of the business personal property audit discovery that Pender County, NC had made on the amusement rides and other assets owned by ARI. This decision definitively confirmed the taxable situs of ARI’s assets within Pender County, and Pender’s legal standing to tax ARI’s assets.

The saga began when Turner Business Appraisers, Pender County’s agent, noticed a cover story in Business North Carolina magazine on Powers Great American Midways (ARI) and how it had been selected to run the 2006 NC State Fair. (It has run the NC State Fair every year since then as well). The article mentioned that the company was based in Burgaw, NC, which is in Pender County. Upon researching county business personal property accounts, it was determined that the company had never filed a tax listing with Pender County, although they had been operating from Pender County since 1993. Therefore, an audit was commenced in September 2006.

In 2007, Pender County issued the discovery resulting from the audit. ARI ended up appealing the discovery through every level of appeal available: the Pender County Board of Equalization and Review in 2007, the NC Property Tax Commission in 2008, the NC Court of Appeals in 2009, and the NC Supreme Court in 2010. At each level of appeal, the decision was unanimous in Pender County’s favor and against the taxpayer, ultimately culminating with the Supreme Court refusing to hear ARI’s appeal, and affirming the Court of Appeals’ 3 – 0 decision upholding the discovery.

The Court of Appeals' decision can be found here: http://www.aoc.state.nc.us/www/public/coa/opinions/2009/pdf/090234-1.pdf

Once the Assessor’s Conference stage had passed, Pender County retained the services of Mr. Charles Meeker as legal counsel, to assist with the audit appeal from that point forward. Mr. Meeker is a Partner with the law firm Parker Poe Adams & Bernstein LLP, Attorneys & Counselors at Law, out of Raleigh, NC. Mr. Meeker began representing Pender County at the Board of Equalization and Review level in 2007. He has provided invaluable legal expertise and advice throughout this appeal process these last few years.

This appeal process enabled Turner Business Appraisers to gain valuable experience as an audit firm. Bill Smoak, Vice President and Senior Auditor, performed the audit analysis and research. The information that Bill compiled as part of this audit was used extensively in Pender County’s legal filings at the Board of E&R level and the Property Tax Commission level. The firm’s President, Jim Turner, CPA, served as an expert witness before the Property Tax Commission. Additionally, Bill accompanied Coby Heath, the Pender County Assessor at the time, to observe the Court of Appeals hearing.

On a side note, after the Court of Appeals issued their unanimous decision upholding the discovery, Christopher McLaughlin, Assistant Professor of Public Law and Government at the UNC Chapel Hill School of Government, wrote a January 28, 2010 blog post entitled Jet Planes and Carnival Games: Who Gets to Tax Them, in which he correctly opined that Pender County would prevail at the Supreme Court level.
His blog post can be found here: http://sogweb.sog.unc.edu/blogs/localgovt/?p=1727

While most audit appeals are resolved at the local level, this appeal has given our firm valuable experience at both the administrative levels (Board of E&R, PTC) and the judicial levels (Court of Appeals, Supreme Court) of the statutory appeal process.
 

Economy Exponentially Increases Real Estate Appeals

(from www.smartmoney.com)

The New Property Tax Battle by Alyssa Abkowitz
* Also See: Property Taxes: Fighting City Hall

JoAnn Palko has always been proud of her family’s house in Lake County, Ind. And justifiably so: The three-bedroom brick bungalow boasts hardwood floors, a new roof and soothing views of a quaint nearby park. But last summer, Palko gave a guest a tour of the house—and, figuratively speaking, she trashed the place. That stove in the kitchen? It dates to Harry Truman’s presidency. The tile floor? Just as old, and made of asphalt to boot. And as for the upstairs powder room, let’s just say that in terms of space and amenities, it might remind a visitor of pioneer days.

Blame Palko’s residential mood swing on the most recent property assessment; the county raised the house’s value by 25 percent. So Palko has hired an appraiser to help her challenge the ruling by pointing out all the things that make her house look crummy. Bringing him on board cost Palko $300, but it may soon pay off. According to the appraiser, the county has overvalued the home by $50,000. For Palko, it’s ammunition for her fight. “This amounts to big savings,” she says.

This summer, as the buying season is heating up, so is the battle over property taxes. Homeowners across the country are trying to figure out the secrets to a good assessment—and by “good,” we mean “lower.” They’re caught in a pinch that taxpayer advocates describe as an unholy love child of the housing crisis and the recession. Because of the struggling economy, counties and cities are facing some of the biggest budget gaps in history—and since property taxes typically account for almost a third of a county’s budget, many governments are gritting their teeth and raising them. Indeed, property tax revenues rose by 6.2 percent in 2008, compared with 2.2 percent in 2005, according to the National League of Cities. But home prices, of course, have plummeted at the same time, leaving homeowners fuming over what seems like an expensive disconnect from reality. According to the National Taxpayers Union, between 30 and 60 percent of taxable property in the U.S. is overtaxed. “We’re seeing assessments that don’t make any sense,” says Barbara Payne, executive director of Georgia’s Fulton County Taxpayers Foundation.

Granted, Americans have been complaining about these taxes ever since George Washington hurt his property value by cutting down his father’s cherry tree. But this time around, they’re fighting back, appealing their assessments in numbers that local officials say are unprecedented. In Collin County, near Dallas, appeals increased 38 percent from 2006 to 2009, a period when taxes went up even as local home values stayed flat. And in Las Vegas’s Clark County, where home prices have fallen more than 50 percent from their peaks, appeals have skyrocketed 885 percent over the past three years. Even former Bank of America CEO Ken Lewis has gotten into the act, appealing his Aspen, Colo., property taxes last year. Alas, he didn’t get the $33,000 tab on his $19.6 million residence reduced—but 20 percent or more of homeowners do win on appeal, experts say.

Nonetheless, as they jump into the fray, many rookie tax warriors are learning that appealing a tax can be just as quirky as any other facet of local politics. In many communities, assessors have great latitude in deciding a property’s value. In Florida, they can add or subtract worth based on a home’s proximity to a noisy nightclub; homeowners along the Nevada shore of Lake Tahoe are judged, and taxed, on the smoothness of their beaches. The bureaucratic labyrinth is generating business for a new crop of assessment-appeal experts—many of them appraisers and real estate agents looking to make up income they’ve lost in the housing slump. Their reward is typically an up-front fee or a percentage of the reduction, regardless of whether the taxpayer gets $400 axed off his bill—or $4,000.
Some taxpayer advocates question whether these services are doing anything that consumers can’t do for themselves. “The appeal process,” says Pete Sepp, vice president for policy and communications at the National Taxpayers Union, “really is set up with the intention that homeowners can use it without third-party assistance.” But that process also varies widely by state and town, and for homeowners who have watched hours of research turn into months of waiting, the temptation to get help is strong. With or without help, many of those taxpayers are in for a chess match that can feel like it’s at a perpetual stalemate.

Read more: The New Property Tax Battle - Personal Finance - Real Estate - SmartMoney.com www.smartmoney.com/personal-finance/real-estate/the-new-property-tax-battle/#ixzz0svMvP8nP