Turner Business Appraisers, Inc

Best Recession Proof Businesses

 Having recently come out of the Great Recession many of you are weary of starting a business that is extremely sensitive to downturns in the economy. With that backdrop in mind I have identified 3 recession proof industries you might consider before buying a business:

1. Disaster restoration company's
These companies specialize repairing damage to property from fire, water and other mishaps. The great news here is that irregardless of the economy the damage most always has to be repaired and most of the property is insured so payment will be made by an insurance company. Big players in this industry include Serv-Pro and Servicemaster

2. Glass or dent repair
We have all used the expression, "accidents will happen" because accidents do happen--very frequently and without regard to how the economy is doing. So why not own a business that helps people when they have an accident? Glass repair company's make money when you or I have the unfortunate experience of a rock going through our windshield but the good news is that the repairs are often covered by insurance. And I love businesses that are reimbursed by insurance companies because they have a contractual obligation to have the work completed--so the service provider is assured of receiving payment from a large corporation versus an individual.

3. Smart phone and electronics fix it shops
Have you dropped your smart phone yet? Consider yourself lucky if you haven't but when you do---chances are you will seek out the help of a smart phone fix-it expert when you do. When I dropped my iPhone 4S shortly after purchasing it I found myself forking out $110 dollars at ubreakifix--one of the hottest franchises in this industry---and while I was at their store I bought an Otter protective cover for $50 more dollars. Logic tells me that as more and more of us buy smart phones the need for this service is going to increase exponentially. The biggest franchisor in this market is CPR Cell Phone Repair

3 Great Tax Tips to Maximize Your Retirement and Minimize Your Payments to Uncle Sam

 1. Contribute to a traditional IRA.

I know you are already thinking it's too late for 2013 but I have good news--- you can make your 2013 IRA contribution up until the due date of your return including extensions (April 15th or October 15th if you file an extension). I have more good news for those of you who make too much money to receive the IRA tax deduction---you can still contribute to an IRA and any appreciation in value is not taxed until you receive distributions from your retirement account

2. Give yourself a raise---make 401k or 403b contributions at the office.
This is one the best tax breaks Uncle Sam ever created--take full advantage and watch your savings grow. Better still if your company matches your contribution---you are giving yourself an instant raise and receiving a tax break. So what are you waiting for?

3. Start investing in capital growth stocks

Blend your retirement strategy to include non-tax deferred investments in equities. Since Uncle Sam does not tax appreciation on stocks until you sell them your money will grow tax deferred in high growth stocks that don't pay a dividend (examples Google or Netflix). More good news---when you do cash these investments in during retirement---Uncle Sam taxes these types of appreciated capital gains at a lower tax rate than funds received from a retirement account (401k, IRA, etc.)

North Carolina HB 462 contingent fee audits July 3, 2012

ABSTRACT
Many of you are probably curious why, after 25 years of compensating private audit firms on a contingent fee basis, would the legislature consider removing this arrow from the Assessor’s quiver. In its original language the approved House Bill 462 was entitled, “Study Business Opportunity & Franchise Sales” it had absolutely no relevance to local government audits whatsoever. But the Bill was altered by the Senate Commerce Committee (The practice of altering an approved Bill is affectionately referred to as “gutting” by members of the legislature). In this brief article you will hear an eyewitness account of the evolution of this Bill through from the vantage point of Jim Turner, CPA. Jim spent several days in Raleigh meeting with lawmakers in an attempt to debunk the urban legend about private auditors who were villainized by proponents of the Bill and labeled, “Pirates, Bounty Hunters and Sharks.” After a lengthy conversation with one legislator—the legislator looked at Jim with a straight face and said, “You don’t have a parrot on your shoulder after all.” That funny story accurately reflects the daunting task that we faced when we entered this battle four weeks ago.

Synopsis of HB 462
The genesis of this Bill began in the House Commerce Committee the primary sponsor was “Representative Unaware.” The House version of the Bill authorized the Legislative Research Commission to study the adequacy of current consumer protections for business opportunity and franchise sales in North Carolina. The Bill easily passed the House and was sent to the Senate Commerce Committee. “Senator Obstinate” was the primary sponsor of gutting HB 462 in the Commerce Committee. “Obstinate” tacked new language onto HB 462 that would prohibit local governments from engaging private audit firms whose compensation was contingent upon the results of an audit. It’s hard for me to imagine but the Commerce Committee wanted to regulate the market---despite the reality that, “The concept of Laissez–faire is one of the pillars of true capitalism." Moreover, the American Institute of Certified Public Accountants (AICPA) made this observation about contingency fees, “In the eyes of many, prohibitions against such fee arrangements are viewed as self-serving, anti-competitive and not in the public’s interest. In some cases, clients are not able to pay for services on an hourly basis, and actually prefer a contingent fee basis. In a free market system, the marketplace should dictate fee arrangements as long as they are disclosed to clients, unless there is an overriding public interest, which is the case for attest services.”

Sources tell me that the Big Cable Company, the Big Telephone Company and the Retail Merchant Association are the forces behind the prohibition of performance based compensation for property tax auditors. The Senate Commerce Committee must not have thought it was prudent to inform local governments that they might strip them of this compliance tool. You see they waited until 24 hours prior to the hearing before they shared their plans with local government. Ironically though proponents of the Bill, including Andy Ellen from the Retail Merchants Association, were prepared well in advance and he was provided ample time to villainize property tax auditors in front of the Commerce Committee. Despite the short notice one of the opponents of the Bill was scheduled to vet the impact on local government but the clock ran out on Kevin Leonard from the Association of County Commissioners---so the Senate Commerce Committee voted to prohibit contingency fee property tax audits solely upon the testimony of those taxpayers who would benefit from a reduction or elimination of property tax audits. The gutted Bill easily passed through the Senate Commerce Committee and headed to the Senate floor. That is where the battle began to intensify. Opponents of the Bill mobilized ground forces against the Goliath sized enemy (By one account the proponents had no-less than 47 lobbyists working for them.) We had a sling shot and they were using Bazookas. But we had something on our side that is much more powerful than any artillery---righteous indignation.

Despite mounting opposition the Bill was still sailing through the Senate like a schooner on the Albemarle Sound. But for proponents an unexpected shift in the winds of opinion occurred---“Senator Wise” had a novel idea, “Why don't we give local governments at least one year to prepare for the affects of this Bill?" Her amendment was seconded. It passed the Senate floor by the slimmest of margins 24-23. A colleague and I began to celebrate--we had a whole year to retool our business model. The next morning a former legislator and friend of mine contacted me with some disturbing news. He said Senate leadership decided to pull the Bill from final reading the night before and it was apparent that an effort was underway to whip those legislators in shape who voted for “Wise’s” amendment. Need I say more? During the next session “Senator Pliable” decided he had not properly understood the amendment so he rescinded his vote and requested a revote. You see in Raleigh if a play does not go your way you simply ask for a redo, for golfers reading this blog think mulligan. “Pliable” used his mulligan and it turned out favorable for proponents (they defeated amendment 4 which would have moved the effective date to July 1, 2013) so the Bill stayed on the Calendar this time and passed its final reading.

Back to the House
Since the Senate had passed a gutted version of a House Bill there were two options for the House upon receipt of the Bill from the Senate;

1. Send the Bill to the House floor for a concurrence vote or

2. Assign it to a Committee for vetting.

Sensible leadership in the House decided it would be prudent for gutted HB 462 to be vetted. So the rules “Chairmen Representative Astute” sent the Bill to Committee. In the House most stakeholders were provided an opportunity to be heard. Kevin Leonard finally got his chance to vet the financial ramifications to Counties, Paul Meyer shared the negative impact this Bill would have on municipalities and Carteret County Assessor, Carl Tilghman articulated the merits of contingent fee contracts for the Assessor's. Proponents of the Bill continued to appeal to the emotions of the Legislators with more sensationalized stories about sharks, pirates and bounty hunters. Lobbyists for the prohibition of contingent fees did not provide any evidence that auditor malfeasance had ever occurred---instead they shared ghastly stories they had heard from taxpayers who owed additional taxes because they failed to report all of their property. In a nutshell the folks who underpaid their property taxes asserted that performance compensated auditors are too aggressive. “Representative Smart” recognized the holes in the proponents arguments so he spoke against the Bill based upon the lack of any credible evidence. He asked for a vote to table the motion and it was seconded. But it was too late-- propaganda by the proponents for the Bill had clouded the judgment of the 26 Representatives who voted to concur with the Senate Committee Substitute language banning contingent fees. The encouraging news was that 20 Representatives voted against concurrence and momentum was now shifting.

The conscientious House members recognized that something did not smell right. The only empirical study ever compiled on the subject contradicted what the proponents were espousing. Retired Forsyth County Assessor, Pete Rodda made a presentation at the 2011 IAAO conference on property tax audits in North Carolina. The results echoed that private auditors were less likely to discover additional taxes when their compensation was contingent upon the results of an audit and the average tax assessment was less for a contingent fee audit that it was for a flat fee or hourly based audit. Moreover, there has not been one single documented case of an auditor inflating assessments. The majority of the House members decided that the facts did not corroborate what the proponents of HB 462 were saying. They began to surmise that--- perhaps auditors don’t have parrots on their shoulders; these folks don’t appear to be bounty hunters, and we don’t see any dorsal fins on them----they pondered that maybe they are simply providing a much needed service to local governments?

The House decided to deliberate this Bill in Caucus (a fancy word for a private meeting). I was not privy to that colloquy so I am not going to speculate on what was said. But I do know that your voice was heard---the voice of reason. So I applaud you for reaching out to your legislators and sharing the truth with them. This battle would have been completely lost had it not been for you. Contingency fees audits would have ended on July 1, 2012 never to be heard from again. The good news though is that a compromise has been agreed to by parties on both sides of this issue.

This battle is far from over though. It is obvious that a few special interest groups are eager to hamstring property tax compliance in North Carolina by limiting the arrows in the quiver of the County Assessor. If proponents attempt to undermine any portion of their agreement with local government then another battle will need to be fought. And local government will need even more grass roots support than it garnered during this campaign. I am confident though that you will be prepared for this bigger battle if it arises because most of us agree that contingent fee property tax audits make good sense---only the taxpayers who underreport pay for the entire audit program. Nobody else pays a dime for it i.e. not homeowners, vehicle owners or the 60% of businesses who get it right the first time--- why would we want to do it any other way?

P.S. I want to thank Carl Tilghman, Pat Goddard, Stan Duncan, David Baker, Paul Meyer, Kevin Leonard, Kirk Boone, Former Senator Eddie Goodall and Team Deans for their tireless efforts in thwarting the efforts of proponents of this terrible legislation.

May God Bless You All,
Jim Turner, CPA
704/821-0667

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