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