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

The real estate implosion has been devastating to local government budgets. Property taxes, once the most stable source of local government revenue, are on a downward trend as property values ​​decline. As a result, an increased number of personal property audits are taking place to generate much-needed revenue.

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

Chill out. 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 meeting the deliverables.

Contact the Assessor’s Office immediately. This tax issue will not go away if ignored. Try to speak briefly with the adjuster 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 a third-party affidavit or power of attorney to the Assessor’s Office, your accountant or CPA can 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 is faced with a choice between going through a shoebox full of receipts and handwritten 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 audit results so that you understand their financial implications. Most counties/localities give the taxpayer the ability to agree or disagree with the audit results. Be prepared to provide supporting documentation why you disagree with the audit results. The Tax Assessor’s Office will mail an assessment change notice if the audit resulted in a positive or negative change in tax value. This notice explains your right to appeal the new assessed value in writing within a specified period of time. If the appeal deadline is not met, 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 singled out for an audit.

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