The real estate boom has shattered local government budgets. Property taxes, once the most stable source of local government revenue, tend to decline as property values decline. As a result, more private property audits are being conducted to generate much-needed revenue.
If your business has been selected for a business private property audit in Georgia, here are some general guidelines for navigating through the mud:
Relax. Link. Release. Take the time to read and understand the specifics of the audit letter. Suppress the desire to become overwhelmed by the scope and severity of the audit and instead focus on delivering results.
Contact the Assessor’s Office immediately. This tax problem will not go away if it is ignored. Try to have a short talk with the assessor or auditor who will be working on your case. Notify the auditor that you have received the letter and are trying to fulfill the request in a timely manner. Describe a change in business status, ownership, or current location.
Talk to your accountant. By submitting a third party affidavit or power of attorney to the Appraisal Office, your accountant or CPA can act on your behalf in this particular tax matter. If your accountant is not experienced in business personal property tax law, you may want to consider a tax consultant who specializes in this area. A skilled personal property tax consultant may be able to reduce or reduce the total amount of back taxes, interest, and penalties owed.
Submit all required documentation promptly and neatly. If the auditor had to choose between sifting through a shoebox full of handwritten receipts and notes, or receiving a well-organized series of financial statements, fixed asset lists, and inventory reports, which do you think the auditor would prefer? Facilitate the work of auditors by conveying the required information on time and regularly. Provide all mandatory documentation; however, only provide optional information at your sole discretion. Federal and state income tax returns are usually considered optional information for personal property audits. Many audits have been expanded on the basis of optional documentation submitted by unsuspecting taxpayers.
Accept or appeal. Auditors are required to support all audit findings. It is wise to ask the auditor to explain the results of the audit so that you understand the financial impact. Most regencies/cities give taxpayers the ability to agree or disagree with the audit results. Be prepared to offer documentation that corroborates why you disagree with the audit results. The Tax Appraisal Office will send a notification letter of the change in assessment if the result of the audit results in a positive or negative change in the tax value. This notice describes your right to appeal the newly assessed value in writing within a certain period of time. If the appeal deadline is passed, you lose your right to appeal the value.
Business personal property tax audits are on the rise. Protect your business and your profits by filing the required annual tax returns. With strategic tax planning and compliance, you can minimize the risk that your business is selected for audit.