Since half of the year is already spent, soon it will be tax season again. This is, therefore, the right time for companies and businesses to develop a sound tax strategy before things get complicated and there is not enough time for getting property tax consulting services.
Creating a tax strategy earlier enough will help next season run smoothly when collecting tax documents and getting the help of a property tax consultant.
So, what are the metrics and factors to consider when choosing a property tax consultant? This post outlines various considerations for evaluating, choosing, and compensating third-party property tax consulting services. Read through to learn more.
Most business or private property owners think property taxes are repulsive. This means that they wait for the tax assessor to give notice and then let consultants motion to reduce the values in a bid to save taxes.
While saving on taxes may be the ultimate target for the property owners, simply aiming for any tax level of tax-saving will not show a complete and clear picture of the consultant’s achievements.
Simply put, tax-saving needs to be assessed based on a comparative measure like tax savings as a percentage of the potential taxes.
For instance, it might look impressive to hit $1million in tax savings, but if it represents only 2% of the potential taxes, then there is probably more savings you need to do.
Also, one can consider net savings as a percentage of potential tax savings as it will give a clear bottom-line economic benefit to the owners.
Another major factor to consider when evaluating a property tax consultant is the speed of finishing the appeals. For cash management reasons, it is in the best interest of the property owner for the appeals to get completed before submissions of the tax bills.
Choosing the Consultant.
After completing the evaluation process, the next step is to hire a new consultant. To help in this step, few factors need to be considered:
First is the experience. Experience is a two-faced aspect. Having experience with the asset type and experience in the locality. Most property owners see property taxes as common taxes and high-value locality experience.
However, various assets are different in their own unique ways and have their own valuation approaches.
The second thing to consider when hiring a property tax consulting service is the service fees. An experienced consultant will work together with the business on costs, and the owners need to fairly pay the consultant and incentivize them to be efficient for the good of both parties.
Compensating property consultants.
The property tax consulting business is mainly compensated on a performance-based (contingency) basis since it requires no charges until the results are realized. Normally, contingency fees are 25% of the total tax savings for low-level cases.
If legal processes are involved, lawyers and experts are hired. This changes the consultant’s fees to the percentage of “net savings,” i.e., the actual tax savings minus the litigation fees that expert’s and attorney’s fees.
In summary, choosing a property tax consultant does not involve getting into the internet and researching the best tax consultants in the market.
It involves evaluations to get the most experienced and conversant with the property markets and understanding the metrics such as compensations and incentives and the legal processes involved.
Follow the information discussed above to get the best property tax consultant to manage all your tax issues.