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Real Property Taxation
Our real property tax practice includes the management and oversight of our clients’ properties across the country. These engagements range from single-state engagements to nationwide portfolio management for clients with hundreds of locations; and our attorneys have represented matters in all 50 states, plus Puerto Rico and Canada. Our service offerings include traditional valuation review and litigation; tax exemption and/or tax incentive structuring, application and maintenance; processing of real property tax payments; assistance with tax accruals; and management of tax notices. In short, our service offerings are scalable to meet the real property tax needs of our clients to both manage the real property tax expense and planning as well as the administrative burdens associated with real property taxes.
REAL PROPERTY VALUATION
Our tax attorneys work closely with appraisers, property managers, engineers and accountants to identify opportunities to help reduce our clients’ property tax burdens. Once an opportunity for savings is identified, our attorneys, in concert with our clients and their advisors, develop the appropriate strategy to pursue the opportunity. Our goal is to ensure that the fair share, and only the fair share, of property taxes are being paid.
On an annual basis, our attorneys work with our clients to identify which properties should be reviewed. Factors to consider involve revaluation cycles by local assessors, new construction, significant changes at a property that could include market changes, decreases in occupancy, decreases in rental rates or government funding sources, causalities such as fire or wind damage or deferred maintenance issues that impact a property’s value. Our process typically involves three stages:
Annually, Vorys reviews the tax assessments for all appropriate properties either owned by our clients or where clients may possess the right to challenge the real property tax assessments. These properties include those with valuation changes during the past year or where our clients have identified a need for a current review.
As part of this stage, Vorys:
- Works in concert with our clients to collect assessment data and financial and structural data for each property.
- Researches market data and consults with appraisers and others knowledgeable about market values.
- Evaluates appropriate legal authority to assess the legal issues that may arise in a challenge to the tax valuations, including questions regarding the classification of property as real or personal under state law.
- Reviews real property tax databases to determine if assessment records accurately reflect physical characteristics of land and structures, including new construction, remodeling, demolition and abandonment.
- Formulates and documents recommendations to the client regarding the assessed values and potential for tax savings.
- Reviews valuations of property partially or totally exempt pursuant to state tax incentive programs to ensure fair valuation when those programs expire.
- Evaluates whether to challenge the tax assessments and the appropriate forum for undertaking such a challenge. The ultimate decision as to whether to challenge an assessment always remains with our clients.
Appeal of Assessment
Once a client has made a decision to contest a tax valuation, Vorys represents the company in seeking the reduced tax valuation. This appeal could be either an informal appeal to the local assessor’s office or a formal filing of a complaint or appeal consistent with state law.
As part of this stage, Vorys:
- Prepares and files all documents necessary to initiate either the informal or formal review process. We also prepare and file all documents necessary to appeal any valuation decision until the client has decided to accept the tax valuation secured on its behalf.
- Identifies, interviews and secures fee quotes from qualified appraisers or other experts.
- Consults with the client and tax authorities to identify and, if appropriate, implement opportunities to pay tax based upon asserted lower valuations rather than contested higher valuations, including related advice with respect to downside penalty and interest exposure.
- Prepares for and represents the client before taxing authorities, reviewing boards and courts of law. This includes informal discussions, pre-trial conferences and mediations, trial, oral argument and post-trial conferences.
- Prepares and files legal memoranda or briefs with the appropriate authorities in support of the requested tax valuation.
- With our clients’ permission, represents them in settlement negotiations with taxing authorities and other interested parties such as boards of education.
- Prepares and files any necessary documents to secure the agreed upon tax valuations.
Once a tax valuation is finalized, Vorys confirms that the correct adjustments are made by the taxing authority and secures the correct tax refund/credits.
Results from the recently concluded matter may identify opportunities for future savings for the property at issue or other properties. As part of our ongoing representation, we review the results with client personnel or advisors and identify additional opportunities for savings or additional properties that should be reviewed as part of the next annual review.
PROPERTY TAX EXEMPTIONS
Our attorneys regularly review real property tax records for all properties owned – or in the process of being acquired – by our clients for possible new or continuing real property tax exemptions. We have done this work for clients across the country. We specifically review property descriptions and use new construction detail, property records and pertinent legal authorities to determine eligibility for new or existing real property tax exemptions.
We also prepare and file applications for real property tax exemption with the appropriate local/state agency. Our attorneys respond to any requests from such agency regarding applications for real property tax exemption. Where an appeal from the local/state agency becomes necessary, Vorys prepares the appeal to and represent our clients before the reviewing board or court.
PROPERTY TAX COUNSEL DURING ACQUISITION/DEVELOPMENT
When companies acquire real estate holdings, it is paramount they do the proper due diligence regarding the tax implications that exist. Vorys regularly helps clients evaluate properties prior to acquiring them to provide budgeting and underwriting advice. Our attorneys can review and evaluate properties to identify those parcels that are overvalued and estimated cost savings that may exist or identify and value potential exposure to increased property taxes as a result of the anticipated acquisition. Where such exposure exists, Vorys can assist in identifying and evaluating potential steps to mitigate such risk.
In many jurisdictions, projects may qualify for real property tax exemptions. Where such potential exists, Vorys will advise you as to any jurisdiction-specific requirements related to entity structure or operating requirements so such opportunities can be evaluated as part of the overall acquisition strategy.
PROPERTY TAX PAYMENT SERVICES
Property taxes are often the largest non-productive expenses incurred by property owners. Assessment and property tax notices are different than most accounts payable and require a professional understanding of the process. The collection, review and payment of property tax bills add a further administrative burden on property owners. Vorys can collect property tax bills and notices and make the payments on your behalf. We can streamline the process, helping you save time and money. With Vorys handling your tax payments, you will simultaneously benefit from a number of efficiencies and improved property valuation services. These can lead to a decreased tax burden, more accurate budgeting, and additional time for internal staff to focus on higher priority endeavors. Our comprehensive service is designed to save you money.
The payment of property tax bills and our comprehensive real property tax valuation services go hand in hand. Without the need for extra layers of administration, Vorys is able to redirect clients’ property tax bills and notices to us, receive those notices, review them with our clients, and make timely payments on behalf of our clients. We have expansive processes and systems in place that allow us to typically perform these services more efficiently than our clients can do internally.
While providing legal services associated with property valuation appeals, we continually monitor expected increases and decreases in real estate taxes. We are skilled in our ability to accurately estimate taxes due by forecasting reasoned changes based on overall values in the region. When making the property tax payments on your behalf, we are able to pass this information on for your entire portfolio to improve your budget estimates, not just on the properties we are appealing.
In many jurisdictions across the country, property tax bills are sent just a few weeks prior to the deadline for filing an objection. When we collect payment notices, Vorys is the first to see and evaluate tax assessors’ estimated values. This places us in the best position to take necessary action and ensure compliance.
Tax assessors often send precursor documents that indicate bills are on the way – or, in some cases, the proposed tax valuation is sent in advance of the actual bill. Vorys’ early access to these documents provides advance notice of upcoming tax changes while simultaneously providing the best opportunity to guard against overpaying.
When Vorys has access to property tax bills, we can ensure that tax assessors have accurately reduced the bills to the amounts agreed upon during the appeals process. In maintaining control over both the valuation services and the payments, Vorys efficiently ensures that the value changes are correctly and timely processed, and reactionary valuation increases are limited.