Many government incentives are largely discretionary. They are designed to support a myriad of civic goals, such as economic development, creating new jobs, redevelopment and fiscal revitalization. When civic goals can be achieved by partnering with commercial investment, eligible businesses can offset both start-up and on-going operating costs.

Discretionary business incentives include the following:

• Property tax abatements

• Infrastructure grants

• Job training funds

• Local fee reductions & waivers

• Low-interest loans

• Utility rate discounts

• Sales or use tax sharing agreements

While some companies schedule new capital projects according to growth demands, the majority deploy yearly capital expense for property, plant, and equipment. Most often the property tax is handled as an afterthought a year or more after the capital expenditures occur. Even though consultants are sometimes used to file appeals of value, property tax planning in conjunction with capital expenditures is virtually non-existent.

The Problem for Most

As capital costs are incurred there are several ways that invoices and documentation are allocated into a company’s records. These capital costs are commonly inclusive of specific types of expenses that typically are not taxable, dictated by state property tax statutes. The opportunity to effectively address these costs are lost once they become part of a company’s records and deemed an audit trail for the property tax. Assessors do not look kindly on attempts to deviate from a company’s records absent any reasonable evidence to the contrary. 

our solution

The most effective methodology to address property tax liability for capital spend is to begin to effectuate savings techniques during the capital deployment stages and while the capital is being allocated to your company’s records.