How to Appeal Business Property Tax Assessment?

There is little doubt to the rise of property taxes in Los Angeles, and generally across California. The passage of Proposition 13 back in 1978 put limits on how much property taxes could be raised annually, but that has not slowed the revenue growth. With business property taxes going up at a rapid rate, over $1.5 billion in terms of revenue raised in 2018 compared to the year before. So, it’s probably not surprising that a growing list of business owners within the state have issues with how their property taxes are being assessed.

Add to this the new split roll tax initiative that may make dramatic increases, and you have a situation which puts even more financial pressure on business owners. Add to this the unique business property tax system which has its own quirks compared to most other states and this creates even more issues for business owners.

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California does stand out from most states in terms of when taxes are due. While most counties in the US set their own dates, in California they mostly are uniform meaning that when a particular tax bill is due in one county, they are the same in all counties.

January 1^st: Lien Date – This is a tax filing for all assets that are on the books at the first of the year.

April 1^st: Return Deadline – You do have until May 7^th before the returns are considered delinquent.

April 10^th: Second Installment – This is when the second installment of secured taxes are due. A secured property is considered something that cannot be moved such as a building or the land itself. You may make two payment installments for secured property each year.

June 1^st to August 1^st: Tax Bills are Issued

August 31^st: Unsecured Taxes are Due – This is property that can be moved, often considered personal property. They are due in one payment unlike secured property.

As with any tax that is due, you may file for an extension. This allows you some flexibility if there are reasons under the California law that does not allow you to pay them on time. Be sure to file for the extension before it is due. However, in certain circumstances you may have to pay the amount that is due, but you have more time to complete the filing.

The tax collector of the Treasury for each county is the person responsible for issuing and collecting all property taxes, both residential and commercial. What is owed is calculated by the multiplication of the tax rate for the jurisdiction with what the assessor sets as the value of the property. The sum total is what is due.

There are secured and unsecured taxes that fall under the business property tax that must be paid. The unsecured taxes can be paid in two installments which are due on the 10^th of April and December of each year. Unsecured taxes or business personal property taxes must be paid in a single payment on the 31^st of August.

Although there may be a few exceptions, every county in the state of California will charge a 10% penalty if the property taxes are not paid by the due date. The penalty will be assessed based on the taxes that are due.

If there has been a change in the property in terms of new ownership, new additions to the property, or if a property tax audit has been conducted, there may be additional taxes that are due. This is known as a supplemental bill which is sent separate from the main property tax bill.

It is possible to not receive the supplemental bill for up to three years later based on the filing. If you have a good software system that helps you assess the property taxes that are due, you may be able to spot a potential additional payment that will need to be made. You can either anticipate such a payment or simply wait until the county has sent you the supplemental bill.

If you believe that your business property tax is too high, you can file an appeal with the County Assessment Appeals Board. You must follow the stated procedures and make a formal, written filing detailing why you believe your property taxes are too high. You can file for an appeal from July 1st through November 30^th of the current fiscal year.

When the appeal is received, the Board will schedule the first in what may be a series of hearings which allows you to present your evidence. What you present should be data that confirms your case that the property taxes being assessed are too high. The data combined with your arguments will be taken into consideration by the board.

It may take more that one hearing for the Board to fully assess the case that you are making. However, if the appeal has not been decided upon by the due date of the first installment, then you must pay the taxes that are due even if you believe they are too high. If the appeal you make is approved, then you will be refunded the difference in the taxes that you have paid. The difference will be based on the reduction of liability.

If you believe that your business property tax is too high, getting professional assistance is advised. A knowledgeable, experienced tax advisor can be of considerable help. They can provide the right information, inform you of all options, and help ensure that you file the proper paperwork in order for your assessment to be heard. Plus, they can represent you if needed when you make your appeal.

With business property taxes on the rise and potential widespread changes to be made by 2021, taking advantage of the appeal system may be crucial to your financial stability. Be sure to keep up with all new property tax laws, file the proper paperwork, and get the right assistance from experienced professionals such as an Enrolled Agent, CPA or tax attorney firm for the proper guidance when needed.

Get a free case evaluation today at 562-204-6700.

• Business Personal Property Tax Overview
• Business Personal Property Tax Compliance
• Business Personal Property Tax Appeal
• Business Personal Property Tax Consulting
• Split Roll – Los Angeles Commercial Property Tax Appeal