Technology solutions for the property tax life cycle

The start of each calendar year greets tax departments with the familiar task of wrangling data across multiple-source systems and departments. Once aggregated, a lack of tax transparency in asset data, along with data inconsistencies, can require property tax analysts to manually scrub data prior to property tax processing, reducing the time available for analysis, review, and improvement. Asset analytics and business intelligence tools can help accounting and tax departments identify data issues during the activity year. More proactive solutions include regular ERP upgrades, asset management software, and increasing asset detail with regular data repairs.

Most of the property tax life cycle is spent rendering assets and preparing forms. Computer spreadsheets are a popular tool for this, but they’re often inefficient and may be prone to error over time. Manual data manipulation can compound reconciliation problems in the future. Property tax software solutions mainly focus on compliance issues and typically work best when integrated with fixed asset management systems and ERP systems.

When interfaces are configured properly, inbound data can automatically be aggregated and classified with self-auditing features to alert users of account reconciliation issues. Complete solutions often include workflows, reports, error handling, and optional email alerts. Automation tools and macros can eliminate repetitive processes. Stand-alone online document storage and management solutions can include electronic signature capability for a decentralized workforce.

The arrival of assessment notices marks perhaps the most important time in the property tax life cycle. Reviewing property tax assessments for reduction opportunities drives the most value for many companies and requires the most expertise from the property tax department.

Historically, one of the most important parts of the assessment review process was simply receiving and opening the notice to allow for informal discussions with state or local assessors before deadlines were missed.

Missing informal appeal deadlines can require the taxpayer to enter into formal hearings, bringing added risk of reassessment and potentially negative public relations as a result of disputing taxes in the formal hearing process. Appealing assessments requires high-level analysis, detailed documentation and support, and timely filings—all with new challenges from remote working.

Software solutions that feature a property tax calendar provide a way to prioritize and manage deadlines, and subscription services with comparable data may be worth the return on investment over time. Many tax departments also co-source or outsource the valuation and appeal functions to supplement knowledge and experience.

Property tax bill management software programs are often included in complete compliance software solutions but not used due to resource constraints. When they are used, outbound payment data can be sent electronically to finance departments to pay bills and generate journal entries for budgeting and forecasting. Supporting solutions might include optical character recognition to read and translate bill data, or data services that aggregate data compatible with software solutions.

One of the biggest hurdles tax departments face here is a lack of accuracy and transparency in their own data. This can make it hard to establish a threshold of reasonableness for annual property tax liability to follow generally accepted accounting principles. A complete property tax software solution will likely include a simple and integrated accrual solution for budgeting, forecasting, and calculating a monthly accrual entry. For a more sophisticated solution, a real-time analytics dashboard can source data from multiple systems.