Common Pitfalls of in-House Property Tax Compliance

For over fifty years, DMA has been trusted by many Fortune 1000 and Top Private companies to provide outsourced property tax services. Whether the move to outsourcing is spurred by reorganization of the tax department, the desire to focus in-house staff on more valuable functions, or other factors, there is a common set of challenges our compliance experts have heard from clients that previously managed property tax compliance in-house. Here are the top pain points that internal compliance operations may face:

Keeping up with multiple jurisdictions is a full-time job

Companies with many operating locations may have to file and pay tax in hundreds of jurisdictions, each with its own complicated (and often changing) rules. Depending on the location of your property, there can be different ways of calculating tax obligations at the state, county, and even city levels. For example, various jurisdictions classify taxable and non-taxable property differently. Taxing authorities also vary greatly on abatements and available exemptions.

Your staff could be adding more value with other activities

Compliance work is tedious, time-consuming, and cumbersome—and personal property compliance can be especially so. In addition to jurisdiction research and other filing activities associated with all tax compliance work, personal property compliance requires countless hours dedicated to tracking assets, ensuring renditions are up to date, and managing seemingly endless amounts of paper and mail.

While this is all critical work, a limited tax staff is best used on higher-value activities, such as audits, strategic projects, and tax minimization.

Attracting (and retaining) compliance staff is difficult

If you hire resources for in-house compliance work, you know that keeping those positions staffed can be a challenge. Because the work can be tedious, in-house staff tends to want to move up (or out) after putting in their fair share of time in compliance. Due to the nature of compliance work, it is difficult for companies to offer the types of work conditions and incentives that may be needed to keep the best compliance talent motivated and engaged.

It’s expensive

Recruiting for any position can be expensive. And with the turnover that’s typical in property tax compliance, hiring costs can skyrocket.

Quality professionals today also command a healthy salary and benefits package. Once hired, they typically need industry training, company orientation, and time to understand how things are done at your company. If you don’t invest the proper time and resources into training new staff, you will likely pay later in penalties and interest.

You take on more risk

Companies are hard-pressed to possess the breadth and depth of personal property tax knowledge cultivated at a quality tax firm that has done the work for thousands of clients over decades of business. Have you avoided all possible penalties and interest? Are you sure you correctly classified taxable and non-taxable property per jurisdiction? Is your rendition up-to-date? Have you double- and triple-checked for mistakes?

Costly mistakes in these areas are not only a risk to your company; they can also shake confidence in your tax department as a whole. Outsourcing property tax compliance to a trustworthy partner can instill confidence that risk is being properly managed.

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Relate to any of these challenges? Then it’s time to get this cumbersome process off your team’s hands. Contact us and our personal property tax experts will show you how DMA can work as an extension of your tax department, integrating seamlessly into your team.