January 23, 2014

Owner, Beware! When Assessors Seek Business Income Information

Often tax assessors request business income information as part of the property tax assessment process. Is it appropriate for a tax assessor to use income information in determining taxable value of a commercial property? There's no uniform answer, as it depends on the type of property at issue and the type of income information being requested.

Faegre Baker Daniels partner David Suess, who focuses his practice on resolving disputes involving state and local taxes, authored an article for Commercial Property Executive which outlined if and when such a request is warranted. Suess explained that such a request could be legitimate to ask of apartment building and office space owners, as the rent garnered from these properties would be considered income directly connected to the property value of the site. However, he said income data should not be considered when assessing industrial sites, shopping centers or business parks, as the income and production information connected to businesses leasing space and operating within these sites has no bearing on the actual value of the property in question.

Suess urged taxpayers to consider objecting to an assessor's request if they're asking for information unrelated to the property or its rent, and added that many states have laws against public disclosure of business information such as earnings, income, profits, losses and expenses. 

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