Choosing the Right Property Tax Firm: A Comprehensive Guide
When it comes to making tax payments to jurisdictions on time, many businesses have learned that maintaining compliance is challenging, complex and inherently laden with financial risks and operational headaches. And with the recent surge of remote work, tax payment processing has only become more problematic for many businesses. These challenges are unlikely to go away anytime soon, for a few reasons:
- Tax compliance is increasingly complex according to the Tax Policy Center. The current tax system in the U.S. didn’t come to be all at once. It developed as a result of additions, subtractions and changes to the tax code made through legislative bills over time. It’s unlikely that taxes will get any simpler for businesses anytime soon.
- Tax compliance is costly and time-consuming. The time, money and resources it takes for individuals and businesses alike to comply with the tax code are significant. According to the Tax Foundation, tax compliance alone costs the U.S. economy $409 billion every year.
- Tax compliance is not a core competency. Compliance and risk management systems are designed to protect organizations and limit liability, but they aren’t necessarily productive when it comes to adding value, according to Harvard Business Review. As a result, maintaining compliance for complex issues, like tax, can be an internal resource drain for businesses that prevent them from focusing on other, more competitive, areas.
- Check payments are unwieldy and expensive. Bank of America estimates that issuing a paper check costs businesses between $4 and $20 per check. Many tax jurisdictions still require paper checks and returns to be physically mailed to their location. The cost and operational demands of managing paper checks and returns should not be underestimated.
Businesses who manage their tax payments in-house are likely to have additional costs, see inefficiencies in their process and work harder to overcome unnecessary challenges. These challenges can affect payment timing, filing accuracy, compliance documentation and the internal controls needed to keep tax obligations organized.
For companies managing business property, these issues often connect directly to business personal property tax services, filing accuracy, assessment review and audit readiness. When internal teams do not have a clear process for tracking assets, deadlines, depreciation schedules and jurisdiction requirements, the risk of missed savings and compliance issues increases.
Here are some of the biggest challenges of managing tax payments in-house.
Paying Taxes to Multiple Jurisdictions is Complex
Not all jurisdictions accept tax payments the same way. Some jurisdictions require that payments be submitted via paper check along with a printed return, while others require electronic payments through their own payment portals. These requirements can change over time.
Businesses who attempt to keep up with changing formats and guidelines themselves will have their work cut out for them. Each jurisdiction can have different deadlines, payment rules, mailing requirements and documentation standards.
It’s unlikely that tax regulations and jurisdictional requirements will become any simpler in the future. You only have to look back to South Dakota v. Wayfair for an example of a recent, major legislative shakeup. It seems more probable that staying compliant will only continue to become more complex and difficult for businesses, especially those with many tax jurisdictions to pay.
Maintaining compliance requires keeping track of large volumes of forms and mailing addresses and visiting multiple jurisdictional websites to facilitate online payments. Businesses that can’t keep up run the risk of triggering audits, governmental interference and incurring costly expenses in the form of penalties and interest fees.
A property tax audit can help identify where records, filings, payments or asset classifications may need closer review. This is especially important for businesses with multiple locations, large asset lists or recurring business personal property tax obligations.
Whether the business is paying sales and use taxes, property taxes, excise taxes, business licenses and registrations, or some combination thereof, it’s a complicated environment.
Managing Taxes Can Be Costly & Inefficient
Businesses may be throwing too much staff, time, money and energy at a resource-draining tax process. Too often, they may not have the staff necessary to maintain tax compliance or manage tax payments efficiently. Processing tax payments adds a burdensome workload to existing internal departments.
Managing tax payments can be labor-intensive and costly. Businesses may also need a stronger depreciation schedule strategy to understand how assets are reported, valued and reviewed over time.
A busy accounts payable or treasury department will have to process payments quickly and in line with jurisdictional requirements. This can become harder when property tax payments, business personal property tax filings and other tax obligations all compete for attention at the same time.
This interplay between departments can be a common point of misalignment and communication breakdowns. The accounts payable or treasury department may be accustomed to paying bills within 30 days, not the quick turnaround time that taxing authorities often require. Tax personnel may not have the clearance to access canceled checks or check images to investigate claims of unpaid tax bills.
Even when a company has quality tax software and dedicated staff, there is no guarantee that payments will be made on time. Multiple approvers for large payments can add to the time it takes to pay a tax bill. Expediting payments when necessary can be painful when it needs to run through multiple staff members for approval or processing.
Tax Payment Compliance is Not a Core Competency for Most Businesses
Most businesses don’t differentiate themselves from their competitors by paying their tax payments efficiently. Their customers simply don’t care about what goes on behind the scenes.
To stay competitive, businesses need to focus on whatever it is they do best.
Compliance and risk systems are built to protect against liability, not drive productivity. For this reason, it’s crucial for businesses to delegate and outsource activities that don’t add to their value and bottom line. In this way, they can stay competitive, work on servicing their customers and continue to honor their core values.
Remote Work & Physical Locations
As an added complexity starting in 2020 with the pandemic, remote work became the default for many businesses, with more employees working from home than in a physical office according to Stanford research. This shift may extend well past the pandemic, as businesses continue to maintain operations with much of their staff at home on a full-time or part-time basis.
A survey from Enterprise Technology Research reported that the number of employees working from home permanently was expected to double in 2021.
But managing tax payments doesn’t mix well with remote work. While some tax jurisdictions can be paid online and by electronic payment, many jurisdictions still require paper checks and physical returns to be mailed.
Printing paper checks and returns and then mailing them to jurisdictions can be much more difficult for internal staff to manage when they can’t be in the office. What was a labor-intensive or time-consuming process before may now be completely unrealistic without regular access to company checks and mailrooms.
Remote work can also make documentation harder to control. If tax bills, assessment notices, payment confirmations and asset records are spread across different systems or people, the business may have a harder time responding quickly when deadlines or audit questions appear.
The Case for Outsourcing
Paying taxes on time and in compliance is essential. But businesses who manage the process themselves may spend too much time, energy and money doing so. It also comes with risk, since making late payments can result in penalties and interest fees. Remote work can make it difficult to keep up with the issuing and mailing of physical checks and paper returns.
Outsourcing can also help businesses prepare for filing reviews, assessment questions and potential appeal opportunities. In some cases, reviewing prior filings may reveal missed opportunities, which is why property tax second-chance appeals can be useful when businesses believe they may have overpaid or missed a correction window.
Traditional payment processes do not lend themselves to the unique demands of the tax payment process. Automated solutions can facilitate transactions, provide insight into payments and enable individuals to more effectively oversee the entire payment process. Companies that invest in automation are taking a step toward systemizing their tax management and minimizing overhead costs.
The benefits of automating tax payments include:
- No more keeping track of jurisdictional compliance. When it comes to paying taxes, keeping track of which jurisdictions to pay and how much to pay them is only part of the problem. You’ve also got to keep track of how each jurisdiction accepts payments and returns. Keeping up with hundreds or thousands of taxing jurisdictions and how to remit payments to each one is a huge undertaking. Automating your tax payments with a payment processor shifts this work off your shoulders.
- No more devoting resources to payment processing. Your accounts payable and treasury departments are already managing many financial aspects of your business. Processing large volumes of tax payments each month is a further drain on time, money and resources. Outsourcing can take away this workload and help you avoid delays and costly penalties or fees.
- The ability to focus on your organization’s strong suits. When businesses can remain compliant with tax regulations and debts without having to devote a burdensome amount of time, money and resources to the process, they have a greater ability to focus on their core competencies.
- Remote work is no longer an obstacle. Across the country, many tax jurisdictions still require paper checks and tax returns. But widespread remote work can make it more difficult to process physical checks and documents. Outsourcing your tax payment process to an organization with large-scale printing and mailing capabilities can help ensure checks and returns are handled efficiently and on time.
While taxes are an inevitable cost of doing business, the burden of paying them can be mitigated with an effective, automated solution from an experienced payment processor. For organizations that manage complex property tax obligations, this should also include reviewing payment processes, business personal property records, audit exposure and opportunities to improve tax management controls.
About Anybill
Since 2001, Anybill has provided tax payment automation to many of the world’s largest companies and organizations. Headquartered in Washington, D.C., Anybill is SSAE 18 SOC1 Type II and SOC2 Type II compliant and HIPAA compliant.
Anybill works with clients across all industries, and partners with accounting firms around the country to automate their clients’ tax payments. The company’s combination of technology, service, treasury and payment processing capabilities make it a unique solution for tax payment challenges.
To learn more about how Anybill helps automate the tax payment process, visit www.anybill.com.
Frequently Asked Questions
How do I evaluate if my business should outsource tax payment processing?
You should assess factors like the number of jurisdictions you pay, the complexity of your tax types, current staff workload, remote work challenges, and the cost of missed deadlines or penalties.
Are outsourced tax payment processors responsible for errors or late payments?
This depends on your service agreement. Some providers offer guarantees or assume liability for mistakes, while others limit their responsibility. Always review contracts carefully.
Can outsourcing tax payments improve audit readiness?
Yes. Many providers keep detailed digital records of all payments, confirmations, and correspondence with tax jurisdictions, which can streamline audit preparation and reduce stress during reviews.
How can managing tax payments in-house lead to property tax audit issues?
Managing tax payments in-house can create audit issues when records, deadlines, asset lists, depreciation schedules or jurisdiction rules are not tracked consistently. A property tax audit can help review these areas and identify errors before they become larger compliance or overpayment problems.
Why do BPP audits matter for businesses with many assets?
BPP audits matter because business personal property tax filings often depend on asset records, classifications, acquisition costs and depreciation schedules. When these details are not reviewed carefully, a business may overreport taxable value or miss opportunities to correct an assessment.
When should a business review its property tax process?
A business should review its property tax process when it manages tax payments across multiple jurisdictions, receives unexpected tax bills, has large asset changes or struggles with internal payment deadlines. Regular review can help reduce risk, improve compliance and support better tax planning.
Businesses that manage their tax payments in-house are likely to have additional costs, see inefficiencies in their process and work harder to overcome unnecessary challenges.
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