38 JUNE 2023 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Long-Term Business Property Tax Savings It is the rare drilling professional who doesn’t attempt to keep the operation’s annual income tax bill to a minimum with tax planning, either year-round or end-of-year. Why then, is a bill for a tax that is one of the biggest expenses of many businesses, one prepared by the local taxing authorities, often paid without question? The property tax is a local tax based on the value of all tangible real property (land, buildings, and everything permanently attached to them), as well as personal property. That’s right, another facet of the property tax in many locales requires the business, rather than a local assessor, to provide the value of other business assets including equipment, vehicles, and in some cases, even inventory. Just as homeowners must pay property taxes on their house, the drilling operation must pay property taxes on their commercial real estate. It’s important to keep in mind that challenging the amount of property taxes is never going to be successful. What will be challenged is the assessment made by the municipality’s assessor. The assessors working for the taxing municipality have various levels of experience and expertise. This can often result in key details being omitted or mistakes made, but not detected. Although inefficient and time consuming to track down a jurisdiction’s tax information and requirements, it can reveal a number of errors. But, how can any drilling businesses discover these omissions and errors? In addition to the drilling professional’s own knowledge about his or her operation’s property, information on the property can also be found by contacting the assessor. Because, experienced or not, municipal officials are generally pretty smart and rarely intimidated or fooled into reassessing a business’s property. Further complicating matters, since the business property tax is computed at the local level, a knowledge of business tax laws and the drilling operation’s obligations is a necessity. Obviously, understanding the assets owned and rented by the drilling operation and the local jurisdiction’s property tax rules can help when correcting the appraised value assessed by the local property tax jurisdiction - or ensuring current values of the operation’s other assets are reported correctly - can open the door to property tax savings for years to come. As with all business taxes, however, knowledge and attention to detail can help ensure the operation’s business property tax responsibilities are met - at the lowest possible cost. Professional assistance may help. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com
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