National Print Company
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Solving the Problem
Identified and Quantified Obsolescence
Digital disruption has hit the printing industry hard. While the impact may have stabilized in recent years for the consumer, the industry has not stabilized. The result of this desynchronization between the market conditions and the assessment process has impacted the fair market value of printing assets. As consumer needs continue to evolve and favor digital formats, there is even more disruption looming for the printing industry. RPTA was engaged to figure out how to reconcile the realities of the printing industry with the fair market value assessments required by state law
After interviewing the plant controller and other stakeholders to understand the business, the plant’s performance, and specific assets in the plant, RPTA started compiling evidence to support the case for an additional obsolescence adjustment to lower the assessed value of the machinery and equipment assets. With production dropping 50% over the last decade, RPTA confirmed that the root cause of the decline in production was due to sustained external conditions impacting the plant. By digging into plant and equipment operating data, including the Operating Equipment Efficiency Ratings (OEE’s) of the assets, RPTA constructed an analysis to identify and quantify additional obsolescence as provided by state law.
Tax Bill Expectations in a Declining Market
Obsolescence adjustments of machinery and equipment value resulted in $250,000 in total tax refunds
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Total Tax Savings Refund -
Estimated Interest Refunds -
A national printing company received their audit results for a four-year assessment cycle and their business personal property and fixtures were increased by $11 million in value, resulting in additional taxes of over $200,000. The returns were filed in-house and did not reflect the reality of the industry and more importantly, the operating business. Production had declined by almost 50% over the past decade due to the change in consumer’s and business’ preference to receive the same information digitally. Knowing the additional liability had not been accrued on the books, the company’s in-house team looked for an experienced property tax consultant to assist with the audit review and develop the best strategy to solve the problem.
Any industry experiencing a deep and sustained disruption of their core business due to changes in the market and consumer preferences is a prime candidate for this type of analysis. A pending recession is also a disruptor and should be watched closely to determine any impact on the market value of assets and potential over-taxation.
The complexity of the analysis required to prove this form of obsolescence requires that businesses engage an experienced consultant experienced in the analysis that they can persuasively present to the taxing authority.