Tax Executives Roundtable Property Tax: Best Practices

Transcription

1 Tax Executives Roundtable Property Tax: Best Practices James M. Fergus, JP Morgan Chase Maggie Brackett, Key Equipment Finance Andra Stanford, Burr Wolff Michelle Sutton, Deloitte Tax Sheryl Flynn, DaimlerChrysler Financial Services

2 Topics Validation of Data Obtaining Lien Date Information Return Processing Assessment Reviews Bill Payment Other Issues

3 Validation of Data Internal - Chase Systematic validation of key components that identify assets as taxable in leasing system Run on command by originators and run daily to monitor any changes Includes lease type information Includes state information Includes equipment type information Based on the above will return error if property tax coding is in error Property tax coding goes beyond taxable yes or no No PPT in state State doesn t tax vehicles State doesn t tax computers, etc. Preliminary lien date letters Confirmation of location and that the lessor is filing (negative) Confirmation that the lessee is filing for self filers (positive)

4 Validation of Data Internal KEF & DCFS, External Burr Wolff & Deloitte Tax Internal Compliance reports to ensure proper data entry Address validation within the lease accounting system Tax location coding assigned within the lease accounting system Account status used to determine whether to import the assets State filing requirements reviewed and updated annually External Taxable vs nontaxable assets by state Data file integrity essential fields, valid data in fields, control totals Methods and reports for asset additions, deletions and moves Review changes asset count, asset cost, model #s, acquisition date Import checklist and review of notes from the prior year Treatment of assets coming off lease

5 Obtaining Lien Date Info. Internal - KEF Internal Data reporting group gathers data from lease accounting system based on general reporting requirements and submits to tax department for further manipulation and review Tax department filters data for exceptions to general reporting rules, such as vehicles titled in the lessor s name Data imported into PTMS Reporting requirements for each state are documented in a Return Information Form (RIF) Return preparer uses information contained in RIF, in conjunction with the asset classifications established in PTMS to determine the taxation or exemption of each piece of equipment

6 Obtaining Lien Date Info. Internal - KEF Internal (Cont.) Once the current year data is finalized, it is compared to the prior year s data, utilizing an internally developed application referred to as the Year/Year The application compares the data and generates the following electronic files: Assets found in current year but not in prior year Assets found in prior year but not in current year Assets with a cost, description, and/or acquisition date difference Data is ready for remittance to the appropriate jurisdictions

7 Obtaining Lien Date Info. Internal Chase & DCFS Internal Monthly imports into PTMS for registration states Preliminary lien date files run 30 days prior Letters sent to lessees to verify location and that tax liability exists Letters sent to self-filers to sign and return Lien date files for each state run at lien date Electronic file downloaded into PTMS of only taxable assets Data from Lease End, Customer Service, and Originations provided to adjust file as needed if changes occurred after lien date file was created

8 Obtaining Lien Date Info. External Burr Wolff & Deloitte Tax External (Burr Wolff) Data file notices are sent 30 days in advance of assessment date File content requirements Delivery options and instructions Contact information for questions or concerns External (Deloitte Tax) Verify that data obtained from IT is what you asked for Run reports after lien date to ensure contracts entered into before lien date are booked (can be 1 month after lien date) Verify required fields are included: such as - lease date, location code, physical address, asset id, lease term date, lease scheduled term, original cost, depreciated and book values, FMV (NADA, black book etc) if available Run queries to make sure file(s) seem reasonable

9 Return Processing External Burr Wolff External Calendar utilized to track return due dates, electronic or hard copy Statutes and regulations are reviewed for changes Prior year comparison reports are reviewed for changes based on additions, deletions, cost changes, model code changes, and acquisition date changes Tax categorization is reviewed to maximize tax benefits Anticipated values are based on type(s) of equipment utilizing proactive depreciation and index tables then compared to prior years assessor values to identify potential issues Reporting of sold/disposed assets (includes transferred assets) and zero returns where necessary Certificate of mailing is utilized to ensure proof of mailing Returns are stored electronically

10 Return Processing External Deloitte Tax, Internal Chase, DCFS & KEF External Track filing due dates. Sign-off on responsibility for state/jurisdiction. Electronic or hardcopy. Verify our adds and deletes of assets - recon to previous return. Compare values to previous years (NADA and depreciation schedules). Any higher then last year? See what was accepted by jurisdictions last year. Identify possible red flags on return. Verify issues that presented themselves last year are addressed this year. Internal Tax Calendar utilized to track return due dates and record when returns are filed

11 Return Processing Internal Chase, DCFS, & KEF Internal (cont.) Owners values provided based on depreciation tables and type of equipment Includes zero returns where necessary based upon prior year filing Taxography is utilized to obtain taxing district information Formalized process for reviewing the return involving entire property tax team Calendar utilized to track return due dates and fulfill control and SOX measures Rendered values compared to prior years assessor values Includes reporting of sold/disposed assets and zero returns where necessary

12 Assessment Reviews External Deloitte Tax Verify receipt of all assessment notices. Check for all companies, account numbers (past years if still open) and returns filed. Compare assessment values to recommended value on return. Check for rollovers - values or assets If you have not received the workpapers, it may be difficult to identify rollover assets. Exemptions that have been applied for Identify appeal opportunities Attempt to handle informally. Always have the agreement in writing. Review requirements, rules, and timelines for appeals.

13 Assessment Reviews Internal Chase, DCFS, KEF Confirm all assessments are received Assign billing jurisdictions and subjurisdictions to prepare for billing

14 Bill Payment Internal - DCFS Enter billing information into PTMS Electronic file created for Accounts Payable Interface from AP to lease accounting system for thru-bill to customer account Checks matched to bills and mailed Customer service provided access to PTMS for assistance in responding to customer questions

15 Bill Payment Internal Chase & KEF, External - Burr Wolff & Deloitte Tax Internal Missing bills identified and followed up with jurisdiction Invoicing enhanced to provide detail Additional detail available for customer service on a separate system Images available for original bill copies Database created to ensure payment of all bills at the asset level External Compare assessed values with assessment notices and final value on resolution of the appeals Check exemptions carried forward to the bill from the assessment notices and resolution of appeals Verify if state is mail by or received by state Send registered/certified/federal express over a certain amount

16 Other Issues Internal - Chase Estimates at lease end on what basis No true up Education Tax training provided to all non-tax segments Tax manuals provided on the Intranet.

17 Other Issues Internal KEF & DCFS, External Burr Wolff & Deloitte Tax Internal Refund tracking using formalized system Internet site which provides tax data for Customers Customer notification of possible tax ramifications of address changes Registration cancellation process for terminated leases Application for and tracking of available abatements External Process review prior to return preparation to set expectations and due dates for various phases