Archive for category: General Information

By Gary A. Stone, ASA, Manager at Swartz and Associates

Most business owners are familiar with property taxes on their real estate and equipment. However, in some states, inventory is also taxed. For business owners that sell tangible goods, their top priority is providing a quality product for a profit. With a good plan, business owners can be prepared to minimize the impact of those taxes on their profits.

Inventory property tax is based on the value of the inventory as of the lien date, which is usually January 1 (West Virginia is July 1). This can include raw materials, work in progress, and finished goods. Not all states tax inventory, but if you operate in Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Kentucky, Georgia, and West Virginia, property taxes will be assessed on your inventory.

Jurisdictions determine value using either the cost method, the market vale method, or the average monthly value:

1. The cost method is based on your inventory cost as of the lien date.
2. The market value method is based on the price a willing buyer would pay.
3. The average monthly value is based on the average inventory held over the course of the year.

Minimizing Property Taxes

To ensure your company is minimizing property taxes, there are a couple of strategies that can help. The first is tracking where materials are sourced and where the product is shipped. This is important because most states that tax inventory offer an exemption called the Freeport Exemption. The Freeport Exemption uses a formula to determine the percentage of materials and products from out of state. That percentage is then used to reduce the amount of taxable inventory.

Another area to keep in mind is inventory in transit, which consists of goods that have left the supplier’s warehouse but have not reached the buyer’s location. This is important because property taxes are based on property located within the tax jurisdiction. For accounting purposes, a company may have inventory in transit assigned to a location in a state that taxes inventory. However, because the inventory is not physically located in that state, there is no need to report it.

Inventory Property Tax Rules

Because property taxes on inventory are not assessed in every state, the rules are not always well understood. If you have consigned goods held by your customers, or you are beginning to do business in any of the states mentioned above, give us a call. We have worked in each of these states and can help you establish a strategy to maximize your profits by minimizing property taxes on your inventory.

By Charles Young, Manager at Swartz and Associates

There’s something about walking into a well-run hotel or resort. From the time you check in, unpack, and start exploring the amenities, it’s not just about lodging – it’s about the experience. A drink at the bar. Relaxing poolside. The feeling that comes with knowing you are being taken care of. For me, that is the kind of hospitality I look forward to experiencing.

At Swartz + Associates, Inc. (SAI) we represent a diverse group of clients in the hospitality industry – independent hoteliers to corporate multi-property flag organizations across the country. To deepen our understanding, I joined the Hotel & Lodging Association of Greater Kansas City where I have had the opportunity to meet and network with hotel owners, operators, and managers who offer valuable insight to the real-world challenges and successes in the industry that – like many others – was significantly impacted by the COVID pandemic.

Post Pandemic Hospitality: What We Are Learning

• Staff Shortages – Finding and retaining skilled staff remains a key concern. Low pay, overnight hours, and burnout are some conditions reported making hospitality a challenging occupation.
• Changing Guest Demographics – Business travel has declined due to the ease of conducting meetings with technology instead of in person face to face interactions. Meanwhile, the rise of the traveling sports family has come back. These families are looking for select-service hotels with kid-friendly amenities and complimentary breakfasts.
• Online Reviews and Reputation Management – Reviews now carry extraordinary weight. A single bad experience involving cleanliness, safety, or poor service can drive customers away for good.
• Rising Operating Costs – Inflation has touched everything – labor, food, beverages, and technology – causing profit margins to be tighter, which means every investment must be strategic.
• Competition – The principle of substitution is alive and well. Consumers will gravitate towards properties offering lower prices for comparable quality and service.

Advising with Insight and Intent

The hotel industry is constantly adapting, driven by changing consumer demands and economic pressure. Our role at SAI is to analyze market data, understand operational trends, and apply our knowledge to our clients’ property valuations. Hospitality is more than room counts and revenue – it is a business built on trust, guest experience, and operational excellence. At SAI we are proud to support an industry where those values matter.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!

By Gary A. Stone, ASA, Manager at Swartz and Associates

Recently, I was working at the office when I received a text from my college-aged son, “hey, why is it 80 degrees in the house and why can’t I change it to go down?”. My air conditioner had stopped working on one of the hottest days of the year. To add insult to injury, it had just been installed a couple of weeks earlier, along with a new furnace.

As an aside, have you ever noticed this never happens on cooler days? But I digress. The technician came out and reset the unit, and it worked for a while. Unfortunately, it took several visits and adjustments from the HVAC company before the system finally began running properly.

Many businesses that own heavy machinery can relate to my experience. Whether it’s a manufacturing line or equipment that produces energy, newly installed equipment does not always run properly from the start. It may take several adjustments or modifications to “work the bugs out”.

When providing valuation services, we occasionally come across clients dealing with underperforming equipment. Part of our scope of work is interviewing key personnel to determine whether the issue is curable or incurable. If the cost to cure is not economically feasible, the deterioration of the equipment is considered incurable and will have a negative effect on the value of the equipment.

Functional Obsolescence

This loss in value is called functional obsolescence, which is a loss in value or usefulness due to problems with its design, features, or layout. The equipment may still be operable, and it can occur regardless of age and is separate from wear and tear (physical depreciation) or economic changes (economic obsolescence).

This is often overlooked when businesses file their property tax statements. County assessors rely on state-mandated depreciation schedules when valuing equipment, which only account for physical deterioration. Therefore, if a business owner has underperforming equipment, they could be overpaying the property tax on that equipment.

We have helped many clients with this issue including a current case in California. Because of our experience, we know the pertinent questions to ask, the proper documents to submit, and how to work with the property tax jurisdictions. If you think this might apply to you, let’s talk. We would be happy to provide you with a consultation to assess your situation.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!

By David Swartz, Business Development at Swartz and Associates

The Iowa Association of Business and Industry (ABI) has proven to be a great organization for Swartz+Associates to be aligned with, and I was excited to attend their annual conference (#ABIcon25) recently held in Council Bluffs, Iowa. Excited, not only for the content and reunion with interesting members I’ve met over the years, but also for connecting to our family’s manufacturing roots in Council Bluffs.

This year’s ABI conference highlights for me were:

• Business-friendly environment to make new connections and foster existing relationships. Every participant is so approachable and willing to share their thoughts and experiences – especially the CEOs of Iowa’s largest employers.
• “Coolest Things Made in Iowa” award to the John Deere CP770 cotton picker machine. 93,000 votes were cast for various nominees and my vote went to the Viking Pump used by chocolatiers worldwide – because who doesn’t like chocolate. Want to see a John Deere CP770? Click here.
• Great breakout sessions covering content from legislative interests to how one might use an influencer in their social media. I’m not sure an influencer can make property tax that interesting – just saying.
• The Union Pacific railroad museum tour was particularly interesting since our sister company, Indurante, is critically tied to the railroad industry.

Canar Manufacturing

Since our business is property value-centric, one can’t deny the economic importance counties, developers, and investors require for utilizing land and its building improvements. This reality was evident as I walked the site of what was our family’s business – Canar Manufacturing– a small furniture manufacturing company which my grandpa and his brother (hmm… I see another theme here about brothers) moved from Council Bluffs to Omaha in the old warehouse district. This district is now Omaha’s famous Old Market entertainment district, and the Canar Manufacturing building was eventually torn down to make way for the beautiful park bordering the Old Market, ConAgra and the Missouri river.

Here are pictures which reflect how the warehouse area looked in my mind’s eye and the beautiful transformation today which clearly improved the area’s development and value.

Picture of employees Canar Mfg employees 8/10/52 Council Bluffs Daily Nonpareil archives

Arial shot of Canar Mfg in the old Omaha Park where Canar Mfg once stood

Here is what it looks like today

Retracing my family history was nostalgic as I saw how much has changed and remained so familiar to me. The incredible stories shared by our state’s manufacturing industry at the ABI conference is confirmation that the future is bright for gifted leaders, entrepreneurs, and risk takers.

Our team is guided by the memories of those who took risks, and by the knowledge we learn from others.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!

By Keith Sherman, Business Development at Swartz and Associates

Recently my wife Melanie and I were in Europe for a magical trip. I am so grateful for the beauty of the places we visited, the food and libations we enjoyed, the walking and talking we did together. History surrounded us and seeing other cultures felt like stepping into a timeless moment. It felt this way because I was completely in the moment – for the first time in 38 years I turned off my phone. No emails, no notifications, no distractions. My phone became my camera, capturing the moments we were experiencing.

We Will Cross That Bridge

This got me thinking of the age-old proverb of Henry Wadsworth Longfellow: We will cross that bridge when we get to it. Throughout my career I often took on high risk opportunities professionally in the marketing and advertising business. We moved a lot for all kinds of reasons – family, title, money, learning, status, impact, mergers, loss of job, and the list goes on. With each transition, I spent a lot of time worrying: Will people do what they say they are going to do? What is going to happen? What action is required? Was this the right decision?

During our stay in Amsterdam, surrounded by canals, that phrase gained new meaning. Whether we walked to a planned destination or just wandered around, we crossed those bridges as we came to them. Life operates in the same way. Some days we set out with a plan and other days we wander without direction – but we cross many bridges along the way.

Take that step onto the bridge. Embrace the moments as they come. It isn’t that you are reckless in your decision making… You are facing your doubts head on and taking a leap that you believe in.

Swartz + Associates, Inc. (SAI) is a full service property tax firm specializing in the review, analysis and appeals of real and business personal property tax valuations. If you need help with your property taxes, give us a call!