Interesting news from the Department of Revenue and Taxation’s Real Property Tax collections uncovered that the IRS lost $15.7 million in “unrealized, lost and forgone tax revenues” with as much as $14 million lost because of “an outdated valuation system”. This report was released from the Department of Public Works and Land Management late August 2013. The report goes on to note:
- DRT is not using current market values to assess residential property values.
- An estimated loss of $14M in tax revenues between 2007 and 2011.
- Guam’s tax code mandates that all real property be reappraised every five years to ensure that values are current.
While Guam is nearly half the world away from the North San Diego Property Management industry, it does point to some interesting facts to consider.
To begin with, it is important to realize that when such a mistake is made and exposed that large scale audits may follow. Currently there is no release or news concerning any upcoming audits in the San Diego area, but, where applicable, it is a great idea to start ensuring that any property that is owned be ready for an audit with all the necessary tax and land value estimation up-to-date.
Further, it can be speculated that this will lead to changes in the real property taxation laws of Guam. While tax reform is a long and complicated process, it is not unreasonable to expect that such a large scale change could ripple down and through our local market. With that in mind, preparing now, and being up-to-date, as previously mentioned is an important step to protect real property assets.
At RPM we understand that while what happened in Guam was outlandish and hopefully atypical, that it is not beyond the realm of possibility to happen in California. That is why we work diligently to ensure that our information is current, that our invoices and monthly income statements are fully prepared to and optimized for tax purposes.
Let Guam be a cautionary tale to everyone to take time and ensure that all of the necessary records and tax information is taken care of.