Why it’s important to review property tax assessments — even if you don’t plan to appeal

When it comes to property tax compliance, most businesses focus on the end result: the property tax bill. But the tax bill is only part of the story. The property tax assessment establishes a basis for how much you’ll owe — and if you’re not reviewing your assessments each year, you could be leaving money on the table.

Even if you never plan to file a property tax appeal, reviewing your assessments is critical to managing property tax compliance, controlling costs, and reducing audit risk. In this post, we’ll explore:

• What is a property tax assessment?
• Why many companies avoid appealing property tax assessments
• How assessments directly impact your tax liability 
• And why it pays to stay proactive, even if you’re not planning to challenge the numbers

At its core, a property tax assessment is the local government’s estimate of the value of a property for tax purposes. That value — called the assessed value — is used to calculate your property tax liability.

In most jurisdictions, assessments are based on a percentage of the property’s market value. For example, if the market value is $1 million and your jurisdiction assesses at 80%, your assessed value would be $800,000. That number is then multiplied by the local tax rate (or millage rate) to determine your tax bill.

Property tax assessments apply to all real and personal property types — from commercial buildings and office space to machinery, equipment, and inventory. Depending on where your business operates, you might receive assessments from multiple jurisdictions, each with its own rules, deadlines, and appeal processes.

It’s no secret that appealing a property tax assessment can be complex and time-consuming. Many businesses decide not to pursue an appeal, even when they suspect the value is inflated. Here are a few of the most common reasons why:

1. Time and resource constraints

Property tax appeals often require extensive documentation, including appraisals, asset listings, or depreciation schedules. Preparing a case takes time — and internal tax teams are already stretched thin managing filing deadlines, audits, and reporting.

2. Legal and professional services costs 

Appeals may require the assistance of property tax consultants, appraisers, or legal counsel — especially for higher-value properties. These costs can add up quickly, making an appeal feel more trouble than it’s worth unless the potential savings are significant.

3. Perceived low ROI

Some businesses assume the cost of pursuing an appeal outweighs the potential savings. Others might think assessments are “close enough” or worry that challenging them could trigger unwanted scrutiny from the assessor’s office.

4. Lack of internal expertise 

Navigating property tax rules — especially across multiple jurisdictions — requires specialized knowledge. If your company doesn’t have in-house property tax experts, the idea of taking on an appeal may feel overwhelming.

Even if you’re not ready to appeal, that doesn’t mean you should ignore your assessment.

Every year, thousands of businesses pay more in property taxes than they should — not because they miscalculated their tax bill, but because they didn’t realize their assessment was too high.

Here’s why that matters:

1. Assessments directly impact your property tax bill

Property taxes are calculated by multiplying the assessed value by the local tax rate. That means any overstatement in the assessed value — even a small one — results in a higher tax liability.

Your assessed value is $1.2 million, but the actual market value should be closer to $1 million. In a jurisdiction with a 2.5% tax rate, that inflated assessment translates to an additional $5,000 annual tax — for just one property. 

Now multiply that across your entire property portfolio.

2. Assessments often carry forward

Many jurisdictions use the prior year’s assessment as the baseline for future years. If you don’t challenge an inflated assessment this year, it may set a precedent — locking in higher taxes for years to come.

3. Errors happen — and they’re not always obvious 

Assessment errors can stem from outdated property records, incorrect asset classifications, or failure to account for depreciation. Some mistakes are as simple as recording square footage incorrectly or reporting assets in the wrong jurisdiction.

Reviewing your assessment allows you to catch these issues early — before they snowball into costly overpayments or audit red flags.

The good news? You don’t have to appeal every assessment to stay compliant and control costs. Here’s how to make assessment reviews part of your property tax strategy — without overburdening your team.

1. Establish a review process

Treat assessments like any other compliance document. Designate a review period after assessments are issued and assign someone on your tax or finance team to compare values year-over-year, validate property details, and flag anything that looks unusual.

2. Centralize your data 

Managing property tax compliance is exponentially more challenging when your property data is scattered across spreadsheets or teams. Consider implementing a centralized property tax platform to track assessments, deadlines, and supporting documentation in one place.

3. Prioritize high-impact properties

You don’t need to review every assessment in the same level of detail. Focus on properties with the highest tax liability, the most significant year-over-year value changes, or jurisdictions known for aggressive assessments.

4. Partner with a property tax expert 

If your internal team doesn’t have the capacity or expertise, partnering with a third-party property tax advisor can help. Many firms offer assessment review services without requiring an entire appeal — helping you stay compliant, reduce risk, and identify savings opportunities.

5. Invest in modern property tax compliance software

Avalara Property Tax is a web-based solution built using modern technology. It allows users to reduce data entry related to assessments and streamline assessment review.

Property tax is one of the most significant recurring expenses for most companies — and one of the most complex to manage. While treating assessments as just another notice in the mail is tempting, doing so can lead to unnecessary overpayments and long-term tax exposure.

By making property tax assessment reviews a regular part of your compliance process, you can:

• Catch and correct valuation errors before they impact your bottom line
• Identify opportunities for tax savings — even without filing appeals
• Reduce the risk of audit issues or disputes with local jurisdictions

In today’s regulatory environment, being proactive isn’t just a bright idea — it’s essential. Visit avalara.com/propertytax to learn how technology can simplify your company’s property tax compliance.