CVS Corp., a $22.2 billion drugstore chain, used to keep track of real estate taxes using Excel spreadsheets. But when an acquisition a few years ago doubled the number of its locations to about 4,000, "we had to find a faster and smarter way of doing our jobs," says Jim Snowden, a property tax manager for the company. "All of a sudden we started getting tax bills from jurisdictions CVS had never dealt with."
It's rarely a pleasant experience when the taxman cometh, but when companies have multiple locations, it can be a nightmare. More than 9,000 municipalities in the U.S. levy real estate taxes,
and they all have different rules, due dates and rates. To the rescue comes ePropertyTax Inc. of Scottsdale, Ariz., with a Web-based solution called Property Tax Office that has data on all 9,000 jurisdictions and also tracks when a company's taxes are due in all of them.
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CVS is in the process of adopting the software. "The good thing about ePropertyTax is that they have all this research already accomplished," Snowden says. "They give the parameters of what needs to be paid, and if there are any discounts." Property Tax Office will track the taxes CVS owes and notify the retailer's accounts payable system to generate the payment, he says.
Late Fees Can Add Up
David Duckworth, president of ePropertyTax, says the system helps corporations maximize their float by not paying too early and avoid fees by not paying late. The stakes are high in some municipalities. Snowden says the cost of making a payment late, including penalties and interest, averages 10% of the bill. And he isn't the only one getting pinched. Frank Lima is director of property tax for Simon Property Group Inc., a real estate investment trust that owns more than 250 shopping centers. Lima says that Simon Property pays almost $360 million in property taxes annually, and "at that volume, missing a deadline at a 1% penalty can be extremely expensive."
Simon Property has been using Property Tax Office for more than two years. It also has a stake in ePropertyTax through Constellation Real Technologies LLC, an investment fund backed by major real estate companies, including Equity Office Properties Trust and Starwood Hotels & Resorts Worldwide Inc. Cushman & Wakefield Inc., a real estate brokerage firm, has a separate equity investment in ePropertyTax.
Besides staying on top of due dates, Property Tax Office has another feature that might come in handy now that real estate markets are flagging: The software can help companies figure out which real estate assessments to challenge. Snowden expects Property Tax Office to assist CVS's challenges by letting it sort through locations by value or by taxes to see which might be appealed. Simon Property's Lima credits the software's support for the success of his company's "aggressive appeals approach," which has saved the REIT and its tenants "millions of dollars."
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