Dear Honorable Senator Lawson:

With regards to HB 521 (Senate Amendment to Amendment (963610), I wish to share my opinions and opposition to this bill.

I am the Managing Director of Silver Oak Advisors, a tax advisory firm that provides property tax support for clients that either do not have the resources not the expertise in the arena of ad valorem tax.  I am also a Certified General Appraiser with the State of Georgia and assist clients on both real estate and personal property tax matters; and have been in the industry for approximately 20 years.  The services of Silver Oak include personal property tax compliance, personal property consulting, real estate consulting, tax credits and incentives, pollution control certification, etc. – all dependent upon the desires and needs of our clients.

Through conversations with many of my clients, I know that the taxpayers are very much opposed to this legislation; in particular the requirement that the annual personal property tax filing must include a statement by the taxpayer of the condition of the property, including, but not limited to, depreciation and obsolescence and all data and analysis supporting the statement.

When Silver Oak is engaged to provide tax services to our clients, we strongly recommend to our clients that any valuation issues be addressed on a proactive basis – we are in complete agreement that a taxpayer “should” provide an opinion as to the condition of the property, including all data and analysis in support of any additional tax adjustments.

However, the ability to provide all this support by April 1 is simply unrealistic in many cases.  As you know, Florida assesses property as of January 1 of the current year.  The majority of Florida taxpayers also close their books on December 31st.  Therefore, the first quarter of each year places significant time demands on internal tax resources to close the books, to ensure that all assets capitalized by year end have been updated on the company’s ledger, to work with internal and external auditors to finalize tax returns, audit financial statements, and for those publicly traded companies – reporting year end and quarter ending earnings.  Compound that with the fact that in addition to Florida, approximately 80% of the other 38 states that tax personal property also require personal property tax filings between the period of January 31st and April 1st.  This includes Florida’s Southeastern neighbors: Georgia, Tennessee, North Carolina, South Carolina, Mississippi and Louisiana.

We believe that many taxpayers earnestly try to provide this supporting documentation when filing the property tax returns.  We also believe that in those situations where taxpayers have extraordinary obsolescence or other unique valuation issues, they diligently attempt to address these issues with the taxing jurisdictions as soon as feasibly possible; and hopefully prior to finalization of the tax roll. 

But, the simple fact of the matter is that with the many other first quarter requirements referenced above, many taxpayers find that they must scramble to simply meet the filing deadlines –with many internal tax accountants literally pulling the midnight shift just to comply with the filing deadlines.  Preparing an appraisal, economic life study, or additional valuation support by the April 1st deadline simply is unrealistic.

This brings me to the second part of this amendment in that “an individual, agent, or legal entity may not contract with a property owner to represent the property owner based on any agreement whereby the property owner agrees to pay the individual, agent, or legal entity a percentage of the amount of taxes saved based on any reduction in value made by the value adjustment board, and any such contract or agreement is declared null and void and contrary to the public policy of this state.”

However, consulting services (i.e. quantification of functional or economic obsolescence, pollution control certification, etc.) may be provided based upon time and expense, flat fee or performance based – depending solely upon the client’s preference.

The perception in the market may be that consultants drive the contingency fee contracts; and in some cases that may be true.  The reality is that taxpayers prefer the performance-based fee for consulting services.  This may be because they prefer the no-risk scenario this presents.  However, it is more likely to be the preferred fee structure because the internal tax departments have very strict budgetary constraints as it relates to hiring consultants; and the only way they can receive approval to hire external resources is if the consultant works on a “for performance” fee. 

The serious economic downturn and deep recession we are now experiencing has forced most companies to cut costs.  These cost cutting measures are often focused on elimination of internal tax and accounting positions – requiring the already stretched internal professionals to take on even more responsibility.  And, in a down economy, most companies also eliminate or freeze all consulting projects – unless as mentioned above, they are of the no-risk, contingency fee.

Although I certainly am not an unbiased observer, and readily admit that the prohibition of contingency fees would negatively impact our company, I also urge you to consider that the passage of such language would also place a great burden on all Florida business owners, and this legislation further erodes the free market capitalist system.  

As with all professions, there will always be a small percentage of individuals that are unscrupulous, unethical and will do things to give that industry a bad name.  Certainly, the property tax consulting business is no different.  However, for the vast majority of us and of the American public, we are hard-working, ethical and honest individuals out to support our families. 

Unfortunately, the financial industry has left a bad taste for all of us, and have demonstrated what happens when there is no oversight at all.  However, we must be careful that the pendulum does not swing dramatically to the other side and we find ourselves going from under-regulation to over-regulation; and I believe this bill risks doing just that.

Thank you very much for your consideration of my views on this matter.

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