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New Article 02/07/2012
What is Tax Abatement?
Tax abatement, also known as tax holiday, tax subsidies or tax reduction programs, is a program granted by the government for a specific time period and for certain activities such as using them for incentives for businesses, in real estate to propel progress or to attract private investments or for corporations to create jobs or develop certain areas. The reduction or exemption of taxes can be short or long-term.
Tax Abatement for Real Estate
The tax abatement process for most states in America puts the burden of proof on whoever is applying for the tax credit. In the majority of cases, this process would require an appraisal report and can be overwhelming and confusing for the average citizen. Many property owners are hesitant or fail to file for tax abatement even though they could potentially qualify due to the confusing nature of the process.
There are three main reasons one would file for a tax holiday. The first one is the easiest to amend and easiest to be approved for a tax abatement and would be because the physical information on the tax card for the property is incorrect. The second reason would be the most common reason for filing and that would be if the equalized assessed value of the property, as of April 1st in the year the abatement is filed, shows the property is being over assessed. The third reason would be if the property is being over assessed disproportionately to other like properties within the municipal the abatement is filed. For property owners that believe they are paying too much in taxes, tax abatement can be one of the first tax debt solutions they look into for relief.
Tax Abatement for Businesses
There are several variations of tax holidays for businesses. A business may be granted a tax reduction or elimination if the abatement would create several jobs or if it would avoid the need to fire several employees. State and local governments, as well as the federal government, use tax abatements as an economic development incentive, also. For example, the government may grant a tax credit to a business owner or developer who makes repairs, renovates or builds in certain areas. Tax holidays may also be used to make specific areas more attractive to business owners, or they can also be offered to encourage a business from leaving a specific area.
The Corporate Tax Credit is also a fairly complicated form of tax abatement allowed by the current US Tax Codes. Corporations are taxed differently and are offered different tax credits than other types of business entities. While the government and corporations feel that a corporate tax abatement is just one of the viable tax debt solutions to help create jobs and keep jobs in America, many individuals feel that it is just a form of corporate welfare and that corporations often fail to live up to their end of the bargain. State and local governments across America are starting to rescind corporate tax breaks when the corporation fails to adhere to their end of the agreement.
Tax abatements are available for corporations, businesses and individuals alike, however tax codes are cumbersome and complicated, and are often specific to a certain state, city or municipal. If you feel your property or business may qualify for tax abatement, the best thing to do is consult with a lawyer knowledgeable in tax codes in your area to see if you have a case.
