How to read property tax bills

This blog has been updated. It was originally published on November 17, 2023.

• Though it’s tempting to skip to the payment part of your property tax bill, learning how to understand your bill can help you avoid overcharges, fines, and penalties.
• The breakdown section allows you to review your assessed value and taxable value after any exemptions.
• Look closely at the annual comparison: If your tax amount jumped from the prior year, it’s possible your property was overvalued.
• Want an easier way to manage the hassle of property tax? Avalara automated solutions can enhance your efficiency and reduce your risk.

There’s nothing like settling in with a warm beverage and a cozy blanket to enjoy some reading — unless you’re looking down at a property tax bill. We’re guessing even the biggest bookworms would agree that isn’t anybody’s idea of a good time.

Still, while property tax bills aren’t as engaging as that bestseller waiting on the shelf, it’s important to read them instead of just skipping to the part that shows what you owe. Otherwise, you just might find yourself reading something far worse down the road: a horror story authored by an auditor.

That’s because missing deadlines or getting something else wrong can put your business at risk of fines and penalties. And not reading your bills can leave you in the dark on other things, such as if you’re being charged the right amount.

There are four key portions of a property tax bill:

• The property tax bill payment stub
• The property tax bill breakdown
• The property tax bill annual comparison
• The property tax bill payment instructions

Let’s take a look at how to read (and understand) each — so you can get back to the kind of reading you really want to do.

(Of course, AI-powered automation from Avalara gives you a way to skip all this bill reading while keeping your compliance needs covered. We’ll get to that in a bit.)

This is the most straightforward part of your bill: It’s the portion you detach and remit with your check. (And most likely, there will actually be something to detach, because nearly all these bills are still on paper.) It serves as a summary of who you are, the property being assessed, and the amount owed.

However, stopping at the stub is like skipping ahead to the end of the story. Sure, you’ll know what ultimately happened, but you won’t understand the how or why. For that, you need to review the rest of your bill.

Think of the tax breakdown as the middle chapters of the story — the parts where you get essential background information. It introduces the tax amount and provides the assessed value and the taxable value after any exemptions. Before remitting any payment, you should verify the descriptions of your property and review your valuations.

The breakdown also includes the following:

• A listing of the taxing jurisdictions the bill covers
• The jurisdictions’ tax rates and calculated tax amounts
• Non-ad valorem assessments, or additional fees that are not based on the taxable value of your business’s property; they might include flat-fee special assessments to cover a jurisdiction’s budget shortfalls or other initiatives

For payments, the bill provides details about the payment options offered, such as a single payment or installment payments. Some jurisdictions might offer a discount for specific actions, like making your payment early. Read this section closely to ensure you can take advantage of discount opportunities if desired — or at least avoid penalties for missing deadlines.

If you think penalties are rare, think again: A 2022 survey of enterprise companies by Avalara and Potentiate found that 61% of respondents were penalized on real property tax bills, while 62% incurred penalties on bills for personal property, which is taxed in 36 states. (Learn more about the difference between real and personal property for businesses here.) Sure, large companies can get thousands of tax bills each year, but this is still a testament to just how complicated property tax can be for any business.

We’ve all read stories that feature glaring plot holes. Unfortunately, they aren’t always easy to spot on a property tax bill. But the annual comparison section can help.

For example, if you suddenly see your payment jump from a previously steady amount, it may be worth checking with the assessor’s office to find out why. After all, assessors are humans who can make errors; it’s possible your property was overvalued. (Your assessments are sent separately from your bill; you should look at those closely too.) If you didn’t submit an appeal before the assessment’s review deadline, you’ll want to flag it for next year.

An automated solution can help with this as well — for instance, uploading prior and current assessments with Avalara Property Tax makes it easy to find and review them in a convenient centralized location. And both Avalara Property Tax and Avalara Property Tax Managed Services use historical filings and current data to help identify risks such as overpayments and penalties.

(Note that higher bills can also mean the jurisdiction changed other taxes that increased the property tax rate. Don’t hesitate to ask: It’s always good to have anything that catches your eye explained.)

The payment instructions are the final chapter of the story. It’s where you find contact information to send payment or ask questions about your bill.

You’ll also get instructions on how to pay — take note of the different fees treasury departments may apply depending on your form of payment. For example:

• No fee for remitting payment via check
• A flat fee for paying via e-check
• A percentage of the transaction added to credit card payments

If you’d rather spend less time reading tax statements altogether — and who wouldn’t? —Avalara Property Tax can help you automate property tax compliance.

Just scan and upload your tax bills, and our AI-powered, cloud-based software extracts key information that is triple-validated for accuracy. Then it’s automatically appended to an account to help you confirm and compare assessments, verify data, and remit taxes on time — more efficiently and accurately than through manual processes. All your data is easily available, a calendar shows you what’s coming up, and you can access reporting tools to make decisions.

Think Avalara Property Tax may be right for your business? Contact us to schedule a call.

What’s included in a property tax bill?

• The property tax bill payment stub
• The property tax bill breakdown
• The property tax bill annual comparison
• The property tax bill payment instructions

Can’t I just pay the amount due instead of reading the entire bill?

Yes. But you’ll be missing out on important information like the valuation of your property, special assessments or fees, and the why behind what you owe. Reading and understanding your bill can help you avoid overpayments and penalties.

Why is my property tax bill higher than previous bills?

Your bill contains the answers. The assessor might have determined that the value of your property has increased (which can be appealed), the tax rate might have gone up, or there maybe be other fees or assessments on the current bill.

Can I have someone else handle these bills?

An automated solution such as Avalara Property Tax — or Avalara Property Tax Managed Services — can simplify the process, reduce your risk, and help you free up resources for other initiatives while helping to ensure you stay in compliance.