Tax assessors sometimes improperly inflate ad valorem property tax bills on industrial and commercial properties by including the value of the taxpayer’s intangible assets, which are not subject to property taxes in some jurisdictions. An article in the just-released Winter 2022 issue of Insights from Willamette Management Associates discusses this and summarizes the generally accepted approaches and methods related to the valuation of taxpayer intellectual property. In particular, the article focuses on the market approach—and the relief from royalty (RFR) method—related to the valuation of the taxpayer’s intellectual property. The article, “Intellectual Property Valuations for Property Tax Purposes,” was written by Barry W. Purnell, Robert F. Reilly, and Charlene M. Blalock.

What to do: Examine your local area to see whether the laws exempt certain intangible assets from commercial property taxes. You may have clients who have overpaid their property taxes if the value of intangibles was improperly included in the assessment.