With personal property tax deadlines coming up, especially for states like Georgia and Texas that impose tax on inventory, now is the ideal time to revisit the source data that you are using for inventory reporting.
This means taking a step back to review current inventory reporting processes to make sure that your numbers truly reflect the value of inventory you have on hand as of the assessment date. Often, adjustments to inventory that are made for book or income tax purposes do not capture all factors impacting fair market value for property tax purposes.
In addition, companies should consider whether source data properly captures excludable costs related to:
- Shrinkage (defective inventory, spoilage, theft, etc.)
- Movement from distribution facilities to stores and returns to vendors
- Non-taxable intangibles, based on each state’s definition of taxable cost
To get to the bottom of these issues in time for filing returns, it is important to go beyond the general ledger account and understand physical movement of inventory, timing issues related to how vendor credits are being tracked and reported, and much more.
These are some of the key insights from a recent podcast with Selena Longway, Senior Manager at SC&H Group, who provides a comprehensive perspective on how companies can best manage inventory reporting.
To learn more about how SC&H Group provides both brick and mortar and online retailers with highly specialized accounting, tax, and consulting expertise, click here.