Charles Garrison
tax analyst for the Rockingham County Tax Department
Can you briefly tell me about the responsibilities of your job?
As tax analyst for the county, my main objective is the appraisal of machinery and equipment. I assess the values on all business personal property in Rockingham County. The business personal property is made up of machinery and equipment, computers, supplies, furniture and fixtures, anything that a business has--whether it be a mom and pop store on the corner or someone like Miller Brewing Company that we have here in the county. So we have tax values ranging anywhere from $25 to over $100 million.
There are two people working on business personal property, myself and my assistant. We handle all the business listings and also all the farm accounts. And we have a little over 4,000 accounts.
What we strive to do is find market value so that we can assess that value to be taxed. We establish a total taxable value for business personal property and we give it to the Tax Administrator to arrive at a tax base for the county. The tax base for the county is made up of real estate, business personal property, individual personal property, and vehicles. The Tax Administrator presents the total tax base to the county manager and commissioners and they come up with a tax rate. So it's very important that we get all the value that we can get and make sure that all businesses are listed.
In appraising property, the objective in the appraisal of machinery and equipment is to determine the market value of the property for ad valorem tax purposes. Ad valorem is Latin for "according to value." That's where it all started from. In order to reach this market value, there are several elements that constitute value, and we have to decide which appraisal concept we will need to use to find market value.
The business personal property value for the county is probably a little over 20% of the tax base, around $750 million. So it's very important that we get all the businesses listed. Basically, the more tax base you've got, hopefully, the lower the tax rate can be set, depending on what the Commissioners do, how much money they need.
You've explained what items you assess in the category of business personal property. Can you tell me what types of individual personal property are taxable in North Carolina?
Airplanes are taxed, I have to appraise airplanes. Boats, boat motors, the trailers that the boats are on, mobile homes, and of course your homes and your real estate. Your household goods are not taxable anymore. They used to be, years ago, but they're not now. You used to have to go in and list the rings you had on your fingers, how many dishcloths you had . . . well, they got away from that. So it's mainly motor vehicles, mobile homes, aircraft, all-terrain vehicles, sea doos--anything like that.
Establishing a taxable value for equipment
How do determine a value for specialized equipment, such as the equipment used by Miller Brewing Company?
As an appraiser, you're looking for true market value. We have certain standards to use in appraisal. The North Carolina Department of Revenue helps us a lot. They have a cost index and depreciation schedule.
We send out a pre-printed listing form every year and their accountants, CEOs, whoever, send those back. We look at each one and make sure that it's consistent with last year's. If you bought a piece of machinery in 1990 and you still have that piece of machinery, it is still taxable, but it has been depreciated according to a schedule set by the State. So that piece of machinery, as long as you have it, it will be worth at least a residual value of 25% of what it originally cost. We check their listings, and if there seems to be a difference in the cost from previous years, then we may make an on-site appearance.
To try to find market value, you have to look at the original cost of the equipment, you have to look at the age of the equipment, the economic, physical, and functional obsolescence of the property. A business might have paid $10,000 for a piece of machinery, but what we have to do is find the market value on that machinery now. If they bought it in 1995, what we do is take the original cost of that piece of machinery and we use the depreciation factors and trending factors to figure what would be the replacement cost new, and then depreciate that figure down to a taxable value, or market value.
Can you explain what depreciation is?
A simple example would be a vehicle. When you buy a brand-new vehicle and you drive it off the showroom floor, if it costs $25,000, as soon as you drive it off the floor, the value has depreciated because it is used. You can't take it back to the dealer and get $25,000, I assure you. You drove it and it's used.
Equipment is the same way--machinery, equipment, and computers. Computers have what we call an economic life of five years. They change so quick; the technology is just changing every day, and as you know, when you buy a computer today it may be outdated in two weeks. So if you pay $10,000 for a complete computer system, over a five-year period that computer cost will be depreciated down to 10% of the original value. Machinery and equipment will have a residual value of 25%, but computers--because they depreciate so fast--the State has said we will use a 10% residual value. It's one of the few things that depreciate that fast.
Is there an appeal process if the accountant or business owner does not accept the assessed value you have calculated?
If we can not come up with a market value which we both agree on, the taxpayer has the right to appeal that value. His first step is to appeal it to me and the Tax Administrator. And then if the taxpayer is not satisfied, he can go before the Board of Equalization and Review. The Board of E&R is a board of five people who have been appointed from different sections of the county; we try to keep it diverse. We present our facts to the members of the board and the taxpayer presents his facts. Then they make a decision and we notify the taxpayer, if the taxpayer was not there, what the decision was. If he's still not pleased with it, his next appeal is before the Property Tax Commission in Raleigh; they are appointed by the Governor and certain members of the Council of State. So you have appeal rights all the way up. When the Property Tax Commission rules, if you're still not happy, you can go to the State Supreme Court, I think that's next. So you have plenty of avenues to appeal. But usually we can solve the problem here in this office.
How many cases have you seen appealed to the Property Tax Commission?
I have not had any that had to go to Raleigh. We have had some that had to go before the Board of E&R. In some cases, it was ruled in our favor. And in some cases, the judgment was made in the taxpayer's favor. We don't take it personally. As long as we can come up with what we think is an equal and fair value, that's what we're looking for. If you're fair and uniform in the appraisal, can't too many people argue with that. Because we're going to treat the guy down here who's got the corner store the same as I'm going to treat Miller Brewing. It's no different.
Charles's experience in the job, education, and background
How long have you been doing this job?
This fall it will be twenty years that I've worked for the Rockingham County Tax Office. The first fifteen of those years I was a delinquent tax collector, which was basically what it says. Anyone who hadn't paid their taxes, I was in charge of collecting all delinquent taxes. In doing that job, I had to deal with businesses, because sometimes businesses wouldn't pay for whatever reason. And so you would have to look at what they owned. In delinquents, you may need to levy on some property, so you need to know what they have.
I've been doing the tax analyst job or the appraisal job for almost five years now. I sort of fell into this job, to be quite honest. Working delinquents, I would have to check the files all the time. I got to where I could read the depreciation schedules and I knew what was going on. I became more familiar with them. The lady who had the tax analyst position for about twenty years died suddenly. We were right in the middle of a listing period. You have to get your listings done before the Commissioners can set the tax rate and all--we have deadlines to meet. So I let the Tax Supervisor know that if he needed help, I'd be glad to help. The next thing I know, I'm doing it. So that's how I really fell into this position.
Have you had any type of special education or training to do this kind of work?
Of course, you have to have a high school diploma and you need a real good accounting background, whether you actually have a degree or not. It's coming to the point where I think you're going to have to have one. I do not have one. I attended the Rockingham Community College here for two years, a long time ago. I'm fifty years old, so I attended there a long time ago, but I had some accounting background there. And while I was in the Air Force, I also had to do some accounting. I was an aircraft mechanic, and we had to keep books on certain things, keeping figures on how long a machine lasts, just different things.
But you've got to have the accounting background because the data they send you--their income statements, their depreciation schedules, fixed assets schedules--are accounting documents. You have to have a good background in accounting because that's what you're doing. And you're dealing with accountants, so you need to know the same terminology. Like I said, I do not have a degree in accounting. But I expect when I leave, the next person who comes here will probably be required to have one.
As far as training, we have a continuing education program with the Department of Revenue. We have to be certified by the State of North Carolina as Certified Business Personal Property Appraisers, and we attend schools for this. Of course, you have to pass these schools, and the Department of Revenue sponsors these schools. So we have our own little group of peers there. The schools are excellent--you can really learn a lot not only from the book work but with your peers, because these people are out there doing this job every day. And as you know, that's where you can really learn a lot of things.
Once you get certified, you have to maintain your certification by completing a certain number of hours of training. You can collect those hours by attending seminars; we have quarterly meetings and we have a conference each year. The State is pretty stiff on that; they want us to stay certified, which we should. Our association is the NCAAO, the North Carolina Association of Assessing Officers.
How did you happen to go to work for Rockingham County?
After the military, I worked at an ABC store; I was the manager of an Alcoholic Beverage Control store. I worked there for seven years. And I worked weekends all the time, and I decided I wanted a job where I didn't have to work weekends. Basically, I just wanted a change.
My brother was with the Sheriff's Department at that time, and he told me they had an opening as a delinquent collector in the Tax Office. So I thought, "Well, I'll try that." And I had a formal interview and got that position, and I held it for around fifteen years.
Was any type of test required of you in applying for that position?
No, you didn't have to take a test. But you had to be certified as a collector by the Department of Revenue, and you had to achieve that certification, I believe, within two years.
Charles's personal thoughts about being tax analyst
What do you like best about your job?
I like crunching the numbers--the math. I really didn't like math that much in school, but I've come to enjoy it more. I guess I appreciate it more. You're working with numbers, and you have guidelines that you have to use, but you also have to have good common sense and sort of read between the lines on some of the rules and regulations, just like you do anything.
When you appraise property, your appraisal is just an estimate of value. So the market value of something is what I think it is, compared to what the owner of the property thinks it is. So we have to get together and come up with what we think is market value. So you get to interact with these accountants, CFOs [Chief Financial Officers], and the mom and pop store at the corner also. But working with people is good. You get to use your own judgment a lot.
And if I say something's worth such-and-such, and the owner says that they don't think it is, you really don't get into arguments. Both parties are professional enough where you can banter back and forth and come up with a value. That's fun to do with these people. Plus, with business property, you deal with everyone from local accountants to Miller Brewing people in Milwaukee--you deal with people from all over the United States who have industries here.
What do you like least about your job?
I'm probably going to give you the same answer all government employees give. The general public, they don't look at government employees, and especially tax people, in a favorable way. You sort of have to defend your position a lot. As a tax appraiser, I guess the public thinks we just make up these numbers on their machinery and equipment or airplanes or whatever. But once you sit down with them and talk to them and explain to them how we come up with values--that we use aircraft blue books, we've got all kinds of manuals that help us arrive at these values--once you explain to them how we do it, they're fine.
But when they come in, they're mad. They want to holler and cuss, and whatever. I guess it's because they're probably already mad at government but they can reach us--they can't reach out and touch Washington, they can't reach out and touch the Governor, but they can come to the local tax office and be face-to-face with an official. So you just have to defend yourself more than you think you should . . . We have angry people come in, but they usually don't leave angry. I'll put it that way.
Is there anything in particular you'd like to accomplish during your time in this job?
I guess the best accomplishment would be to make sure that all the businesses in Rockingham County are listed. Some businesses may not know that they're supposed to list; some businesses are just not going to list. Our job is to try to get them all. If I'm paying taxes, you should pay taxes.
We have ways of finding these people: they advertise, of course, in phone books and newspapers. We check those, and if they have not listed, we do what we call a discovery tax bill. The discovery means, "You did not list in January, so we're saying that you have such-and-such a tax value, and we're going to bill you for that." And basically we try to get the value up there far enough to get their attention. They usually come in after that, and we get them listed.
But you still have to sort of beat the bushes to get them all. It's probably a handful of businesses, that's about it. Most of those are small businesses and new businesses, people who may have opened up a sewing center or garage or something, they may not know that they're supposed to list every year. So it's just a small figure.
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See the section on Local Taxes in Chapter 7, "Paying for Local Government," of the textbook Local Government in North Carolina, or see Lesson Plan 2, "Who's Footing the Bill?" on this web site, for more information about property taxes as a revenue source for city and county government.
Some questions for classroom discussion:
Think of the business personal property that would have to be listed for appraisal at a few different types of businesses, such as a music store, a fast food restaurant, and a movie theater. Which one do you think would have the most items of personal property to be appraised? Which one do you think would have the greatest dollar value in personal property? If you were asked to help a business owner compile the very first listing for a new business, how would you get started?
Charles stated that the value of business personal property, at $750 million, totals a little over 20% of the total tax base for Rockingham County. That translates to a total tax base of approximately $4 billion for Rockingham County. Make an estimate of the total tax base for your county, then check your estimate by reviewing a county budget document or by contacting the county's Tax Administrator. What percentage of your county's total tax base is made up of business personal property?
Charles explained how accounting skills are needed to perform his work as a Certified Business Personal Property Appraiser. What other skills or abilities would be needed to tackle the yearly appraisal of all the machinery and equipment, computers, supplies, furniture and fixtures used by businesses within a county?
If you enjoyed accounting, would you consider working for a county's Tax Office? What other job opportunities might you pursue?