Project Methodology

When To Partner With An Outsourced Tax Consultant For Your Cost Segregation Study

Perhaps you have a lot of fixed asset additions each year that include a variety of tangible personal property and real estate assets, but are unfamiliar with or not particularly savvy in the ways of cost segregation. Or, perhaps your business is finally emerging out from under the recession’s thumb or you’re a thriving startup that has recently become taxable and may now reap the rewards of cost segregation and broadened real estate tax strategies.

Whether or not you’ve done cost segregation historically for your business, you likely understand that you’ll need help conducting a solid cost segregation study – one that captures and substantiates the maximum allowable deductions. 

You know you need to outsource this type of complex, specialized accounting work.

But, to whom? A CPA? A cost segregation specialist? Or, a tax consulting firm with a vast arsenal of resources? Obviously, the latter sounds great, but the real key is deciding what outsource channel is right for your business’s needs – from both a broader fixed asset management perspective as well as a cost segregation standpoint.

When A Tax Consulting Firm Is Right For Your Cost Segregation Study

You should have little issue making an investment with an experienced tax consultant who is equipped to formulate a comprehensive cost segregation and real estate tax strategy that aims to achieve substantial ROI for your business. But, how do you determine if the tax consultant is truly trustworthy and able to make your investment more than worth it?

Step One: Getting To Know You

From the start, a reliable cost segregation tax consultant is going to spend a fair amount of time with you, asking questions to try and get a sense of your business and all applicable opportunities available:

  • What industry are you in?
  • What types of fixed assets do you have and how have you treated them historically?
  • Are you in compliance with the tangible property regulations?
  • Are there energy efficiency incentives available?
  • Do you have a variety of facilities and are they spread out across the nation or grouped in a single region or state?

By asking the right questions, your tax consultant is ascertaining the viability of a multitude of options beyond standard cost segregation, including compliance and opportunity relative to the tangible property regulations or capturing certain energy efficiency incentives. Further, just as you are doing your due diligence to assess whether or not the relationship is going to be mutually beneficial, so are they.

Step Two: A Walk-Through Of Deliverables

Once you and the tax consultant agree that partnering makes sense, the consultant should take you through their approach to cost segregation studies and real estate tax strategies. This allows you to get comfortable with their deliverables and their methodology for capturing every available opportunity possible – many of which are missed by most cost segregation specialists. 

And, while you are likely aware there is minimal risk to cost segregation, it’s always reassuring to hear the tax consultant’s answers to questions, relative to years of experience and how well they’ve done for their clients in the event of an IRS audit.

Step Three: A Free Feasibility Study Offering

Finally, the right tax consultant is going to offer you a free Phase 1 feasibility study. To accomplish this, generally, you will begin by providing the consultant with your fixed asset depreciation schedule, current year fixed asset additions, or a description of a facility you’ve acquired or constructed, even if only currently within the planning stage. 

Generally, the takeaway is a no-cost, obligation-free Phase 1 feasibility study highlighting the potential, estimated tax savings and the associated service fees, allowing you to see concrete evidence of the ROI that results from a thorough, well-planned strategy.