Evaluating Contingency-Based Personal Property Tax Services

As enterprise tax teams face growing demands for cost control, audit readiness, and multi-state compliance, the appeal of performance-based consulting arrangements has increased. Among these, contingent fees for tax services, particularly within personal property tax engagements have gained traction. They promise to align fees with results, offering potential value for firms seeking efficiency without additional internal lift.

But for large organizations with complex tax footprints, the real question is: does the structure of a contingent fee engagement support long-term compliance, transparency, and risk management?

Understanding Contingent Fees for Tax Services

Contingency-based tax services are structured so that the consultant is compensated only when savings are secured. In the context of personal property tax, these fees typically apply to reductions achieved through amended filings, valuation adjustments, or successful appeals.

This model shifts financial risk to the consultant, offering an appealing value proposition. However, understanding how these engagements operate—and how incentives are structured—is critical to ensuring the approach aligns with your firm’s compliance expectations and strategic tax posture.

Why Companies Choose Contingency-Based Tax Services

Contingent fee models often appeal to tax directors and CFOs for their cost-containment benefits and results-oriented focus.

• No upfront costs. The fee is incurred only when savings are realized.
• Predictable ROI. Fees are linked to financial outcomes, creating a clear return profile.
• Incentivized performance. Consultants have a strong motivation to uncover opportunities that may have been overlooked during initial filings.

For large firms with expansive fixed asset registers, legacy data inconsistencies, or prior-year overstatements, these engagements can serve as a supplemental savings initiative without disrupting ongoing compliance operations.

The Hidden Risks in Contingent Fee Arrangements

Despite the financial appeal, contingent fee models introduce risks that must be carefully managed, especially at scale.

Compliance Risks from Misaligned Incentives

Consultants paid on the basis of savings may be incentivized to adopt aggressive positions that exceed the client’s risk tolerance. In high-volume, multi-jurisdictional environments, inconsistent filing standards can trigger audit exposure or reputational risk if the underlying analysis lacks jurisdictional grounding.

For example, an accelerated depreciation position that appears favorable in one state may not be permissible in another. Without tight oversight, these discrepancies can result in reassessments, penalties, or costly audit defense.



Transparency Gaps That Impact True Savings

Another challenge arises in how "savings" are defined. Some firms calculate savings based on hypothetical assessments rather than actual reductions against validated valuations. This creates ambiguity, undermines auditability, and can inflate fees beyond the true financial benefit delivered.

Large firms with mature tax functions often require granular reporting and methodology documentation. When these elements are absent, replicating the outcome in future years becomes difficult and internal confidence in the engagement erodes.

How to Evaluate Contingent Fees in Personal Property Tax

Tax leaders evaluating contingency-based engagements should assess more than just potential savings. The structure and transparency of the engagement are just as important as the results it may produce.

Key areas to evaluate include:

• Definition of savings. Is it based on actual changes to tax liability, or estimated reductions from an internal model?

• Documentation standards. Are valuation changes supported by fixed asset records, depreciation schedules, and jurisdiction-specific rules?

• Jurisdictional nuance. Does the provider demonstrate understanding of relevant statutes across all applicable states?

• Coordination with internal teams. Are tax staff involved in reviewing positions before they are submitted?

A well-structured engagement will create alignment between the consultant’s incentives and the client’s compliance posture, ensuring that results are both defensible and replicable.

Baden’s Approach: Transparent, Results-Driven Partnerships

At Baden Tax, we work with some of the most complex organizations and firms operating across dozens of states, managing extensive personal property inventories, and subject to increasing regulatory scrutiny. For these companies, compliance is non-negotiable and performance must be balanced with risk management.

Our contingency-based services are built for this environment.

We offer:

• Transparent methodologies. Clients know exactly how savings are calculated and how fees are derived.

• Audit-ready documentation. Every adjustment is supported by detailed analysis, records, and jurisdictional research.

• Proactive communication. We involve client tax teams in each step of the process to ensure full alignment with internal protocols and thresholds.

Our engagements are structured to deliver value over multiple years and are grounded in long-term partnership.

Comparing Contingent and Fixed-Fee Property Tax Services

While contingency models offer flexibility and performance alignment, they are not always the best fit for every tax function. Many large firms prefer fixed-fee structures for annual compliance services, such as routine returns, data collection, and reconciliation. These engagements offer budget predictability, streamline procurement, and align well with existing internal control frameworks.

By contrast, contingency-based engagements are most effective when applied to targeted reviews, such as uncovering historical overstatements, onboarding new acquisitions, or reassessing aging assets.

Firms should view fixed-fee and contingency models as complementary tools, each appropriate for different parts of the property tax lifecycle.

Ready to Evaluate Your Property Tax Fee Structure?

Contingent fee arrangements can drive meaningful value when structured correctly. But for mid-to-large firms, success depends on finding a partner that prioritizes compliance, transparency, and results.

Baden Tax brings deep multi-state experience, senior-level engagement, and a proactive service model to every engagement. Whether you are correcting legacy filings, identifying missed depreciation, or preparing for a strategic review, our team ensures every recommendation stands up to scrutiny.

We deliver value you can verify and savings you can scale.