Business owners may complete all the necessary forms and permits to operate their businesses but may be surprised to receive a property tax bill from their local jurisdiction. Personal property tax is an ad valorem tax, meaning the tax amount is set according to the value of the tangible property. Although most jurisdictions throughout the United States levy a personal property tax, several states do not and as a result, some residents may not be aware that a tax on personal property exists. For example, Kansas does not assess tax on property placed into service after 2006. Below are some questions to consider when filing business personal property tax returns.
First Time Filers:
- Where do I need to file?
- What assets are reportable?
- Do I have to report leased assets or supplies? Are there other required items?
- Are any exemptions available?
- When is the return due? Can I request an extension?
Existing Business Filers:
- Have we expanded business operations? Did we open any new locations?
- Do we have any new assets?
- Did we upgrade or replace assets?
- Did we dispose/retire/write-off any assets?
- Do we have idle assets?
Personal property tax is assessed annually, usually as of January 1st, but other assessment dates include March 1, April 1, July 1 and October 1. Businesses are assessed a business personal property tax on items such as furniture and fixtures, computers and peripherals, construction equipment and automobiles. Other items reported on the return may include items expensed under tangible property regulations, operating supplies, leased assets, inventory and construction in process. Idle assets, retirements and write-offs should be considered before finalizing the return. Due dates of returns vary by jurisdiction and most range from March 1 to July 1.
After review of the return by the jurisdiction, taxpayers will receive an asset summary statement, often called a Notice of Value. Any errors or omissions found in the Notice of Value should be addressed by the applicable appeal deadline. If the Notice of Value is correct no further action is needed. For certain jurisdictions payment of the assessed personal property tax is due with the return; however, most jurisdictions will mail a tax bill. Bills can be received throughout the year with various due dates.
If personal property tax reporting raises concerns or uncertainties, the State and Local Tax (SALT) professionals at RubinBrown can assist you in resolving those concerns. We are available to provide a detailed consultation regarding the application of reporting requirements to your business and assist in preparation of jurisdiction filings.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
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